‘Nersa unlikely to grant Eskom the full tariff it has applied for’

Editorial Note: This story has been updated to include the full quote of the expert.

Energy analyst Ruse Moleshe says the National Energy Regulator is unlikely to grant Eskom the full tariff it has applied for.
But says consumers are in trouble with yet another tariff increase in the pipeline.

This is in response to NERSA formally publishing Eskom’s much-anticipated and much-criticised allowable revenue application for the coming three years.

The documents have been published on the Nersa website following an assessment of its compliance with the methodology and approval to do so during a special Electricity Subcommittee meeting held earlier this week.

The sixth multiyear price determination confirms that Eskom has indeed applied for allowable revenue of R446 billion for the 2025/26 financial year.

If granted, this would translate to a tariff increase for direct Eskom customers of 36.15% on April 1 next year, and a 43.55% hike in municipal tariffs from July 1. This has caused understandable outrage among consumers on social media platforms.

Most are struggling to keep their heads above water with the already high cost of living.

Nersa says Eskom’s application is premised on two processes which include the amount Eskom is entitled to recover in each financial year.

Energy Analyst Ruse Moleshe agrees that for operational reasons the power utility is entitled to recoup some money back.

“Eskom makes this application on an annual basis because they need to be reimbursed for the plants and these include many things like coal, the employees that they have to employ operating the plants and getting spare parts. Everything that relates to Eskom spending money in order for it to generate electricity. That is what they recoup from Nersa. There is an additional element which is the revenue, which is calculated based on their assets that they have, whether it’s the old or new assets”

The three-year application also includes total revenue requests of R495 billion and R537 billion for the 2026/27 and 2027/28 financial years.

The application will no doubt face fierce opposition which Moleshe agrees is understandable.

“They are probably not going to get everything that they have asked for, it’s still going to be a relatively high tariff. To be honest, it’s not sustainable in terms of the consumers. But, I think South Africa is stuck between a rock and a hard place because consumers have to pay. At the same time there is affordability challenges, the impact on the economy. At the same time, Eskom still has to function without electricity.You saw when we had load shedding that without electricity small businesses, industries all suffer. At the end of the day, we are really stuck between a rock and a hard place and I think if government could afford it, it would say government should make a plan.”

Nersa is calling for public comment with a closing date for the submission of written comments of 16:00 on the first of November 1.

This will be followed by public hearings that will be held across all nine provinces between November 18 and December 4.
The final decision is expected to be made on December 20, 2024.