Eskom’s tariffs set to surge

Key Topics.237% tariff increase over a decade: Tariffs have surged far beyond inflation.Projected 66% hike in 3 years: Outa warns of severe economic strain.Household costs to soar: Monthly bills could rise by up to R4,500..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..The seventh BizNews Conference, BNC#7, is to be held in Hermanus from March 11 to 13, 2025. The 2025 BizNews Conference is designed to provide an excellent opportunity for members of the BizNews community to interact directly with the keynote speakers, old (and new) friends from previous BNC events – and to interact with members of the BizNews team. Register for BNC#7 here..If you prefer WhatsApp for updates, sign up to the BizNews channel here.By Myles Illidge.Eskom has requested a 36.15% electricity tariff increase for 2025/26, bringing its Block 1 and 2 Homepower 4 tariffs to R3.84 and R6.18 per kWh, respectively..Ten years ago, these tariffs were R1.14 and R1.83 per kWh. If Eskom's electricity tariff increase for 2025/26 is approved, this would represent an increase of approximately 237% over ten years..Excluding the projection of Eskom's 2025/26 tariff application, the current Homepower 4 tariffs for Block 1 and Block 2 customers are R2.82 and R4.54, respectively..This represents a roughly 148% increase since 2015/16..For perspective, this means a household that consumes 450kWh of electricity per month is paying around R756 more each month than they were in 2015/16..Compared to inflation, the current Homepower 4 Block 1 tariff would be R1.00 less at R1.72 per kWh if Eskom's tariff increases aligned with inflation..Similarly, Block 2's tariff would be R2.76 per kWh instead of the R4.84 per kWh Block 2 customers are currently paying..From 2016/17 to 2018/19, Eskom's annual tariff increases largely aligned with inflation. However, the trends diverged from 2019/20 onwards as the power utility's tariffs increased faster than inflation..For perspective, Eskom's Homepower 4 Block 1 tariff increased by just R0.21 per kWh between 2015/16 and 2018/19..However, the tariffs increased by R0.58 per kWh over the next four years..Read more: Eskom's tariff overhaul risks repeat of Telkom's costly mistakes.Moreover, as the years progressed beyond 2019/20, the National Energy Regulator of South Africa (Nersa) approved proportionally higher tariff increases yearly, bringing the price trend further from inflation..Between 2019/20 and 2024/25, Eskom's Homepower 4 tariffs increased by roughly 84%, or nearly 17% each year..The chart below tracks Eskom's Homepower 4 Block 1 and Block 2 tariff increases from 2015/16 to 2024/25, with a projection for the 36.15% price increase requested for 2025/26..Homepower 4 tariffs from 2015/16 to 2024/25 are also plotted against inflation..Eskom's electricity tariff application for 2025/26 included price adjustment requests for the following two financial years: 2026/27 and 2027/28..The power utility requested increases of 11.81% and 9.1% in these years, respectively..The Organisation Undoing Tax Abuse (Outa) has highlighted that combined, the proposed electricity price hikes equate to a roughly 66% increase over the next three years..It opposed the proposed electricity price hikes in its submission to Nersa.."Outa's submission notes that these increases come on the back of massive revenue and price increases for Eskom over the past 15 years," said Outa.."Eskom focuses on ensuring cost reflectivity by increasing tariffs and revenue rather than by reducing costs and improving performance and efficiency.".The organisation believes the proposed increases are too high and will exacerbate the economic burden, mainly because they are higher than inflation.."South Africa cannot afford this," said Outa senior project manager Estienne Ruthnam.."Our submission addresses significant concerns regarding Eskom's proposed electricity price increases over the next three years, from 2025 to 2027.".It outlined several recommendations, including rejecting Eskom's proposed hikes, focusing on cost reflectivity, and improving transparency..MyBroadband demonstrated how the combined 66% price hike over three years would impact the electricity bills of households consuming between 600kWh and 1,500kWh per month using Eskom's Homepower 4 tariff..Currently, customers consuming 600kWh per month pay R1,692. If Nersa were to approve Eskom's application, this figure would increase to R2,808 monthly..Homepower 4 customers consuming 1,500kWh of electricity monthly currently pay around R6,810. With Eskom's proposed price adjustments, this would increase by nearly R4,500 to R11,302 per month..The table below compares monthly energy costs for households that consume 600kWh, 900kWh, 1,200kWh, and 1,500kWh monthly in 2024 to their monthly bills in 2027 if Eskom's tariff adjustments are approved as-is..We combined the Homepower 2 and 3 tariffs as they are similar..TariffHomepower 1Homepower 2 & 3Homepower 4600kWh per month2024 billR1,692.00R1,692.00R1,692.002027 billR2,808.00R2,808.00R2,808.00IncreaseR1,116.00R1,116.00R1,116.00900kWh per month2024 billR4,014.00R3,915.00R4,086.002027 billR6,661.53R6,497.23R6,781.02IncreaseR2,647.53R2,582.23R2,695.021,200kWh per month2024 billR5,352.00R5,220.00R5,448.002027 billR8,882.04R8,662.98R9,041.36IncreaseR3,530.04R3,442.98R3,593.361,500kWh per month2024 billR6,690.00R6,525.00R6,810.002027 billR11,102.55R10,828.72R11,301.70IncreaseR4,412.55R4,303.72R4,491.70.Read also:.Eskom's 36% tariff hike sparks debate on power pricing and reform: KatzenellenbogenSouth Africa enacts law to end Eskom's monopoly and boost electricity market competitionSA's electricity crisis: A tale of mismanagement and politics – Andrew Kenny.This article was first published by MyBroadband and is republished with permission.

Eskom’s tariffs set to surge

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