South Africa’s electricity regulator has approved higher tariff increases for the next two financial years after correcting a R54.7 billion ($3.35 billion) calculation error in the pricing framework used for Eskom, the country’s state-owned power utility.
The National Energy Regulator of South Africa (NERSA) confirmed that electricity tariffs for Eskom’s direct customers will increase by 8.76% from April 1, 2026, while municipal customers will face an average increase of 9.01% from July 1, 2026.
The decision follows the regulator’s approval of Eskom’s Electricity Retail Tariffs and Structural Adjustment (ERTSA) application on March 5.
The increases are higher than the tariffs previously approved under the sixth Multi-Year Price Determination (MYPD6) after the regulator corrected a miscalculation in Eskom’s regulatory asset base.
According to NERSA, the correction allows the utility to recover revenue it was previously unable to collect due to the error.
Court forces public review
The tariff revision stems from a dispute between Eskom and the regulator over how the utility’s assets were valued in the MYPD6 pricing framework.
Initially, NERSA acknowledged the error and reached a settlement agreement with Eskom behind closed doors. However, the Gauteng High Court ruled in December that the matter had to be reconsidered through a transparent process that included public consultation.
Following the court order, NERSA initiated consultations and completed a redetermination on February 7.
The regulator concluded that the R54.7 billion ($3.35 billion) miscalculation should be recovered gradually through electricity tariffs over several financial years.
In a statement, NERSA said the adjustment would be implemented within the tariff structure approved under Eskom’s ERTSA application.
Under the revised decision, Eskom will recover the amount in phases rather than in a single tariff increase.
NERSA said R12 billion ($736 million) will be recovered in the 2026/27 financial year, followed by R23 billion ($1.41 billion) in 2027/28. The remaining R19.7 billion ($1.21 billion) will be recovered in the next multi-year price determination period.
As a result, tariff increases previously approved under MYPD6 have been adjusted.
For Eskom’s direct customers, the regulator said tariffs will rise by 8.76% from April 1, 2026, instead of the 5.36% increase originally approved. The increase for the following year will also rise to 8.83% from April 2027, compared with 6.19% previously announced.
NERSA said the differences between tariffs for direct Eskom customers and municipal customers arise from different financial calendars.
“According to the ERTSA methodology, Eskom must recover the full allowed revenue within its financial year, which is from April to March. However, the municipal financial year is from July to June,” the regulator said.
Stakeholders to shape final decision
Moreover, NERSA said the redetermination process incorporated feedback from stakeholders during the public consultation period ordered by the court.
The regulator said comments received during the process were reviewed before the Energy Regulator approved the final tariff structure earlier in March.
“Stakeholder comments were considered during the decision-making process, and the reasons-for-decision document will be published on the NERSA website in due course,” the regulator stated.
The adjustment was implemented through Eskom’s ERTSA application, which the utility submitted to the regulator on February 10 following the redetermination.
How electricity tariffs work in South Africa
Electricity tariffs in South Africa are determined through the Multi-Year Price Determination (MYPD) process, a regulatory framework used by NERSA to set Eskom’s allowable revenue over several years.
The calculation includes the value of Eskom’s infrastructure and generation assets, known as the regulatory asset base, as well as operating costs and planned investments.
Errors in these calculations can affect the amount of revenue the utility is permitted to collect from electricity sales.
Eskom remains the dominant electricity supplier in South Africa, generating and distributing most of the country’s power through a network of coal-fired stations, transmission infrastructure and distribution systems.
Under the latest decision, the tariff adjustments will begin with the 2026 financial year and continue into the next regulatory period as Eskom recovers the outstanding amount linked to the earlier pricing error.
