South Africa’s energy mess: Eskom’s R54bn error and how it costs you
South Africans are once again facing steep electricity hikes after the National Energy Regulator of South Africa (NERSA) admitted to a multibillion-rand mistake that will see Eskom recover an extra R54 billion from consumers.
The error occurred during the processing of Eskom’s sixth Multi-Year Price Determination (MYPD6), leading to what Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso has called a “regulatory farce”.
The adjustment will add roughly 8% to power tariffs in 2026 and 2027, pushing up costs for municipalities, businesses, industries, and households alike. Instead of creating cost discipline, the current Regulatory Clearing Account (RCA) mechanism allows Eskom to pass yesterday’s inefficiencies onto tomorrow’s consumers.
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Despite the RCA being designed to balance costs retrospectively, it has never resulted in price cuts—only increases. Mavuso argues that no other company in a competitive market would be allowed to operate under such a system.
The Energy Intensive Users Group (EIUG), which represents the country’s largest electricity consumers, has urged NERSA to reopen the tariff determination, citing a lack of transparency and the devastating impact on affordability.
Civil society organisations such as Outa and AfriForum are preparing legal challenges, questioning the constitutionality and fairness of secret settlements. Parliament’s portfolio committee on electricity and energy is also set to interrogate the regulator’s processes.
Eskom insists its tariffs are “cost reflective”, but critics point to rampant inefficiencies, a bloated workforce, and procurement corruption that inflates even basic purchases. Instead of driving reform, the settlement reinforces a cycle where South Africans bear the costs of mismanagement.
Since 2008, average electricity prices have surged more than eightfold, while Eskom’s sales volumes have fallen nearly 20%. For energy-intensive industries, power accounts for up to 40% of production costs, forcing closures and deterring investment.
NERSA had previously drafted a new Electricity Price Determination Methodology (EPDM) to replace the RCA but abandoned it in 2024 due to implementation challenges. Without urgent reform and a more competitive energy market, South Africa remains locked into escalating tariffs.
Mavuso warned that consumers are already seeking alternatives, with rooftop solar and private generation on the rise. Yet Eskom is fighting back with additional charges on solar users, further undermining energy affordability.
“The only way out of this absurd cycle is to accelerate the shift to a competitive electricity market,” Mavuso stressed. “That is the only pathway to rational pricing and sustainable economic growth.”
