Just when South Africans thought they were rid of constant load shedding, Eskom increased municipal tariffs by 12.74% in July. The tariff hike has left ordinary households and the agricultural sector concerned about the affordability of electricity.
Electricity tariff increases in South Africa are a complex issue influenced by Eskom’s operational costs, financial debt, infrastructure maintenance, regulatory decisions, and the broader energy transition.
The power utility determined a 12.74% municipal increase effective from the 1 July 2024 until 30 June 2025 for Eskom’s direct customers. The increase was approved by the National Energy Regulator of South Africa (Nersa).
Renewable energy expert Prof. Sampson Mamphweli explained that electricity tariffs in South Africa are assessed on a multi-year basis and revised annually based on the cost of electricity supply from the previous financial year.
Tariff increases explained
“The tariffs were not cost-reflective for many years, especially on the side of Eskom. That’s why Eskom always applies for higher tariffs and gets lower approvals from Nersa. The balance was normally recovered through the regulatory clearing account, which looks back at the actual cost of electricity supply,” he said.
Mamphweli added that municipalities do not include maintenance costs for infrastructure like transformers and power lines in their tariffs.
“This led to dilapidating infrastructure over time and the need to work the maintenance funding into the tariffs. Eskom generation had to get money from the government to service their debt and use their balance sheet to maintain their power stations because they could not collect enough revenue from tariffs to service both the debt and the maintenance of the power stations, ” Mamphweli said.
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Martin van Rooi of Boerdery Onderbegin in the Northern Cape highlighted the strain the tariffs will have on producers in the winter rainfall regions who rely on irrigation during summer.
“It’s a massive impact on us because I don’t know how we will pay everything because that increase is too much, it’s way too much. And when the summer comes, the pumps must run every day,” he expressed.
Van Rooi raised the need for the government to urgently address and find solutions to these rising costs as they heavily impact everyday life and economic activities.
“Our government must come together and speak and try to sort that thing out because even in the household it is expensive. You cannot buy R100 electricity to get 31 units. How will you manage to go through the month if you spend a lot of money on electricity? In farming, in businesses, it’s more than expensive,” said Van Rooi.
Meanwhile, Dibesho Serage, the managing director of Groundstone Group in Limpopo, said they are not particularly affected by the electricity tariff hikes.
“We are running on solar, so we’ve got [an] alternative power supply here in the form of solar panels. So, it does not have so much of a bearing for us because the solar panels are carrying 95% of the load at the farm. The small portion that remains is sort of negligible for us,” he said.
Serage explained that because of the continuous power supply from the solar panels, this alternative energy solution has kept his operations stable.
Knock-on effect on other products
However, Phaladi Matsole, the managing director of Sebata maize meal, echoed the grievance of many Eskom customers.
“The increase of tariffs is too steep for our ailing economy, clearly the energy regulator was not mindful of other factors complementing the growth of the economy,’’ he said.
The absence of load shedding has been a relief for the agriculture sector, however, Matsole expressed that agribusinesses are still recovering from the impact it had over the years.
“I’m thankful that we had almost four months without load shedding. Now this sharp increase in electricity [tariffs] is impeding the agribusiness sector from gaining a full process of healing from damage and scars caused by load shedding.
“It is one problem after the other. Power supply is constant but with high pricing of electricity, price of food and other contemporary products are likely to increase in the next two or three months,” he said.
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