City Power warns of ‘tariff shocks’ from Eskom’s proposed tariff restructuring

City Power have expressed their opposition to Eskom’s proposal to adjust their tariff structure.

As well as requesting a 36.15% increase in tariffs last year, Eskom asked the National Energy Regulator of South Africa (Nersa) on Friday to consider their plan to change the way they calculated electricity usage.

Eskom’s proposal aims to condense the number of tariff packages they currently provide from 10 to three, while also removing the threshold-based block tariff structure.

Peak hour changes

City Power questioned the impact the proposed Retail Tariff Plan (RTP) increases would have on consumers.

City Power are concerned that Eskom’s RTP would coincide with the proposed 36.15% increase set for the 2025/26 financial year.

The proposed increases for the 2026/27 and 2027/28 period are 11.81% and 9.1%, respectively, and City Power have suggested aiming the tariff restructuring for either of those two periods.

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The new structure also makes changes to the peak times and the corresponding tariffs, as well as their services charges.

“The proposed [time of use] rates are expected to result in at least a 9% increase in summer tariffs, particularly for the two lower sub-categories,” stated City Power spokesperson Isaac Mangena.

“The proposed service charge would lead to a 29% increase in addition to [Eskom’s] tariff increase,” warned Mangena.

Legacy charge

A legacy charge linked to the government’s renewable energy policy will be applicable, while the current transmission network capacity charge will be replaced by a generation capacity charge.

Disputing the need for the legacy charge, Mangena said, “Over the years, Eskom has underspent on the allocated budget for renewable energy procurement.”

“The higher price per unit of renewable energy compared to nuclear and coal does not create a cross-subsidy between energy sources,” he added.

Eskom said on Friday that the restructuring is necessitated by the entity undergoing its own unbundling and that the tariffs must reflect market adjustments in recent years.

“While we note Eskom’s need for cost reflective tariffs, it is crucial that the national power utility conduct further evaluations on this matter to avoid tariff shocks,” Mangena stated.

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