Market inquiry launched to address electricity cost concerns

The National Energy Regulator of South Africa (NERSA) has officially initiated a comprehensive market inquiry into the fixed and capacity charges levied by electricity distributors, including Eskom and various municipalities. 

This move aims to address growing concerns about the rising electricity costs and the structure of tariff increases.

In a statement released at the weekend, NERSA spokesperson Charles Hlebela said the inquiry was due to the concerns raised by customers.

“This market-wide inquiry responds to widespread concerns from customers and stakeholders about the impact of these charges, as well as the level of increase imposed, and the structure and justification of these charges,” he said.

NERSA stated that the inquiry will scrutinise the genesis and implementation of fixed charges, generation capacity charges (GCC), and legacy charges, among other related fees. 

The organisation said the inquiry is being conducted under the Electricity Regulation Act, 2006 (Act No. 4 of 2006), with the intent to reveal how such charges have led to significantly high increases over and above Eskom’s approved 12.74% tariff hike.

“This market inquiry... aims to reveal how the distributors formulated the charges, which resulted in substantially high increases being added to the approved 12.74% tariff increase for Eskom, as well as assess the impact of these charges on different customer segments, and evaluate their alignment with approved tariff methodologies. 

“This evidence-driven process is intended to enhance transparency, foster regulatory certainty, and ensure that tariff structures remain equitable and economically sustainable,” said Hlebela.

NERSA’s full-time regulator member responsible for Electricity Regulation, Nomfundo Maseti, highlighted the regulator’s commitment to balancing consumer protection and sector viability. 

“This inquiry underscores NERSA’s commitment to safeguarding the interests of electricity users while ensuring the sector's financial viability.

“By engaging stakeholders and rigorously interrogating the basis of these charges, we aim to deliver regulatory guidance that promotes fairness, cost-reflectivity, and stability in the electricity market,” she stated.

The regulator stated that the inquiry will primarily focus on municipal fixed charges and Eskom’s unbundled generation tariffs, including the generation capacity, legacy, and variable energy charges.

In addition, it will involve a detailed process including data requests, benchmarking exercises, stakeholder written submissions, and public hearings.

Stakeholders are invited to submit written representations and supporting evidence within 30 days of the Terms of Reference (TOR) publication on September 25, with the closing date set for October 25. 

A public hearing is scheduled for November 17 to ensure procedural fairness and adherence to the Promotion of Administrative Justice Act. 

The Market Inquiry Report will be drafted in December 2025, with the final report slated for early 2026.

“NERSA encourages all affected parties — from residential and commercial customers to municipalities and Eskom, as well as industry associations — to actively participate in this inquiry.”

Submissions and queries should be sent to electricity.marketinquiry@nersa.org.za