Eskom's 66 Price Hike Proposal 'excessive' - Outa

The Organisation Undoing Tax Abuse Outa has made a submission to the National Energy Regulator of SA Nersa opposing Eskoms pricing application, saying this would result in a 66 price hike over three years.

This comes after Nersa received Eskoms Multi-Year Price Determination application for the years 2025/26 to 2027/28 MYPD6 and called for comment on the proposed tariff hikes in September with a closing date of 1 November.

South Africa cannot afford this, said Estienne Ruthnam, Outa Senior Project Manager.

Our submission addresses significant concerns regarding Eskoms proposed electricity price increases over the next three years, from 2025 to 2027. Outas core argument is that Eskoms application for a 66 revenue and price increase proposed at 36.15 for 2025, 11.81 for 2026, and 9.1 for 2027 is excessive and will have adverse impacts on South Africas economy, customers, and society.

Outa noted in its submission that these increases came on the back of massive revenue and price increases for Eskom over the past 15 years, and that the utility focused on ensuring cost reflectivity by increasing tariffs and revenue rather than by reducing costs and improving performance and efficiency.

The submission highlights issues such as the power utilitys insufficient focus on cost-cutting, outdated economic studies, and under-utilised cost-reduction strategies.

In its submission, Outa recommended that Nersa should reject the proposed increases as they were too high and would exacerbate the economic burden, especially as they exceeded inflation.

Outa urged Nersa to push Eskom towards cost reductions in staffing, maintenance, and energy procurement instead of passing rising costs on to consumers. It proposed that Nersa should initiate independent studies on Eskoms socio-economic impact, staffing levels, remuneration, and regulatory asset valuation to provide a balanced view of Eskoms costs.

The submission emphasised that Eskom must shift more rapidly toward affordable, sustainable energy sources, and avoid reliance on fossil fuels, while also restructuring and increasing competition within the energy sector.

Outas detailed, data-driven response seeks to persuade Nersa to scrutinise Eskoms approach, prioritise South African consumers, and ensure responsible regulation of electricity prices that balances economic stability with sustainable energy practices, the organisation said.

Nersa will hold public hearings on the Eskom application from 18 November to 4 December, and expects to make a decision on 20 December. The regulator said the main drivers of the request for price increases were the cost of primary energy, operating costs, the cost of independent power producers IPPs, international purchases and depreciation.

The Eskom MYPD6 application is calculated on a revenue requirement of R446 billion for the first year, then R495 billion and R537 billion for the subsequent years.

The increases follow two big increases for the last two years of 18.65 and 12.74.

This means the average price of electricity on the standard tariff has increased from 173.8 cents per kilowatt hour c/kWh in 2023/24 to 195.95c/kWh 2024/25 and, if Eskoms application is granted, will increase further to 266.78c/kWh 2025/26 to 298.27c/kWh 2026/27 and to 325.4c/kWh 2027/28.