{"id":836284,"date":"2025-08-28T14:29:37","date_gmt":"2025-08-28T12:29:37","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=836284"},"modified":"2025-08-28T14:30:12","modified_gmt":"2025-08-28T12:30:12","slug":"r50-billion-kick-in-the-teeth-for-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/836284\/r50-billion-kick-in-the-teeth-for-south-africa\/","title":{"rendered":"R50 billion kick in the teeth for South Africa"},"content":{"rendered":"\n

South Africa\u2019s energy regulator will allow Eskom to raise electricity prices by more than previously permitted after the parties reached a R54 billion settlement, potentially fueling inflation and further alienating customers as demand wanes.\u00a0<\/p>\n\n\n\n

This victory for the state-owned electricity company, which challenged a January decision by the National Energy Regulator of South Africa, will see prices rise 8.76% in the year starting April 1 compared with an original hike of 5.36%, Nersa said in a statement late Wednesday. <\/p>\n\n\n\n

This far exceeds the South African Reserve Bank\u2019s forecast for inflation to average 3.3% this year and next.<\/p>\n\n\n\n

The central bank will have less room to lower interest rates as it tries to bring consumer inflation down to its 3% goal, and it may also stifle economic growth as it raises costs for companies and consumers, said Joshua Mahony, chief market analyst at Scope Markets Ltd.<\/p>\n\n\n\n

\u201cYou\u2019re going to have to see an uplift in terms of the outlook going forward for forecasts for inflation,\u201d Mahony said. <\/p>\n\n\n\n

\u201cIt\u2019s damaging for the idea of excess money for businesses; so how much lower the margins of South African businesses will be, the spare cash that households will have to be able to spend will be lower.\u201d<\/p>\n\n\n\n

The central bank cut its benchmark rate by 25 basis points last month to 7%. Money markets predict it will remain on hold until March, when 25 basis points of easing are priced in. <\/p>\n\n\n\n

Government bonds edged higher on Thursday, with the yield on 10-year securities dipping two basis points to 9.57%. The rand was steady.<\/p>\n\n\n\n

Eskom wasn\u2019t immediately able to respond to a request for comment. <\/p>\n\n\n\n

The utility has warded off record power cuts that hobbled South Africa\u2019s economy in the last couple years by raising the reliability of its backbone of coal-fired units and stabilizing the grid.\u00a0<\/p>\n\n\n\n

At the same time, the government is moving forward with a plan to split Eskom into transmission, generation and distribution units and open the system to private generators that may offer cheaper prices for power. <\/p>\n\n\n\n

South Africans have also increased their use of solar panels, especially during the nation\u2019s streak of sustained outages, denting demand for power from the utility.<\/p>\n\n\n\n

The amount of electricity sold to customers dropped 11% through the four years from 2020.<\/p>\n\n\n\n

The regulator\u2019s tariff award in January was based on incorrect data and left it with a R107 billion revenue shortfall, Eskom argued in court papers, according to Nersa.\u00a0<\/p>\n\n\n\n

The settlement will also see prices rise 8.83% in the year starting April 1, 2027, instead of the 6.19% announced previously, according to Nersa. <\/p>\n\n\n\n

Eskom should be reimbursing customers, not the other way around<\/h2>\n\n\n\n
\"\"<\/a>
Energy expert Chris Yelland<\/figcaption><\/figure>\n\n\n\n

According to energy expert Chris Yelland, the R54 billion error by Nersa is “absolutely astounding”, especially in the context of how much Eskom has cost the country. <\/p>\n\n\n\n

He said that “massive undeclared imprudently and inefficiently incurred costs” at Eskom have passed through to customers in higher tariffs in the past ten years. <\/p>\n\n\n\n

Considering this, Nersa should be clawing back these costs on behalf of customers of electricity in the form of reduced electricity tariffs going forward, he said.<\/p>\n\n\n\n

“Eskom’s revenue in the 2024\/25 financial year is expected to be about R300 billion, so the R54 billion error means Eskom is being allowed an extra approximately 18% price increase over and above the MYPD6 price increases already granted.”<\/p>\n\n\n\n

The Democratic Alliance also took exeption to the situation, saying that it was incorrigable for South African citizens and businesses to keep paying for Eskom’s and Nersa’s inefficiencies.<\/p>\n\n\n\n

“South Africans, struggling under the weight of high electricity costs and a fragile economy, will now face additional tariff hikes on top of the already steep increases previously approved,” the party said.<\/p>\n\n\n\n

“Businesses, municipalities, and households will once again be forced to pay for the incompetence of the regulator and the inefficiency of Eskom.”<\/p>\n\n\n\n

South Africans will keep paying even more and even beyond a price hike.<\/p>\n\n\n\n

Higher prices that are more cost-reflective could spur demand for illegal electricity connections and vouchers, according to a January presentation by South Africa\u2019s auditor-general. <\/p>\n\n\n\n

The utility needs to cut expenses and improve collections of debt owed by municipalities, it said.<\/p>\n\n\n\n

Having stabilized the grid, Eskom is making moves to compete with established renewable-energy companies. <\/p>\n\n\n\n

That\u2019s included a plan to build green-power capacity of its own and calling for\u00a0proposals<\/a>\u00a0from large users to buy solar-generated electricity.<\/p>\n\n\n\n

Business-lobby groups earlier this month called for Eskom to withdraw its legal challenge against trading licenses granted by the national regulator. <\/p>\n\n\n\n

Electricity Minister Kgosientsho Ramokgopa echoed this, asking the utility to withdraw or suspend the action. Eskom maintains the action is, in part, necessary to protect low-income customers.\u00a0<\/p>\n\n\n\n

\u201cIf a group of contributing customers is removed from the cross-subsidy base, it will exert pressure on the remaining customers to shoulder the burden of the regulated obligations on Eskom and municipalities,\u201d it said in a separate response to questions Wednesday.<\/p>\n\n\n\n

Reporting with Bloomberg<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africans will be forced to pay over another R50 billion to Eskom, despite already paying a premium for years of its inefficiencies, corruption and load shedding.<\/p>\n","protected":false},"author":10,"featured_media":812933,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[5504,1164,2006],"class_list":["post-836284","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-chris-yelland","tag-eskom","tag-nersa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836284","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=836284"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836284\/revisions"}],"predecessor-version":[{"id":836285,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836284\/revisions\/836285"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/812933"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=836284"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=836284"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=836284"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}