Eskom could come after South African electricity users for an extra R40 billion
South African consumers could end up paying Eskom at least R40 billion more after years of mistakes by the country’s energy regulator, NERSA.
These mistakes were made in calculating the revenue the power utility is entitled to recover through electricity tariffs.
It was reported that this follows a court-approved settlement between Eskom and the National Energy Regulator of South Africa (NERSA) that quietly concluded several legal disputes earlier this year.
The settlement, which the court ordered in May 2025, relates to so-called “clawbacks” for the financial years 2014/15 to 2020/21.
Eskom had disputed NERSA’s revenue decisions for those years, arguing it had been under-compensated due to errors in the way the regulator applied its own methodology.
The court found in Eskom’s favour, granting the utility the right to recover an additional R40 billion from customers. However, the court left the timing of those recoveries in NERSA’s hands.
Eskom has now launched another challenge, which targets NERSA’s most recent revenue and tariff determinations for the current and next two financial years.
The utility argues that further errors, especially in the treatment of its Regulatory Asset Base, mean it is being short-changed again, and it wants the latest determinations set aside.
Eskom had applied for a tariff increase of 36.15% for 2025/26, followed by 11.81% and 9.1% in the subsequent two years.
However, Nersa only approved an average increase of 12.74% for 2025/26, effective from 1 April 2025, and further increases of just 5.36% and 6.19% for the two years that follow.
After Nersa published its reasons for the decision in June, Eskom filed papers asking the courts to review and overturn it.
Eskom’s issue is with how NERSA calculated the Regulatory Asset Base (RAB), the value of Eskom’s generation and transmission infrastructure.
This figure determines the return Eskom can earn and how much it is allowed to recover through tariffs.
More price pain on the cards
According to energy expert Ruse Moleshe, Eskom believes NERSA failed to properly include key assets in the RAB, including the Koeberg nuclear power plant.
“Eskom is arguing that NERSA, in terms of looking at the asset base and how they’ve evaluated them, has made a mistake,” she explained.
“If the base is wrong, then the actual assessment is incorrect, and Eskom will want to recover that.”
Moleshe said this scenario is not new and has played out before. “It has happened before where Nersa has been wrong and Eskom has been right.” Given that history, she said, this latest case could follow a similar trajectory.
The implications for electricity users are serious. If Eskom is successful in its latest challenge, consumers could face even more tariff hikes.
Moleshe highlighted that this would be on top of already steep increases and the R40 billion they are already on the hook for from the earlier settlement.
Other energy experts have noted that the more expensive power from Eskom becomes, the more people try and get off the grid. However, Moleshe warned that Eskom’s dominance still gives it enormous leverage.
“Eskom still supplies 95% of the country’s electricity. Some customers, like mines, need 24/7 power. They can’t easily move away,” she said.
Moleshe also acknowledged that Eskom’s requests aren’t entirely unjustified. “Eskom does need the money. That’s the crux of the issue.”
She argued that NERSA has a legal responsibility to apply its methodology fairly and independently, regardless of political or public pressure.
“Their role is not to play to any gallery. They are supposed to be independent and evaluate according to the methodology that is regulated.” Moleshe noted that political pressure on Nersa has intensified.
Even the Minister of Electricity had floated the idea of submitting a tariff application on Eskom’s behalf, which she said would be a clear conflict of interest. “That’s how much pressure there is.”
Asked whether regulatory reform is needed, Moleshe said it’s long overdue. “They were supposed to have changed the market price determination methodology a while back, but they didn’t get to that. We’re still using that methodology.”
She noted that the rules need to change in line with the shiftof South Africa’s electricity sector toward a more competitive model. “They are working on that… but it will take some time for that transition to be effective.”
Loading ...