In yet another hammer blow for the embattled Nelson Mandela Bay consumer, a nearly 9% hike in electricity tariffs is on the cards from April.
Already battered by factory closures, shrinking export markets and punitive US tariffs, Bay businesses and residents are set to shoulder yet another financial burden — through no fault of their own.
This comes as an out-of-court settlement was recently reached between Eskom and the National Energy Regulator of SA (Nersa), allowing the utility to recoup R54bn in revenue calculation errors.
The deal means tariffs will rise by 8.76% on top of what Eskom will apply for in 2026/2027 and 8.83% more in 2027/2028.
For the 2024/2025 period, Eskom’s increase amounted to 12.74% for direct Eskom customers and 12.72% for municipalities.
Nelson Mandela Bay Business Chamber chief executive Denise van Huyssteen said this had exposed the lack of competitive pressure in the country’s electricity supply system, effectively expecting consumers to absorb repeated increases without relief.
Van Huyssteen said the chamber was highly disappointed with the settlement where Nersa had reached an agreement with Eskom which allowed for the utility to recoup R54bn due to revenue calculation errors.
“SA used to have among the most affordable electricity costs in the world, but now it is more expensive than several other markets, including China and India,” she said.
“This error also exposes the lack of competitive pressure in the country’s electricity supply system, and simply expects customers to keep on absorbing these increases.
“This is further accelerating the move by residents and businesses to procure renewable energy through private generation sources.
“SA needs to urgently accelerate the transition to a competitive electricity dispensation which includes licensed traders and independent power generators, along with the required regulatory framework and grid infrastructure support.
“The provision of stable, reliable and cost-competitive power is a vital enabler in retaining and attracting investment and employment to the country.”
The out-of-court settlement phases in R12bn of additional tariffs in 2026/2027 and a further R23bn in the 2027/2028 financial year, with the final tranche for 2028/2029 yet to be set.
Eskom had demanded R107bn, saying there were errors in Nersa’s decision.
This is not Nersa’s first high-stakes blunder.
Over the past decade, court challenges have exposed repeated miscalculations in its price determinations.
Its Sasol Gas tariff methodology was struck down by the Supreme Court of Appeal and the Constitutional Court, and branded excessive by the Competition Tribunal in 2024.
On Tuesday, the country’s largest electricity users called on Nersa to reopen Eskom’s tariff determination for the current and next two financial years.
In a statement, the Energy Intensive Users Group of Southern Africa (EIUG) said electricity prices had consistently posed a significant challenge for its members, particularly since Eskom began implementing frequent double-digit price increases over the past two decades, with the average price of electricity rising from 19.9c/kWh to 165.43c/kWh between 2008 and 2024.
“Specifically, electricity consumption by large power users in the industrial and mining sectors decreased by 23% between 2008 and 2024, while the number of customers declined by 709 (17%) during the same period.
“This period has been characterised by not only rapidly increasing prices but also high volatility and an uncertain price trajectory, which complicates investment decisions and general production planning for our members.
“Given that some intensive electricity consumers have electricity costs constituting up to 40% of their production costs, the price increases, volatility, and uncertainty are major factors contributing to some operations shutting down and to low investment levels in the South African market.”
The EIUG said the behind-closed-doors settlement between Eskom and Nersa came as a complete shock to consumers.
“It is not only about the quantum of the additional revenue but also about a lack of transparency on a decision that has fundamental consequences for consumers who have to bear this settlement.
“While the argument of the judicial nature of the decision may have merits, the lack of transparency of the settlement leaves much to be desired.
“This is especially so when it comes to the implementation period of this settlement, which was also not consulted upon and yet directly affects consumers who are already facing serious financial constraints.
“Making matters even worse is that some operations already see as high as 19% increase against the 12.74% Nersa decision due to the changes in the Retail Tariff Plan.
“With these additional costs, their situation will get even worse.”
Nelson Mandela University emeritus professor Charles Wait said the cost of electricity would be passed on to both domestic and business consumers.
“We know what happens when costs are passed on to business, it gets passed on to their prices and again, this reaches the consumer, the ordinary person in the street, which now means that person pays more for the domestic use of the electricity and pays more for the products distributed.
“Hikes hit two groups in the economy, the consumer and producer, broadly speaking, as well as the person in the street, along two channels.
“The tragedy is that public institutions are making mistakes, and the easy way out is to pass it on to the consumer.
“There are no consequences for the people making mistakes.”
The Herald
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