Nersa publishes Eskom’s proposed tariff changes

The National Energy Regulator of South Africa (Nersa) has released Eskom's proposed retail tariff plan for public consultation, which includes modifications to its tariff charges and rates.

The energy regulator said the proposed tariff changes aim to support an evolving electricity supply industry, ensuring electricity tariffs reflect Nersa-approved costs for generation, transmission and distribution services, while considering affordability, fairness and transparency.

Eskom group executive for distribution Monde Bala said the electricity supply industry is undergoing fundamental changes that will set the course for economic growth and prosperity in the years ahead. 

“It is therefore vital that as many stakeholders as possible engage with Nersa on the proposed changes to support the determination of tariffs that are as fair as possible for all customers.”

Bala said the proposed tariff changes aim to restructure existing tariffs and avoid the creation of unintended subsidies. 

However, Bala said, it is important to note the tariff restructuring process is separate from Eskom’s revenue application to Nersa for the 2025 to 2028 period under the MYPD 6 process. 

“Eskom will not generate additional revenue from the proposed tariff restructuring but will rebalance the charges while remaining within the 2024/2025 costs already approved by Nersa,” said Bala.

The energy regulator said the application follows similar submissions made to Nersa in 2020 and 2022. 

Except for the introduction of the Homeflex tariff, a residential tariff that enables grid connection and energy export for solar photovoltaic (PV) customers in 2022, none of the previous submissions were approved.

Major structural changes proposed by Eskom to retail tariffs include:

• Eskom is proposing to remove the incline block tariffs so low-usage households pay the same price no matter how many times electricity is bought in a month to support affordability and provide greater access to energy services; 

• customers with solar rooftop PV connected to the grid who use Eskom-supplied energy as a backup, known as the “Eskom battery” on cloudy days, at night and during the morning and evening peak, will still be required to pay for using the Eskom network; 

• customers with the technology to export own-generated excess energy onto the grid can reduce their electricity bill through energy credits to their bills; 

• tariffs for municipal distributors purchasing in bulk are likely to benefit on average from lower costs due to lower subsidy contributions and reduced fixed charges through consolidating their 15 tariffs into three options; and 

• large industry, mining, commercial and rural customers will see an overall reduction in fixed charges and winter energy time-of-use prices. Services charges for large industry, mining and commercial users that consume significant quantities of baseload power will in future be calculated on each point of supply, which ensures fairness and better reflects the resources required to manage multiple points of electricity delivery at large industrial and mining sites.

Nersa said the application does not include customers who have disconnected from Eskom’s grid and have no Eskom connection or meter.

The unbundled tariffs will enable Eskom to recover Nersa-approved costs and returns by aligning prices and tariff rates with the actual costs incurred.

According to Nersa, the application is a crucial step towards fully unbundled tariffs, which will have separate charges for electricity capacity usage and network services.

“This approach will accurately reflect the costs of providing electricity services and enhance transparency for customers,” it said.

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