{"id":840346,"date":"2025-10-20T09:26:43","date_gmt":"2025-10-20T07:26:43","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=840346"},"modified":"2025-10-20T09:39:20","modified_gmt":"2025-10-20T07:39:20","slug":"south-africans-say-goodbye-to-eskom","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/840346\/south-africans-say-goodbye-to-eskom\/","title":{"rendered":"South Africans say goodbye to Eskom"},"content":{"rendered":"\n<p>Eskom&#8217;s steep electricity price increases have gutted demand for its product, and promises of single-digit increases going forward come far too late to stop it from sinking.<\/p>\n\n\n\n<p>This is according to a new demand analysis from independent energy analyst Pieter Jordaan, showing how the power utility&#8217;s price increases and tariff reforms have steered customers away.<\/p>\n\n\n\n<p>Jordaan looked at South Africa&#8217;s electricity expense-to-income ratio, often referred to as <strong>energy burden<\/strong> to track the percentage of a household&#8217;s income on electricity costs.<\/p>\n\n\n\n<p>&#8220;A household is considered to have a high energy burden if this ratio exceeds 6% of their income, and severe if it exceeds 10% of their income,&#8221; he said.<\/p>\n\n\n\n<p>&#8220;Beyond a 6% burden, households start to limit their electricity consumption to match their income growth, or look for cheaper substitutes such as wood, paraffin, gas or solar power.&#8221;<\/p>\n\n\n\n<p>He assessed the energy burden between 1996 and 2025 using two profiles:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Low-income Households (LIH)<\/strong>, with an income of R5,000 per month, consuming 150 kWh\/m on Eskom&#8217;s HomeLight 20A tariff.<\/li>\n\n\n\n<li><strong>Middle-income households (MIH)<\/strong>, with an income of R22,500 per month after tax, consuming 600 kWh\/m on Eskom&#8217;s HomePower 4 tariff.<\/li>\n<\/ul>\n\n\n\n<p>According to Jordaan&#8217;s calculations\u2014based on Eskom&#8217;s own data and official figures from Stats SA\u2014up to March 2008, LIH carried an energy burden of ten basis points higher than MIH.<\/p>\n\n\n\n<p>In 2008\/9 and 2025\/6 Eskom restructured its retail tariffs so aggressively, that by 2025\/6 MIH now carry a burden that is 340 basis points higher than LIH.<\/p>\n\n\n\n<p>By 2020 the energy burden for MIH had escalated from 3.5% to 6.2%, which is considered a high burden. <\/p>\n\n\n\n<p>Eskom restructured its fixed charges substantially in 2025\/6, having the effect of increasing the energy burden for MIH by 22% from 8.9% to 10.9%, creating a severe burden.<\/p>\n\n\n\n<p>Jordaan warned that this will only get worse. <\/p>\n\n\n\n<p>Because Eskom&#8217;s tariff restructuring in 2025 is phased\u2014with only 20% of the change kicking in this year\u2014the tariffs will escalate steeply in 2026\/7 and 2027\/8 as more fixed charges are phased in.<\/p>\n\n\n\n<p>Based on the Nersa-approved increases, the MIH <strong>energy burden is set to reach 14.7% by 2027\/8.<\/strong><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Energy-burden.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"910\" height=\"763\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Energy-burden.jpg\" alt=\"\" class=\"wp-image-840347\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Energy-burden.jpg 910w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Energy-burden-300x252.jpg 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Energy-burden-768x644.jpg 768w\" sizes=\"auto, (max-width: 910px) 100vw, 910px\" \/><\/a><\/figure><\/div>\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-sales-vs-burden.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"913\" height=\"768\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-sales-vs-burden.jpg\" alt=\"\" class=\"wp-image-840349\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-sales-vs-burden.jpg 913w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-sales-vs-burden-300x252.jpg 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-sales-vs-burden-768x646.jpg 768w\" sizes=\"auto, (max-width: 913px) 100vw, 913px\" \/><\/a><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\">Empty promises as Eskom sinks<\/h2>\n\n\n\n<p>Energy minister Kgosientsho Ramokgopa last week <a href=\"https:\/\/mybroadband.co.za\/news\/energy\/614502-electricity-and-energy-minister-read-eskom-the-riot-act-on-electricity-prices.html\"><strong>promised that the government had found a &#8220;path forward&#8221; on electricity pricing in South Africa<\/strong><\/a>, stating that the days of double-digit increases for Eskom are over.<\/p>\n\n\n\n<p>While the minister&#8217;s statements make for great headlines and media clips, they effectively amount to nothing.<\/p>\n\n\n\n<p>After its latest MYPD6 approvals by Nersa, Eskom had already indicated that it was on a single-digit tariff increase path. <\/p>\n\n\n\n<p>Even with <a href=\"https:\/\/businesstech.co.za\/news\/energy\/836185\/eskom-electricity-price-shock-for-south-africa-with-even-bigger-increases-on-the-way\/\"><strong>Nersa&#8217;s R54 billion blunder factored<\/strong><\/a> in, increases for 2026 and 2027 were single digit (circa 9%)\u2014with no intervention from the government.<\/p>\n\n\n\n<p>However, the real issue is that even with inflation-tied increases, the damage has already been done. Without a massive reduction in electricity prices, Eskom is already in what Jordaan calls &#8220;demand quicksand&#8221;.<\/p>\n\n\n\n<p>After two consecutive 30% price-shocks in 2008\/9 and 2009\/10\u2014exacerbated by the global financial crisis\u2014demand stopped growing for five years. <\/p>\n\n\n\n<p>&#8220;Eskom seemingly realised that the increases stifled demand and slashed its tariffs by 10% in 2011, which only marginally stimulated demand. Economic growth returned in 2014-16, so did demand and load shedding,&#8221; Jordaan said.<\/p>\n\n\n\n<p>As South Africa&#8217;s energy burden increased, demand started tanking. Recent spikes in demand are due to load shedding effectively ending, but remain far from that seen in the past.<\/p>\n\n\n\n<p>In fact, &#8220;from 2019 onwards, Eskom residential demand started to freefall,&#8221; Jordaan noted, with Eskom&#8217;s residential demand being in decline at a compound rate of 5% per year.<\/p>\n\n\n\n<p>In 2025 a &#8220;spike&#8221; of less than 0.1 GW was observed and overall demand has not yet bottomed out. <\/p>\n\n\n\n<p>&#8220;This is a clear indication that demand for Eskom&#8217;s power has taken a severe hit; and historic data shows that demand losses are permanent from 2018 onward due to the overpricing of its product,&#8221; Jordaan said.<\/p>\n\n\n\n<p>Jordaan said that this is the &#8216;demand quicksand&#8217; that Eskom finds itself in, where its inability to operate efficiently and continued price increases are killing its business case.<\/p>\n\n\n\n<p>&#8220;It is unable to rectify the crisis with a competitive pricing strategy,&#8221; he said. <\/p>\n\n\n\n<p>Even with promises from government that electricity price increases will be single digit from here on out, the fact is that prices have already increased far beyond affordable.<\/p>\n\n\n\n<p>Eskom electricity prices have increased by 937% since 2007, while inflation over the same period was 155%.<\/p>\n\n\n\n<p>By using the pricing signal at a 5.6% energy burden in 2018, Jordaan said it is possible to mathematically extrapolate the &#8220;fair maximum price point&#8221; for HomePower 4 in 2025\/6 at R2.11 per kWh. <\/p>\n\n\n\n<p>At the current rate of R4.11 \/kWh, <strong>this charge is 95% overpriced<\/strong>, he said.<\/p>\n\n\n\n<p>Similarly, the pricing signal for LIH was at 4.7% energy burden in 2018, and indicates a maximum price point for LIH at R1.57 \/kWh. The current tariff of R2.49 is therefore <strong>58% overpriced<\/strong>.<\/p>\n\n\n\n<p>At these levels, there does not appear to be any way for Eskom to climb out of the demand quicksand.<\/p>\n\n\n\n<p>&#8220;(Eskom) appears to be doomed to chronic hand-outs for its survival by its single shareholder \u2013 the South African taxpayer,&#8221; Jordaan said.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-demand-vs-average.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"912\" height=\"761\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-demand-vs-average.jpg\" alt=\"\" class=\"wp-image-840351\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-demand-vs-average.jpg 912w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-demand-vs-average-300x250.jpg 300w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/10\/Eskom-demand-vs-average-768x641.jpg 768w\" sizes=\"auto, (max-width: 912px) 100vw, 912px\" \/><\/a><\/figure><\/div>","protected":false},"excerpt":{"rendered":"<p>Eskom&#8217;s steep electricity price increases have gutted demand for its product, and promises of single-digit increases going forward come far too late to stop it from sinking.<\/p>\n","protected":false},"author":10,"featured_media":642081,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[1164,17989],"class_list":["post-840346","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-eskom","tag-pieter-jordaan"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840346","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=840346"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840346\/revisions"}],"predecessor-version":[{"id":840361,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/840346\/revisions\/840361"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/642081"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=840346"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=840346"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=840346"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}