Eskom Increase Its Electricity Price With Effective Immediately

Wendy Masombuka

The South African state-owned power utility, Eskom, has announced the implementation of its annual price increase. This also seems like another strain that South African households are already trying by all means to combat with all the other economic challenges existing in the country.

The hike in tariffs is effective immediately for all direct customers at Eskom, but for municipalities, the effective date of the tariff increase is scheduled for July 1st, 2024. A chain of events involving legal challenges and regulatory approval follows. Eskom was granted a substantial increase of 12.74% to its direct customers by the National Energy Regulator of South Africa (NERSA), also coupled with a 25.64% affordability subsidy.

According to BusinessTech, the price hike is expected to take the average electricity tariff in South Africa from roughly R1.84 per kWh to around R2.07 per kWh, and local municipal prices will differ. Urban customers who consume power in higher areas will pay more than this. “The average increase applied to the key industrial and urban tariffs will be 13.29% due to the increase in the subsidy charge. The affordability subsidy charge is raised as a subsidy to the Home light 20A tariff and is determined by NERSA. This charge exists due to historically lower Home light 20A tariff increases and is paid by the non-municipal large industrial and urban tariffs,” Eskom said.

Since loadshedding started in 2008, the increase in electricity has grown by at least 450%; this figure is far higher than the growth in 98% inflation over the same period as loadshedding. ”With these increases looming over citizens, the figures are expected to balloon further,“ said a columnist from BusinessTech. The implementation and decisions that were taken sparked discussions and backlash among political parties such as the DA, along with the South African Local Government Association, which was disputing the decision in court.

The increase in tariffs is also being implemented in the midst of an economic strain, with South Africa’s annual inflation rate reaching 5.6% in February 2024. The rising inflation in different sectors is visibly affecting businesses and civil society at large. In important sectors such as housing, transportation, and food, rising inflation enables financial burdens on households, clearly making the hike in tariffs unpleasant.

“Why increase electricity bills when we don’t even use it as South Africans? Then stop the loadshedding, but this is South Africa; they don’t care.“ Asanda Ntshwane, a concerned citizen, commented. However, the decision taken by the Reserve Bank to maintain the repo rate high also adds to the financial burden faced by most South Africans.

While South African citizens combat all the financial strains and burdens in their households, and the economic strain is not getting any better due to policy decisions, all legal challenges are being dismissed. Citizens believe that the upcoming elections will emerge as a crucial moment for the nation’s democratic fate in tackling the current burdens that are being faced.