The National Energy Regulator of South Africa (Nersa) has confirmed a R54 billion Eskom settlement. This decision follows errors in calculating Eskom’s revenue for the 2025–2028 period. Unfortunately, consumers will bear the brunt of this settlement through higher electricity tariffs in the coming years.
How the Eskom Settlement Came About
Eskom and Nersa have been in a long-running dispute over Eskom’s revenue determination for the 2025–2028 period. Eskom argued that Nersa made mistakes in its calculations, particularly in the depreciation rates and the regulatory asset base (RAB). Eskom estimated a R107 billion shortfall, which led them to take Nersa to court.
Instead of fighting the claim, Nersa chose to settle. On 30 July 2025, the two parties agreed to an R54 billion settlement. While Eskom will now have the funds it needs, the cost will be passed on to South African consumers through higher electricity bills.
What This Means for Your Electricity Bill
As a result of this settlement, Nersa will increase electricity tariffs. Here’s how it breaks down:
- 2026/27: Electricity tariffs will rise by 8.76%, an extra 3.4 percentage points higher than the originally planned 5.36%.
- 2027/28: Another increase of 8.83% is expected, instead of the earlier proposed 6.19%.
These increases are designed to cover the R54 billion settlement Eskom received. As a result, consumers will face higher electricity costs over the next few years. Many South Africans are already struggling with the high cost of living, and these additional increases will further strain household budgets.
Eskom and Nersa’s Legal Struggles
This Eskom settlement is part of an ongoing series of disputes between Eskom and Nersa. Eskom has often challenged Nersa’s revenue calculations and tariff decisions, especially in cases where it feels Nersa’s figures were inaccurate. Many of these challenges have ended in Eskom’s favour, with the courts forcing Nersa to revise its decisions.
For instance, earlier in 2025, Eskom challenged Nersa’s tariff determinations for the current and future periods. These disputes highlight the difficulties in balancing Eskom’s financial needs with the affordability of electricity for consumers.
Chris Yelland, an energy expert, has criticised Nersa’s repeated mistakes. “Nersa continues to make errors in its calculations, and these errors keep getting passed down to consumers,” Yelland pointed out. This issue adds to the financial burden already placed on South African households.
The Impact on South African Households
The rise in electricity tariffs will hit many South Africans hard. Already struggling with high living costs and regular power cuts, many consumers will find it even harder to manage their expenses.
The Green Connection, an environmental rights group, expressed concern about the fairness of the tariff hikes. “For many South Africans, electricity has become unaffordable. “This settlement will make things even worse,” said Liziwe McDaid, a representative of the group. The group warns that these increases will disproportionately affect lower-income households, who are already under financial strain.
These concerns point to the need for better financial management and more transparency in how tariffs are determined. It’s crucial that the government ensures electricity costs are affordable for all South Africans, especially those most in need.
What’s Next for South Africa’s Energy Sector?
While this settlement may provide Eskom with immediate relief, it doesn’t address the long-term challenges facing South Africa’s energy sector. Eskom’s ongoing financial difficulties and the country’s power supply issues are far from over. The question remains: will this settlement stabilise Eskom, or is it just a temporary fix?
The situation also raises important questions about the role of Nersa. Its repeated errors in calculating Eskom’s revenue show that the current regulatory system needs to improve. The government must find a way to ensure that both Eskom and consumers are treated fairly.
South Africa’s energy future depends on finding a more sustainable solution. Eskom needs to be financially stable, but it’s equally important that electricity remains affordable for South African households.
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The Cost of the Eskom Settlement Falls on Consumers
The R54 billion Eskom settlement is a reminder of the ongoing struggles within South Africa’s energy sector. While Eskom may have received the funds it needed, it is South African consumers who will foot the bill. With electricity tariffs expected to rise by as much as 8.76% and 8.83% over the next two years, the financial burden on households will be significant.
This settlement highlights the need for greater accountability from both Eskom and Nersa. South African consumers are already under financial strain, and further increases in electricity prices will only worsen the situation. Moving forward, it’s crucial that Eskom and Nersa work together to ensure that such mistakes do not happen again and that consumers are not unfairly burdened with the costs.