Eskom’s latest double-digit electricity price hike is now in effect – and several experts, including former CEO Andre De Ruyter, say these price hikes are unsustainable despite being necessary. <\/p>\n\n\n\n
Last month, Eskom was granted a 12.74% increase for its direct customers by the National Energy Regulator of South Africa (Nersa). <\/p>\n\n\n\n
This increase is coupled with a 25.64% affordability subsidy. The average increase for key industrial and urban tariffs will be 13.29%, which is due to the increase in the affordability subsidy charge. <\/p>\n\n\n\n
The affordability subsidy charge is given as a subsidy to the Homelight 20A tariff and is determined by Nersa. <\/p>\n\n\n\n
Eskom explained that it is paid by the non-municipal large industrial and urban tariffs and exists because of historically lower Homelight 20A tariff increases.<\/p>\n\n\n\n
Nersa also granted a 12.72% increase to municipal customers. However, while Eskom\u2019s prices go up today, municipalities will only increase their customer tariffs on 1 July.<\/p>\n\n\n\n
According to an economic bulletin published<\/a> by the South African Reserve Bank (SARB) \u2013 written by economists Zaakirah Ismail and Christopher Wood \u2013 since load shedding started in 2008, electricity has increased by a shocking 450%, drastically outstripping CPI by 352%, with inflation recorded at 98% over the same period.<\/p>\n\n\n\n Unsustainable<\/strong><\/p>\n\n\n\n While the everyday South African will only feel the pinch of the tariff increase in July, many experts have already raised concerns regarding increases, including former CEO Andre De Ruyter.<\/p>\n\n\n\n Following the implementation, several economists have noted that this increase will further burden cash-strapped South Africans and businesses that have also been hit with consecutive fuel price increases since February 2024.<\/p>\n\n\n\n “South Africans find themselves in a very tough position, and those who can afford it will simply move to other forms of electricity such as solar,” said<\/a> economist Mudiwa Gavaza in an interview with Newzroom Afrika.<\/p>\n\n\n\n From the beginning of 2023 to the end of 2025, RMB estimates that the private sector will add over 6,000 MW to the grid. <\/p>\n\n\n\n From 2025 to 2030, it will add a further 19,300 MW.<\/p>\n\n\n\n Independent energy expert Mohammed Madhi told eNCA<\/a> that renewable electricity prices, like solar PV, decrease year-on-year while Eskom prices increase.<\/p>\n\n\n\n Madhi argues that Eskom is shooting itself in the foot with the above-inflation electricity price increases.<\/p>\n\n\n\n \u201cWe have already reached the point where renewable electricity prices are cheaper than Eskom\u2019s rates,\u201d he said.<\/p>\n\n\n\n However, only wealthier South Africans can afford these alternative options, while poorer citizens still rely on Eskom.<\/p>\n\n\n\n Andre de Ruyter explained that if this trend continues, Eskom will be left with only non-paying customers, who can either not afford electricity or refuse to pay, which includes private citizens and municipalities.<\/p>\n\n\n\n Despite these red flags, De Ruyter added Eskom needs more electricity price hikes to survive.<\/p>\n\n\n\n