Staff Writer17 March 2023

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After granting Eskom a 18.65% price hike in January, the national energy regulator Nersa has now approved a 18.49% hike for municipalities.

The increase for Eskom’s standard tariff customers will be effective from 1 April 2023 and for municipalities from 1 July 2023.

Nersa said that key industrial and urban customers would realise an 18.65% increase and an additional 7.37c/kWh to cater for the subsidy, which increases from 5.69c/kWh resulting in a 29.53% increase.

Municipalities will experience a slightly lower hike at 18.49% because they will not experience an increase in the first three months (April to June) of Eskom’s financial year – their financial year starts on 1 July.

The table below shows the retail tariff adjustments for 2023-2024:

The regulator added that tariffs exclude value-added tax (VAT) as the Minister of Finance Enoch Godognwana determines the rate.

“The Minister of Finance last proclaimed a VAT increase in 2018, from 14% to 15%,” said Nersa.

Eskom will ensure that its approved Schedule of Standard Prices for 2023/24 is published on its website and communicated to all customers, it added.

Nersa’s proposed increase faced major public backlash from already cash-strapped South Africans who have experienced restricted access to electricity. Load shedding has been implemented every day this year so far. South Africa has been in a near-permanent state of load shedding since September 2022.

The hike has also been widely rejected as unaffordable by municipalities, businesses and even president Cyril Ramaphosa. The president even went so far as to suggest that Eskom and Nersa delay or stagger the increase to ease the burden on South Africans at large.

However, the Nersa approval is final and can only be undone through legal processes. The president subsequently walked back on his comments, acknowledging the regulator’s independence.

Eskom has welcomed the hike, even though it was far below its application of 32%. The embattled power utility said that tariffs need to reflect the cost of producing electricity, as this is essential for the company to resolve its financial issues and to service its debt and take on critical maintenance.

One of the major issues that remain is non-payment by customers, however. Regardless of how high Eskom hikes tariffs, municipal customers simply do not pay their bills, with the group sitting with a municipal debt bill over R50 billion.

To help address its financial issues, National Treasury has agreed to take on R254 billion of Eskom’s debt over three years. R168 billion in the form of capital and R86 billion will be in interest.

“Because of the structure of the debt relief, Eskom will not need further borrowing during the relief period. The government will finance the arrangement through the R66 billion baseline provision announced in the 2019 Budget and R118 billion in additional borrowings over the next three years,” Treasury said.

Customers who are aggrieved by the tariff hikes will take is further incentive to move off of Eskom’s grid. To this end, Treasury has also implemented a rooftop solar tax break.

From 1 March 2023 to March 2024, households that install rooftop solar panels can claim a rebate of 25% of the cost of the panels in the 2023/24 tax year, up to a maximum of R15,000.