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South Africans will have to pay more for electricity after the National Energy Regulator of South Africa (Nersa) admitted to making mistakes in calculating Eskom’s revenue for the coming years. The regulator confirmed in a statement on Wednesday night that it has reached a settlement with Eskom worth R54 billion, which will now be recovered from consumers through higher tariffs spread over the next three years.
This development comes only a few months after a similar settlement in May, which added R40 billion to Eskom’s revenue. In total, the two settlements mean South African households and businesses will shoulder R94 billion in additional electricity costs – money that will be collected through tariff increases.
Tariff hikes to bite consumers
Nersa explained that part of the R54 billion will directly affect tariffs already announced for 2026 and 2027. Consumers will pay:
In the 2026/27 financial year, electricity tariffs will rise by 8.76% instead of the 5.36% originally announced.
In the 2027/28 year, tariffs will rise by 8.83% instead of the planned 6.19%.
These increases alone account for R35 billion of the settlement, while the remaining R19 billion will be recovered in a future tariff cycle. Nersa warned that actual increases could end up being even higher, especially if the earlier R40 billion settlement and other clawbacks are also factored in.
The new settlement has drawn public concern because electricity prices in South Africa have already risen steeply over the past decade, affecting households, small businesses, and industries. Many observers fear that the higher tariffs will further squeeze disposable incomes, raise the cost of living, and add pressure to inflation at a time when the economy is struggling.
Why Eskom went to court
According to Nersa, Eskom went to the High Court to challenge the regulator’s earlier revenue determination for the period April 2025 to March 2028. Eskom argued that Nersa’s calculations left it with a shortfall of R107 billion because of errors in the treatment of depreciation and the Regulatory Asset Base (RAB) for its generation business.
After reviewing the case, Nersa admitted it had made “data input errors” that affected the revenue calculation. Instead of fighting a long legal battle, the regulator agreed to settle with Eskom, granting it R54 billion – roughly half of what the power utility originally demanded.
Lack of transparency questioned
The settlement has raised eyebrows because it was negotiated behind closed doors. Reports by financial media earlier this week revealed that consumers were not consulted, even though the outcome directly affects their electricity bills.
Nersa defended its decision, saying judicial reviews are different from the usual public participation processes it follows when considering tariff applications. The regulator argued that it had to wait until the settlement was made a court order before making it public, to avoid “pre-empting the decision of the courts.”
Critics, however, say this secrecy undermines transparency and trust in regulatory institutions, especially given Eskom’s long history of financial challenges and mismanagement.
What it means going forward
By settling, Nersa says it has avoided years of litigation with Eskom, allowing both institutions to focus on their core responsibilities – regulating the power sector and keeping the lights on. The regulator also insisted that phasing in the settlement will “mitigate immediate tariff shocks” for consumers, even though South Africans will still face steep increases.
For Eskom, the settlement provides a financial boost as it struggles to stabilise electricity supply, reduce load shedding, and finance its transition to more sustainable energy sources. For ordinary South Africans, however, the reality is that electricity costs will keep climbing at a pace faster than inflation.
The case underscores the financial pressures facing Africa’s most industrialised economy, where power supply remains one of the biggest threats to growth. Rising tariffs could hit manufacturing, mining, and small businesses hardest, while households continue to feel the pinch of higher living costs.
