Electricity price joy for South Africa’s most expensive city

City of Cape Town Mayor Geordin Hill-Lewis is promising the metro’s residents a reprieve from Eskom’s hefty electricity price hikes for the 2025/26 financial year.

Hill-Lewis is set to deliver the City of Cape Town’s budget speech on Thursday, 27 March 2025.

According to an EWN report, residents in the metro won’t be subject to Eskom’s more than 11% electricity price hike for municipal providers and will instead pay an average increase of 2%.

To achieve this, Hill-Lewis said the council plans to remove the 10% contribution to other service delivery that was embedded in the electricity unit price.

This will make it possible for the city to mitigate the impact of Eskom’s price hikes on residents.

He also promised to announce changes to the way the metro charges for water supply.

Hill-Lewis said he was looking to lighten the load as residents are struggling with the cost of living in South Africa’s most expensive city.

In mid-March 2025, the National Energy Regulator of South Africa (Nersa) approved an average standard tariff increase of 11.32% for municipal power utilities.

The regulator cut Eskom down to size with the adjustment it approved, considering the state-owned power utility had applied for a 43.55% price hike in 2025/26.

The energy watchdog said it approved the adjustment in an 11 March meeting, during which it considered and approved the Eskom Retail Tariffs and Structural Adjustment (ERTSA) application.

While municipal power customers will be hit by an 11.32% increase from 1 July 2025, Eskom direct customers will see tariffs increase by 12.74% on 1 April.

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

It should be noted that municipal end-users, excluding those supplied by the City of Cape Town, could pay more than the 11.32% increase from 1 July, as municipal providers must still submit their applications to the regulator.

Municipal power providers’ applications will consider aspects like individual municipalities’ cost of supply, among other factors.

Eskom submitted its application to the country’s energy regulator in August 2024, with Nersa publishing it towards the end of September of that year.

The application included adjustments for 2025/26, as well as 2026/27 and 2027/28. Eskom requested electricity price adjustments for municipalities of 3.36% in 2026/27 and 11.07% in 2027/28.

Nersa hasn’t confirmed the price adjustments it approved for 2026/27 and 2027/28.

Backlash over 2024/25 municipal electricity price hikes

Civil action organisation AfriForum slammed Nersa in July 2024 after the regulator approved price hikes for 178 municipalities.

AfriForum said the regulator failed to implement a requirement that all municipalities must submit cost-of-supply studies to accompany their tariff applications.

AfriForum local government affairs manager Morné Mostert said the regulator sent a letter to municipalities in October 2023 warning them that they wouldn’t receive electricity tariff increases without a cost-of-supply study.

“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,” said Mostert.

As a result, a large portion of municipalities submitted their applications without conducting a cost of supply study.

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

AfriForum approached the courts to enforce an order from 2022 mandating the completion of cost-of-supply studies.

Mostert said the blocking increases in 2024 would ensure that municipal providers plan accordingly for 2025.

The organisation said only 66 of 178 municipalities submitted the necessary documents.

Electricity price adjustments for municipal providers were approved nonetheless, and AfriForum approached the High Court for an order instructing offending providers to reimburse their customers.

The court dismissed its application in December 2024.