Eskom has asked for 28 electricity price hikes in 25 years. What’s next?

Eskom is negotiating proposed tariff hikes that are expected to hit consumers in the pocket during 2025 as the country draws close to nearly 100 days without load-shedding.

The power utility has applied to the National Energy Regulator of South Africa (Nersa) for the price of electricity to be raised 28 times in the past two-and-a-half decades.

The highest increase ever awarded by the regulatory authority was 31.3% in 2009/10.

Eskom kept mum this week on its proposed hikes after Daily Maverick reported on a “confidential draft document” which indicated it would lobby for a 36.15% increase next year for direct customers and 43.55% for those supplied by municipalities.

Eskom spokesperson Daphne Mokwena said the utility was “not in a position to comment on information that is still under consultation. Eskom must respect the confidential consultation process with the South African Local Government Association (Salga) and the National Treasury. Once Nersa has published the revenue application according to its processes, Eskom will engage on the matter.”

Eskom’s biggest play for a hike was in 2008/9 with a for 60%, which Nersa reduced to less than half at 27.50%. In the most recent period, covering 2024/25, the request for 22.52% was cut to 12.74%.

While the proposed hikes are yet to be thrashed out, red flags are being raised about the danger of Eskom pricing itself out of a formerly captive market.

Prof Peter Bauer, from the School of Economics at the University of Johannesburg (UJ), believes too hefty an electricity price hike would be disastrous.

“Unemployment and poverty are persistent problems in our country with its thousands of informal settlements,” Bauer said.

“In the year 2024 electricity should not be a luxury any more, but a basic human right.”

It is a complex issue, he noted. “What will increases like these do to household economic structures? With our out-of-control unemployment numbers, it means you are lucky if you have a single income in a household.”

Raising electricity prices would skew household spending, he said. “Key points of household spending are food, health, travel, electricity and education. When something like this happens, it impacts these key areas. If you increase one element, the money must come from somewhere.

“Should education be impacted we will have long-term consequences. We see children at our universities in South Africa who have to decide between food and books sometimes. Others run out of finances in their final year.

“We should have invested way more in alternative sources of energy decades ago. Why can’t people use solar and get paid for supplying excess energy back to the grid? It makes no sense to not allow that nationally.”

A UJ colleague, Prof Hartmut Winkler from the university's physics department, said the cost of electricity has increased substantially since the dawn of democracy in 1994.

“Electricity would be about 1,700% more expensive today than it was in 1994. And it has consistently increased at rates higher than inflation in any given year,” Winkler said.

“Even 20 years ago Eskom won awards for being the top electric utility in the world. It is terrible that the utility has fallen into such a state of disrepair.”

He believes Eskom will base its tariff request to Nersa on hard numbers: “There is no real room for manouvering”.

Speaking to the possibility of a substantial price hike, he said Nersa was unlikely to agree. “It is very much like union negotiations. Nersa has almost never given Eskom what they asked for. It is always a little less.”

He added: “Medupi and Kusile power stations put us and Eskom where we are today. Both of them cost more than double what was projected. We are suffering the consequences of these two projects today.

“Eskom must be careful to not price themselves out of a formerly captive market. I suspect those with the money to do it have already put solar in their houses. The cost of installation is what is keeping others from doing that. Should this become cheaper while the price of Eskom power increases, the national utility will run into terminal issues at some point.”