• South Africa approves 18.36% residential power hikes over two years

• NERSA allows Eskom to recover $3.4 billion after pricing error

• Heavy industries receive tariff relief as households face rising costs

Residential electricity bills in South Africa are set to rise by nearly 18.36% over two years. This follows a decision by the National Energy Regulator of South Africa (NERSA) authorizing state utility Eskom to recover $3.4 billion in additional revenue. Electricity consumption tariffs will increase by 8.76% in 2026/27 and 8.83% in 2027/28. These figures replace the 5.36% and 6.19% hikes initially planned. 

The increase stems from a calculation error by NERSA during Eskom's multi-year price determination. In January 2025, the regulator underestimated the utility’s costs, resulting in an estimated revenue shortfall of $6.7 billion. To offset the gap, the two parties agreed to recover $3.4 billion from residential consumers without a public consultation.

The NGO AfriForum challenged this process in court. In its judgment on Dec. 21, 2025, the court stated that “Nersa was clearly embarrassed by its mistake. Its purpose in entering into the agreement was, at least partially, to avoid public scrutiny of its error.”

The court further criticized the compromise. It stated that “The absence of any explanation as to how the compromise amount of 54 billion rand was arrived at leaves one with the uncomfortable feeling that the compromise was little more than a thumb-suck.”

Process restarted

Following the ruling, NERSA reopened the process through a public consultation. It published a consultation document on Dec. 30, 2025, and recalculated Eskom's regulatory asset base using the same data submitted in the initial application. On Feb. 8, 2026, the regulator confirmed the same amount of $3.4 billion to be recovered. This will be distributed in three phases: $748 million in 2026/27, $1.44 billion in 2027/28, and $1.19 billion in 2028/29.

Eskom’s costs have increased over two decades due to factors including inflation, inefficient management, and a high wage bill. According to economist Dawie Roodt, the regulator has no reliable market mechanism to determine the fair price of electricity, leaving Eskom to pass its excess costs on to consumers. Electricity prices have multiplied eightfold since 2008. The planned increases exacerbate the pressure on households.

Relief for heavy industries

The increase comes as NERSA has recently granted relief to the most energy-intensive industries. Two ferrochrome producers, Samancor Chrome and Glencore-Merafe, are benefiting from a temporary 35.6% reduction in their tariffs. Rates were lowered from 135 to 87 South African cents ($0.08 to $0.05) per kilowatt-hour, with the suspension of the take-or-pay mechanism.

The move aims to prevent smelter closures and the loss of thousands of jobs in a sector weakened by soaring energy costs. A 6% reduction in the price of gas was also finalized to support industries dependent on Sasol Gas, notably in chemistry, petrochemistry, and fuel production. The Secunda industrial complex consumes approximately 120 million gigajoules of gas per year for its furnaces and facilities.

Olivier de Souza