South African households are bracing for what could be one of the most significant electricity price increases in recent years. What was initially communicated as a relatively modest adjustment of just over 5% may now climb to well above 10%, following revised calculations linked to Eskom’s cost recovery.
For homeowners, tenants, landlords, and property investors alike, rising electricity tariffs have become more than just a monthly inconvenience; they are a growing financial pressure that directly affects affordability, rental demand, and long-term property value.
At the centre of the debate is the National Energy Regulator of South Africa (NERSA), which is expected to announce its final ruling on Eskom’s revised tariff application at the end of the month. Any approved increase is expected to come into effect from 1 April, impacting millions of South Africans almost immediately.
Why Eskom’s Price Increase Is Higher Than Expected
The latest Eskom tariff increase did not arise overnight. Earlier in the year, NERSA approved an electricity price increase of approximately 5.36%, based on Eskom’s submitted cost structures. However, it later emerged that not all of Eskom’s operational and financial costs had been fully accounted for in the original calculation.
This omission triggered a legal process, resulting in Eskom applying for an additional adjustment to “claw back” the costs that were excluded. Once recalculated, the revised figures point to a far steeper electricity price increase, estimated to be between 9% and 10.5%.
In simple terms, households may now be required to pay for costs that were overlooked the first time around, effectively turning a manageable increase into a far more painful one.
NERSA’s Role in Electricity Tariffs in South Africa
NERSA plays a critical role in determining electricity prices in South Africa. Its mandate is to balance Eskom’s financial sustainability with consumer protection, ensuring that electricity remains accessible while the utility remains operational.
However, critics argue that the current tariff-setting process places too much emphasis on cost recovery and not enough on affordability — especially in a country already grappling with high unemployment, rising food prices, and weak economic growth.
According to civil society organisations, the latest Eskom tariff increase highlights structural weaknesses in how electricity pricing decisions are made, with errors ultimately passed on to consumers.
Impact on South African Households
Higher electricity prices affect all households, but not equally. For middle-income families, a double-digit electricity price increase often translates into hundreds of rand more per month, money that could otherwise be spent on education, healthcare, or housing improvements.
For lower-income households, pensioners, and unemployed youth, the situation is far more difficult. Civil society group Green Connect warns that rising electricity tariffs could push vulnerable households deeper into energy poverty.
In many homes, electricity is already carefully rationed. A further Eskom price hike may force families to make impossible choices between buying food, paying transport costs, or keeping the lights on.
Energy Poverty on the Rise
Energy poverty is no longer a fringe issue. As electricity prices rise faster than wages, more households are either reducing usage dramatically or turning to unsafe alternatives such as paraffin and illegal connections.
These coping mechanisms increase health risks, fire hazards, and strain municipal infrastructure — creating broader social and economic consequences far beyond the electricity bill itself.
What This Means for Property Owners and Investors
From a property market perspective, rising electricity costs have become a key consideration for buyers and tenants alike. Monthly utility expenses now feature prominently in affordability calculations, particularly in sectional title schemes and rental properties.
Landlords may face increased pressure as tenants push back against rising living costs, while homeowners must absorb higher expenses without a corresponding increase in property values.
In many cases, escalating electricity prices are accelerating interest in alternative energy solutions such as solar panels, inverters, and battery storage, particularly in areas affected by load shedding.
Solar vs Eskom Electricity Prices
As Eskom electricity costs continue to rise, the long-term economics of solar energy are becoming increasingly attractive. While the upfront investment remains significant, many property owners now view renewable energy as a form of cost control rather than a luxury.
From an investment standpoint, properties with solar installations and backup power solutions are often more attractive to buyers and tenants, offering a hedge against both load shedding and future tariff hikes.
Economic Consequences Beyond the Household
According to the Centre for Risk Analysis, the pressure from rising electricity prices is unlikely to end this financial year. Years of poor financial decisions, operational inefficiencies, and declining customer numbers have left Eskom and related entities with limited options for recovering costs.
This reality extends beyond Eskom itself. Municipal distributors and metro-level utilities also face financial strain, making further electricity price increases across the value chain increasingly likely.
In a slow-growing economy, higher electricity prices reduce disposable income and weaken business confidence, ultimately limiting investment, job creation, and economic growth.
How Businesses Are Affected
For small and medium-sized businesses, electricity is a critical input cost. Rising tariffs reduce cash flow, limit expansion, and often force companies to delay hiring or infrastructure upgrades.
This has a knock-on effect across the economy, as reduced business activity translates into fewer employment opportunities and lower overall demand.
Calls for Reform of Electricity Pricing Policy
Green Connect and other civil society organisations are calling on NERSA to reject further tariff increases and instead push for a comprehensive review of South Africa’s electricity pricing policy.
They argue that continually raising electricity prices to recover past mistakes is unsustainable and disproportionately harms the most vulnerable segments of society.
Analysts broadly agree that meaningful reform is required if South Africa is to achieve the 2% to 4% economic growth needed to create jobs and stabilise public finances.
When Will the Final Decision Be Announced?
NERSA is expected to announce its final decision on Eskom’s revised tariff application at the end of January. Should the additional increase be approved, new electricity tariffs will take effect from 1 April.
For South African households, businesses, and property owners, the announcement will bring clarity, but not necessarily relief.
Preparing for Higher Electricity Prices
While consumers have little control over tariff decisions, there are steps households and property owners can take to reduce exposure to rising electricity costs:
- Improving energy efficiency through LED lighting and efficient appliances
- Monitoring electricity usage more closely
- Exploring solar and backup power solutions
- Factoring utility costs into property buying and rental decisions
As electricity prices in South Africa continue to rise, proactive planning is no longer optional - it is essential!
The Eskom price increase and NERSA tariff decision highlight deeper challenges within South Africa’s energy sector. While cost recovery may be necessary to keep the lights on, repeated price hikes risk pushing households, businesses, and the broader economy beyond breaking point.
For now, all eyes remain on NERSA as South Africans wait to see just how much more they will be paying for electricity in the months ahead.