Eskom tables tariff increase application

Debt relief package obligations, municipal debt, “correction” of National Energy Regulator of South Africa’s (Nersa) previous decisions and the energy industry undergoing a transition are among the reasons listed by Eskom for its Multi-Year Price Determination (MYPD) Revenue Application for the years 2026 to 2028.

The power utility is requesting a 12.74% tariff increase for 2025, 36.15% for 2026, 11.81% for 2027 and 9.10% for 2028.

In its application which will be out for public participation, Eskom outlined factors that had contributed to a challenging financial position.

“(Financial year) 2023 was a challenging year for Eskom from an operational point of view. Plant availability deteriorated to 56.03% with unplanned load losses rising to 31.92% and planned maintenance at 10.39%.

Load had to be curtailed by an estimated 13 476GWh, with load shedding on 280 days (2022: 65 days). Gas turbines produced 4 116GWh (2022: 2 725GWh) at a cost of R29.7 billion (2022: R14.7bn) for Eskom and IPP OCGTs.

“Overall, IPP programmes delivered about 5 100GWh less than anticipated, contributing to the generation capacity shortfall.

“Transmission system minutes performance deteriorated to 4.71 minutes (2022: 2.88 minutes), with one major incident. Distribution network performance remained resilient, with frequency and duration of supply interruptions well within target, although energy losses remain too high. Arrear municipal debt escalated to R58.5bn (2022: R44.8bn), where Nersa did not allow for any arrear debts in its revenue determination. From a financial sustainability point of view, the net loss after tax worsened to R23.9bn (2022: R11.9bn).”

On the 36% increase it is requesting for 2026, Eskom said this was driven by the impact of the “introduction of negotiated pricing agreements, correction of Nersa’s previous decisions and the need to improve the level of ROA (Return on assets) for migration towards sustainability”.

Highlighting the “limitation” on new borrowings which came as a condition of the last debt relief package Eskom said it needed to ensure that the balance of debt servicing costs, as well as the cash flows required for the capital investment programme, are “fully funded through cash generated from operations”.

Eskom added that the application came at a time when the industry was undergoing a transition.

“The Electricity Regulation Act (ERA) amendment bill is awaiting the approval of the President of the country to be finalised. The National Transmission Company of South Africa (NTCSA), a wholly owned regulated subsidiary of Eskom has been operationalised on 1 July 2024. The NTCSA will de facto become the Transmission System Operator (TSO) when the ERA amendment is implemented.”

The objective of the ERA amendment includes the provision for the establishment of the TSO and to provide for a competitive multi-market structure for the electricity industry.

Cosatu has, however, called on Nersa to reject Eskom’s proposed electricity tariff hike of 36.15% for 2026.

“Eskom’s proposed electricity tariff increase is unaffordable and will sink both businesses and citizens further into financial distress, particularly working-class and poor communities.

“The Federation calls on government to intensify support for Eskom to reduce its dependency on double-digit electricity tariff hikes, and for load shedding to remain a distant memory.

“Eskom and government must do their work and fix the leakages in Eskom, for example municipalities owing more than R80bn to the utility.

“As agreed to, in the Eskom Social Compact, all consumers must be moved to prepaid electricity meters.

Government must relieve Eskom of its debt commitments to it and allow it to invest in its own renewable energy generation capacity,” Cosatu said.

Public hearings on the application will held across the country starting November 18. Written comments can also be forwarded to mypd@nersa.org.za. The closing date for the submission of comments is November 1 at 4pm.

Cape Times