Big electricity price hike in South Africa gets green light

The National Energy Regulator of South Africa (Nersa) has approved an average standard tariff increase of 11.32% for municipal power utilities.

The application Eskom submitted to Nersa requested a 43.55% price hike for municipalities. According to the regulator, the municipal price hikes will take effect on 1 July 2025.

“The Energy Regulator, at a meeting held on 11 March 2025, considered and approved the Eskom Retail Tariffs and Structural Adjustment (ERTSA) application — an average tariff increase of 12.74% for Eskom direct customers and 11.32% for municipalities,” it said.

“The difference in percentage is brought about by the difference in implementation dates of Eskom direct customers and municipalities buying from Eskom.”

For reference, Eskom’s price hikes take effect on 1 April each year, while municipal price hikes take effect on 1 July each year.

The 11.32% price hike is on wholesale electricity sales to municipal power providers. However, the figure will likely be higher for end-consumers as municipalities must still submit their applications to the regulator.

This will consider aspects like individual municipalities’ cost of supply studies, among other factors.

Eskom submitted its application to Nersa in August 2024, and the regulator published it in late September of that year.

The state-owned power utility had applied for a 36.15% hike for direct customers. Nersa approved an adjustment of just 12.74%.

In addition to the 43.55% price hike it requested for municipalities in 2025/26, it also asked for increases of 3.36% in 2026/27 and 11.07% in 2027/28 for municipal electricity tariffs.

Nersa has yet to confirm the adjustments it has approved for 2026/27 and 2027/28.

Last year, the energy regulator faced backlash when it approved price hikes for 178 municipalities in July 2024.

According to AfriForum, Nersa had failed to correctly implement a requirement that municipalities must submit cost-of-supply studies to accompany their tariff applications.

“Last year in about October, there was a letter sent from Nersa to municipalities, warning them that if they don’t do cost of supply studies, they won’t be able to get electricity tariff increases,” said AfriForum local government affairs manager Morné Mostert.

“In January this year, the story changed woefully. They then sent a letter to municipalities saying: if you can send this information or these few steps, then we will consider your tariff increase.”

This resulted in a large number of municipalities submitting their applications without the cost of supply study.

“Without this document, we can’t determine what the tariff of a municipality should be,” said Mostert.

It approached the courts to enforce a court order from 2022, which stipulates the requirement for cost of supply studies.

Mostert said AfriForum’s application to the court was forward-looking in the sense that blocking the tariff increases in 2024 would encourage municipal power providers to plan accordingly for 2025.

According to the firm, only 66 of 178 municipalities had submitted the necessary cost of supply studies.

It said it believes the lack of compliance relates to the high cost and logistics involved with cost-of-supply studies.

AfriForum approached the High Court for an order instructing municipal power providers to reimburse municipal customers. However, the High Court dismissed its application in December 2024.

Nersa welcomed the decision, saying that certain decisions relating to the tariff applications would have been declared invalid, which would have resulted in massive headaches as many municipalities may have had to reimburse customers.

“AfriForum was seeking to have the High Court judgement of 8 July 2024 implemented whilst the appeal process that was granted to Nersa by the Supreme Court of Appeal is underway,” Nersa said.

“Had the court granted AfriForum’s order, certain decisions of the energy regulator on municipal tariff applications made in June 2024 would have been invalid.”