South Africans to pay Eskom for NERSA’s R54 billion mistake

The National Energy Regulator of South Africa (NERSA) has announced that Eskom is entitled to an extra  R54 billion in revenue, which will be added to customer electricity prices over the following years. 

The regulator said that an error occurred during the sixth multi-year Price determination (MYPD6) in January and that it has reached a settlement with Eskom of R54 billion over the next three years.

Errors relating to the depreciation amount and the transfer of an asset for commercial operation, as captured by NERSA, resulted in the regulator underestimating the revenue required by Eskom. 

In January 2025, NERSA approved a 12.74% tariff increase for the 2025/2026 financial year, and further increases of 5.36% and 6.19% for the following financial years, prompting significant public opposition.

Yet, these increases were R107 billion less than what Eskom had requested. As such, the power utility lodged a judicial review of NERSA’s decision, pointing out the regulator’s calculation errors. 

Following the review and identification of the mistake, the regulator has now approved an additional electricity price increase of 3.4% for the 2026/2027 financial year, resulting in a price increase of 8.76%.

In 2027/2028, an additional 2.64% will be charged to customers, leading to a total increase of 8.83% for the financial year. 

NERSA said this phased implementation will mitigate immediate shocks to consumers. 

“This settlement agreement represents a fair and balanced resolution. It safeguards the interests of South African electricity consumers,” said Nomfundo Maseti, NERSA regulator member responsible for electricity generation.

This is “while addressing Eskom’s legitimate revenue requirements to ensure operational sustainability – both achieved by the pragmatic settlement agreement,” she added.

“This is substantially lower than Eskom’s claim,” NERSA emphasised.

The R54 billion mistake was condemned by energy expert and MD of EE Business Intelligence, Chris Yelland, on social media. 

“It’s absolutely astounding. Bearing in mind the massive, undeclared, imprudently and inefficiently incurred costs that Eskom has passed through to customers in the tariffs in the last 10 years, actually, NERSA should be clawing back these costs on behalf of customers,” he said. 

He added that the error means that Eskom is being allowed an extra approximately 18% price increase over and above the tariff increases that were already granted by NERSA in January. 

A ‘devastating impact’ on the economy

The Democratic Alliance (DA) has sent a letter to the chairperson of the Portfolio Committee on Electricity and Energy requesting an urgent review of the settlement agreement.

“It is unacceptable that a technical error in the calculation of depreciation and the Regulatory Asset Base could result in such a massive financial burden being shifted onto consumers,” DA Spokesperson for Electricity and Energy said. 

The party said that this incident illustrates systematic failures within NERSA’s processes and calls into question the credibility of its oversight. 

The DA has called on the parliament committee to urgently investigate how this error occurred, why it was not detected earlier, and what safeguards will be put in place to make sure it doesn’t happen again. 

In January, when faced with Eskom’s request for a 66% price increase over three years, NERSA’s electricity subcommittee said at the time that:

“The increase would have a devastating impact on the economy and also on consumers who are vulnerable and struggling to buy basic necessities.”

The regulator added that there was not sufficient justification for such an increase, given Eskom’s poor spending in recent years. 

When the price determination was originally published for public comment, both the National Union of Metal Workers in South Africa (NUMSA) and Agri SA said that the increases will have devestating impacts on the manufacturing and agricultural sectors. 

NUMSA said these increases would accelerate retrenchments and company closures as businesses struggle to afford the rising costs. 

Agri SA warned that South African farmers would be driven into financial distress without urgent intervention on electricity costs, as advancements in agricultural technology require large amount of electricity.