The ‘secret’ R54 billion settlement deal between power utility Eskom and energy regulator Nersa has been nixed by the High Court, until the public has been sufficiently consulted.<\/p>\n\n\n\n
Nersa revealed in August 2025 that it had reached a settlement with Eskom behind closed doors, allowing the utility to collect an additional R54 billion in revenue from tariff hikes in 2026 and 2027.<\/p>\n\n\n\n
This was because Nersa had erred in its calculations when determining the allowable revenue in Eskom’s MYPD6 application.<\/p>\n\n\n\n
According to Eskom, R107 billion was excluded by Nersa; however, through the settlement, R54 billion would be collected over the next two years, with the balance to be drawn in thereafter.<\/p>\n\n\n\n
Because of this settlement, the electricity price hikes for 2026 and 2027, already running at double the inflation rate, would have been close to 9% for each of the next two years, almost triple the inflation rate.<\/p>\n\n\n\n
For context, the price of electricity has surged 265% over the past decade or so, higher than the 151% inflation. <\/p>\n\n\n\n
Salaries have not kept pace with rising costs, placing South African households under immense strain.<\/p>\n\n\n\n
Once the secret settlement came to light, the public backlash was immediate.<\/p>\n\n\n\n
According to energy expert Chris Yelland, the R54 billion error by Nersa was \u201cabsolutely astounding\u201d, especially in the context of how much Eskom has cost the country.<\/p>\n\n\n\n
He stated that massive, undeclared, imprudently incurred, and inefficient costs at Eskom have been passed on to customers in the form of higher tariffs over the past ten years.<\/p>\n\n\n\n
Eskom has long argued that its exorbitant tariff hikes are so that South Africans pay prices that reflect the cost of producing electricity. <\/p>\n\n\n\n
However, the “cost” aspect also includes a decade of inefficiencies and procurement corruption at the company, where it has overpaid inflated invoices and burnt through billions of rands in diesel.<\/p>\n\n\n\n
Considering this, Nersa should claw back these costs on behalf of electricity customers in the form of reduced tariffs, Yelland said.<\/p>\n\n\n\n
Instead, Eskom has gone the opposite direction, forcing customers to pay even higher tariffs, even as demand drops and it lays out ambitious expansion plans.<\/p>\n\n\n\n
Following the revelation of the R54 billion clawback, lobby group AfriForum and the Minerals Council of South Africa applied to the court to intervene.<\/p>\n\n\n\n
One of the key challenges was that neither Nersa nor Eskom consulted with the public in settling, nor were any details provided on how the number was reached.<\/p>\n\n\n\n
Nersa had argued that it wasn’t necessary to consult the public. However, the opponents argued that South Africans in general would be affected by the settlement and thus had a direct interest.<\/p>\n\n\n\n