Eskom’s Retail Tariff Plan outlines changes to make electricity pricing more transparent and fairer to all customers

What: Energy regulator NERSA has released the power utility’s proposed plan for electricity tariff charges and rates for public feedback.

Why: Eskom views this application as an important move towards fully unbundled tariffs, introducing separate charges for electricity capacity usage and network services.

What next: Members of the public are urged to take part in the public hearings where Eskom will respond to all questions on the proposed tariff structure.

The National Energy Regulator of South Africa (NERSA) has released Retail Tariff Plan (RTP), proposed by the state-owned power utility Eskom, for public feedback.

The plan outlines adjustments to electricity tariff charges and rates, with the main objective to align customer payments with the actual costs they incur, Eskom said in a press statement on November 8.

According to the utility, the proposed changes aim to adapt to the evolving electricity supply industry by ensuring that tariffs accurately reflect NERSA-approved costs for generation, transmission, and distribution, while also focusing on affordability, fairness, and transparency.

“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,” said Eskom group executive for distribution Monde Bala. “The proposed tariff changes aim to restructure existing tariffs and avoid the creation of unintended subsidies.”

MYPD 6 revenue application

Bala emphasised that the tariff restructuring process was separate from Eskom’s current revenue application to NERSA for the 2025 to 2028 period under the Multi-Year Price Determination 6 process. This methodology is now in its sixth application and the process is referred to as MYPD 6. The application aims to ensure the financial sustainability of Eskom while moving towards cost-reflective pricing.

It the MYPD 6 revenue application, submitted to NERSA in September, Eskom is applying for total revenues of ZAR446bn ($25.9bn) for FY2026, ZAR495bn ($28.8bn) for FY2027, and ZAR537bn ($31.2bn) for FY2028.

This, according to the utility’s statement, translates to the proposed average price increases for Eskom’s direct customers of 36.15% (1 April 2025 to 31 March 2026), 11.81% (1 April 2026 to 31 March 2027) and 9.10% (1 April 2027 to 31 March 2028).

Public submissions for a consultation process regarding MYPD 6 revenue application were closed on November 1. Indicative public hearing dates have been set in various provinces from November 18 to December 4, as previously reported by NewsBase. The processing of Eskom’s application will take approximately 126 days, with NERSA’s decision expected in mid-March 2025.

Alongside its MYPD 6 application, Eskom submitted the current RTP to NERSA, detailing proposed structural tariff adjustments. These changes are anticipated to take effect from April 1, 2025, pending NERSA’s approval and completion of governance processes. The release of Eskom’s RTP by the regulator for public feedback marks the start of the approval process.

“Eskom will not generate additional revenue from the proposed tariff restructuring but will rebalance the charges while remaining within the 2024/25 costs already approved by NERSA,” Bala explained.

The RTP application builds on similar proposals submitted to NERSA in 2020 and 2022. However, aside from the approval of the Homeflex tariff—a residential option introduced in 2022 allowing solar PV customers to connect to the grid and export energy—none of the earlier submissions received approval.

RTP proposals

Eskom has proposed significant changes to retail tariffs for residential users by removing the inclining block tariff (IBT), which currently raises per-unit costs as more electricity is purchased in a month. The removal of the IBT will allow lower-usage households to pay a consistent rate for better affordability and access, Eskom says.

At the same time, customers with solar PV systems who rely on Eskom as backup during peak or low-sunlight hours will still pay network usage fees. Those who have the technology to export excess energy to the grid will receive bill credits.

Additionally, municipal distributors could see cost benefits from fewer subsidy contributions and reduced fixed charges by consolidating their 15 tariffs into three.

For large industrial, mining, commercial, and rural customers the benefits will come from lower fixed charges and reduced winter peak prices. Service charges for large energy users will be calculated per supply point to improve fairness and match the resources needed for managing multiple delivery points at large sites.

The application excludes customers who have fully disconnected from Eskom's grid and lack both an Eskom connection and meter, the utility says.

Eskom views this application as an important move toward fully unbundled tariffs, introducing separate charges for electricity capacity usage and network services. According to the utility, this approach aims to reflect the actual costs of providing electricity services more accurately and to improve transparency for customers.

“Unbundled tariffs will enable Eskom to recover NERSA-approved costs and returns by aligning prices and tariff rates with the actual costs incurred,” the statement said. “Insufficiently unbundled tariffs pose revenue risks for the licensee and unfairly increase tariffs for all customers. Properly unbundling and structuring tariffs will ensure fair cost recovery, avoid unfair cross-subsidies, and support the responsible integration of alternative energy sources.”

Eskom urged members of the public to take part in the public hearings where the state-owned entity would openly respond to all questions on the proposed tariff structure.