• Lecturer at the University of the Witwatersrand’s African Energy Leadership Centre, Steven Matome Mathetsa has outlined how extreme proposed tariff hikes are.
• These hikes would serve only to harm the most vulnerable South Africans.
• Instead the lecturer has outlined suggestions for ways government can improve the landscape for citizens and Eskom alike.

Earlier this year Eskom had the gall to ask the National Energy Regulator to hike the price of electricity to 36.1 percent in 2026. As you might expect the response to this from the public was swift and vicious because frankly, citizens are barely making ends meet.

This proposed increase must also be looked at through the lens of an 18 percent increase in 2023 and a 13 percent increase this year. But lecturer at the University of the Witwatersrand’s African Energy Leadership Centre, Steven Matome Mathetsa has put these increases into a context that should help in the fight against the proposed 36.1 percent increase.

This context is framed by two things – the economy and unemployment. As Mathetsa notes, South Africa’s unemployment rate sits at an extreme 33.5 percent, the economy meanwhile only grew 0.6 percent in 2023. Perhaps most importantly, however, the lecturer points out that while Eskom applies for these increases, the rates it requests are so far beyond inflation – currently at 3.8 percent – one has to wonder where the utility believes South Africans will make the money appear from.

South Africans are stretching their Rands further and further but eventually something will break and we suspect a 36.1 percent increase in electricity tariffs will be that breaking point.

“South Africans and businesses in the country have little choice about where they source their energy. Eskom is still the sole supplier for nearly all the country’s electricity needs. This means that ordinary citizens are likely to continue relying on electricity supplied by Eskom, irrespective of the costs. The high costs affect businesses negatively. Large industrial and small, medium, and micro enterprises have all highlighted that costs associated with utilities, mainly electricity, are affecting their sustainability,” Mathetsa writes.

The self-feeding problem

For many, the solution to a rise in tariffs is to switch to solar power and lower reliance on Eskom. However, this creates a problem for Eskom.

As the Wits lecturer notes, the migration of customers away from Eskom has led to a 2 percent drop in revenue at Eskom. Couple this with non-payment of bills and the utility is in dire need of funds. So, to alleviate this it approaches the National Energy Regulator of South Africa to recoup those funds through increased tariffs.

For those who can’t move to solar power, this means constant increases both from Eskom and their municipality.

However, in the context of global energy supply, South Africa aligns its energy framework with the World Energy Trilemma Index. This promotes a balance between energy security, affordability and sustainability and should help promote a just energy transition from coal and other fossil fuel based sources to other energy sources.

“South Africa is currently unable to meet these goals because of different energy policies that do not align, a lack of investment in electricity and dependency on coal-fired power. Electricity is increasingly becoming unaffordable in the country. Although there’s been a recent reprieve from power cuts, security of supply is still uncertain,” says Mathetsa.

Load reduction for instance is still plaguing many areas in South Africa. Load reduction sees Eskom limiting supply to areas where illegal connections are rife. The trouble here is that often, these areas are home to low-income citizens who can’t afford increased tariffs. As Eskom increases tariffs, theft of electricity goes up necessitating more load reduction, leading to lower revenue which ultimately, will lead to Eskom hiking those tariffs again.

Solving the problem

To address this problem, Mathetsa has five suggestions worth considering so that vulnerable communities aren’t left holding the bag once the wealthy are pre-occupied with how much juice their batteries are getting.

The first of these solutions is a reworking of the tariff application methodologies. It can’t be the case that Eskom can apply for increases when it fails to operate its business effectively.

These bleeds into the second solution proposed by the lecturer, Nersa needs to get stricter. The regulator needs to hold Eskom accountable for its failings especially when the quality of service is low and funds are mismanaged. Municipalities should also be held to account for a failure to pay what Eskom is due.

The third solution is for government to be more mindful of tariff increases against the backdrop of inflation and the cost of living. If South Africans are already struggling to make ends meet right now, why does government believe things will be different in a year? A 36 percent increase in electricity will lead to increased poverty, higher rates of non-payment and as a result, lower revenue from the sale of electricity.

“Fourthly, communities can play a vital role in saving electricity at a household level. This will reduce the country’s overall energy consumption. Furthermore, both small and large businesses should continue to consider alternative energy technologies while implementing energy saving technologies. Lastly, the level of free-basic electricity is not sufficient for poor households. Subsidy policies should also be reviewed to allow users access to affordable electricity as their financial situation changes negatively,” the lecturer explains.

All of this can be boiled down to a simple statement – Government needs to be more mindful of how its policies affect all South Africans.

Right now though, Mathetsa’s words may fall on deaf ears given that aside from public comment, there appears to be little to no push back from officials regarding Eskom’s proposed tariff hikes.

Let’s hope that cooler heads prevail and we aren’t paying over a third more form power than we are right now by April next year.