By Lehlohonolo Lehana.
Energy regulator Nersa confirmed that it has entered into an out of court settlement with Eskom, following the mistakes it made in determining the utility’s revenue for the current and next two financial years.
This mistake will result in significantly higher electricity prices for consumers in the 2026/27 and 2027/28 financial years.
As a result, consumers will have to cough up R54 billion more through higher electricity tariffs, phased in over several years. Nersa has already estimated how much the increases announced in January will be adjusted upward.
Nersa in its statement estimated the price impact of the latest settlement as follows:
- An additional 3.4 percentage points in 2026/27, which means electricity tariffs will increase by 8.76% instead of the 5.36% announced in January.
- An additional 2.63 percentage points in 2027/28, which means the tariffs will increase by 8.83% instead of the 6.19% announced in January.
These adjustments will account for R35 billion of the additional R54 billion Eskom has been awarded. The balance will be recovered from consumers in the next tariff period, according to Nersa. Details on this recovery are not yet clear.
It is important to note that these increases may be even bigger if the impact of the first settlement and further clawbacks are implemented at the same time.
Nersa explains that Eskom approached the high court to have the regulator’s revenue determination for the three financial years from 1 April 2025 to 31 March 2028 reviewed and set aside, citing a R107 billion shortfall.
“Eskom challenges the energy regulator’s decision only in respect of a revenue shortfall that occurred in the generation business due to a data input error, which mainly affected depreciation and the Regulatory Asset Base (RAB) value for the generation business,” the statement reads.
“The reliefs Eskom sought through the judicial review were assessed to evaluate the validity of Eskom’s claims and to determine whether Nersa could mount a sustainable opposition to the grounds of the review application. Nersa also considered Eskom’s requested reliefs in relation to their potential impact on customers and the broader economy, taking into account the public interest. Drawing on the findings from the founding papers and relevant case law on administrative decision reviews, Nersa decided not to oppose the application.”
The regulator admits to its mistakes and says: “After rectifying these errors, Nersa concluded that Eskom was entitled to an additional R54 billion over the three-year MYPD6 period, an amount substantially lower than Eskom’s original claim of R107 billion. The parties settled for R54 billion on 30 July 2025.”
The Democratic Alliance (DA) took exeption to the situation, saying that it was incorrigable for South African citizens and businesses to keep paying for Eskom’s and Nersa’s inefficiencies.
“South Africans, struggling under the weight of high electricity costs and a fragile economy, will now face additional tariff hikes on top of the already steep increases previously approved,” the party said.