Demonstration outside the Eskom offices in Belville against the rising electricity tariffs on 12 August 2021. Picture: Gallo Images/Die Burger/Jaco Marais
Ahead of Eskom’s latest tariff increase, South African households consuming more than 500 kilowatts (kW) of electricity per month are currently paying nearly R1 500.
This was revealed by Electricity and Energy Minister Kgosientsho Ramokgopa in a recent parliamentary response.
Democratic Alliance (DA) Member of Parliament (MP) Edwin Victor Baptie raised concerns about the affordability of electricity, stating that pricing was under severe upward pressure due to legacy costs linked to state capture and corruption over the years.
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Baptie requested information on the current cost per kilowatt-hour (kWh) for electricity generated by Eskom and independent power producers (IPPs) under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).
He also asked how Eskom’s current cost of generation per kWh compares to its performance over the past 20 years, taking inflation into account.
Responding to these questions, Ramokgopa confirmed that Eskom’s direct customers currently pay R2.49 per kWh.
He highlighted that the amount was due to electricity tariffs increasing by 12.74% in the 2024/2025 financial year, ending on 31 March.
“While specific per-kWh costs vary based on customer category and usage, residential customers consuming 600 kWh per month are now paying approximately R1 491.06 monthly, equating to about R2.49 per kWh,” he said.
The minister indicated that renewable energy costs have declined through successive REIPPPP bid windows.
“Recent data indicates that solar photovoltaic [PV] projects have achieved prices as low as 56 cents per kWh, and onshore wind projects at approximately 62 cents per kWh.”
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However, Eskom’s electricity generation costs have surged due to infrastructure investments, maintenance of ageing power plants, rising fuel prices, and operational expenses.
When adjusted for inflation, these factors have driven up tariffs for households and businesses.
“For instance, in 2014, a typical Eskom customer using around 800 kWh per month paid approximately R1 055.40.
“By 2024, the same consumption costs about R2 948.98, reflecting both nominal increases and underlying cost pressures.”
Last month, the National Energy Regulator of South Africa (Nersa) approved a 12.7% tariff increase for 2025/2026, set to take effect from 1 April this year.
Despite the rising costs, Ramokgopa assured that the electricity ministry was working on measures to ease inflationary pressures on consumers.
One such intervention was a potential revision of the free basic electricity (FBE) policy, which currently provides indigent households with 50 kWh of free electricity per month.
“The ministry is exploring an increase in the allocation to between 150 and 200 kWh, ensuring that more households can meet their basic energy needs without additional financial burden.”
To further mitigate rising costs, the minister noted that his department would also prioritise the expansion of renewable energy through the REIPPPP and supporting Eskom’s operational efficiency improvements.
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Additionally, government is leveraging the inclining block tariff (IBT) system.
“Under this model, electricity prices are tiered, with lower consumption levels being charged at a lower rate per kilowatt-hour and higher levels of consumption charged at progressively higher rates.
“This structure encourages energy efficiency and allows households to manage their electricity usage within their affordability levels.
“For example, households consuming below the lowest threshold can keep their electricity costs significantly lower, incentivising responsible energy consumption,” Ramokgopa explained.
The minister emphasised that the combination of IBT and FBE would ensure that vulnerable households were protected, while promoting sustainable electricity usage across all income levels.
“By implementing and reviewing these measures, the ministry aims to alleviate the financial burden on households while maintaining a fair and equitable energy pricing framework that supports both consumers and the sustainability of the electricity sector.”
Meanwhile, Ramokgopa stressed that Eskom’s financial recovery plan was vital to stabilising the utility’s operations and ensuring long-term sustainability.
He highlighted the Eskom Debt Relief initiative, which will provide the struggling power utility with R256 billion over the next three years.
“A key component of the plan is the significant reduction of Eskom’s debt burden through government-backed initiatives and operational efficiencies,” Ramokgopa continued.
“By addressing legacy debt stemming from historical inefficiencies and corruption, the plan will allow Eskom to re-enter the debt capital markets in a much stronger financial position.”
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According to the minister, Eskom’s improved financial standing will enable the utility to secure funding at lower interest rates, reducing overall borrowing costs.
“Lower financing costs directly translate to the containment of Eskom’s cost-reflective tariff, ensuring that electricity prices remain within the affordability limits of end consumers.
“Ultimately, this strategic focus on financial stability will not only restore Eskom’s credibility with investors but also alleviate upward pressure on tariffs, creating a more sustainable electricity supply environment for all South Africans.”
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