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Dawie Roodt Says Nersa Has ‘No Clue’ How to Price South Africa’s Electricity
South Africans have been hit with one power price hike after another, yet the lights still flicker and load shedding remains a household reality. Now, economist Dawie Roodt believes the problem lies deeper than Eskom’s power stations. He says the country’s energy price regulator, Nersa, simply “has no clue” how to determine what electricity should cost and should probably be shut down altogether.
‘Nobody Knows What the Price Should Be’
According to the Efficient Group’s chief economist, the whole system of government-controlled pricing is broken. Both Eskom and Nersa rely on teams of economists who make predictions about oil prices, inflation, demand, and interest rates before suggesting or approving annual tariff hikes. But, Roodt argues, this process is far too speculative.
“Eskom has got a team of economists making predictions about demand and the price of oil, interest rates, and all sorts of stuff. Then they ask for a certain increase. Nersa does exactly the same, and then they say ‘no’ and approve something lower,” he said.
The result, he noted, is a pattern of electricity increases that are consistently higher than inflation, even as Eskom’s performance declines. Since the start of the past decade, the average electricity price has jumped more than 177%, while corruption and inefficiency continue to drain the system.
Why the Market Should Set the Price
Roodt believes that the only way to discover the real cost of electricity is to let the open market decide. “What stops farmers from increasing the price of tomatoes? What stops shoemakers from charging too much for shoes? It’s supply and demand that sets the balance,” he explained.
The economist argues that if private suppliers were allowed to compete freely, it would naturally drive innovation, attract investment, and improve pricing. “The more profitable something becomes, the more businesses will supply it,” he said.
Former Eskom CEO André de Ruyter has echoed similar sentiments, suggesting that South Africa should move towards a system of open competition, perhaps with a maximum tariff cap to protect rural and low-income consumers from exploitation.
Nersa Under Fire Again
While Roodt’s criticism is blunt, Nersa is already facing serious credibility problems. The regulator, based in Arcadia, Pretoria, is currently embroiled in multiple court battles with AfriForum and other civic groups.
In one case, the Pretoria High Court ruled that Nersa’s approval of over 100 municipal tariff hikes for 2024/2025 was unlawful because many municipalities failed to submit cost studies. Nersa still allowed the increases and has taken the matter to the Supreme Court of Appeal.
More recently, AfriForum launched another challenge, accusing the regulator of failing to give the public enough time to comment on price increases. The group also succeeded in temporarily blocking a R54 billion settlement between Eskom and Nersa, which would have added another 9% hike over three years.
Documents from Rapport revealed that Nersa’s electricity subcommittee took an average of just four minutes to consider each municipal tariff application last year, raising questions about the depth and fairness of its review process.
Public Trust Running on Empty
Public frustration has grown as South Africans see prices rising faster than incomes while service delivery stagnates. Critics argue that the regulator, which was meant to protect consumers and ensure transparency, has instead become a rubber stamp for unsustainable increases.
Roodt says it’s time to admit the system has failed. “If Nersa doesn’t know what the correct price should be, then why regulate it at all?” he asked.
As the debate over deregulation gains momentum, one thing is clear: with prices climbing and trust fading, South Africans are running out of patience for a regulator that seems as powerless as the grid it oversees.
Also read: South Africa Risks a Costly Own Goal as FATF Decision Looms
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Source: MyBroadband
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