Electricity prices up 907% in 20 years, minister concedes industry pain

Electricity prices have risen by 907% over the past 20 years, a jump that Electricity and Energy Minister Kgosientsho Ramokgopa said is harming both industry competitiveness and household income.

Minister acknowledges large price rise and its effects

Addressing journalists about the government’s new electricity pricing policy, Ramokgopa confirmed the steep increase and said it was “undermining the competitiveness of our industries and “eroding disposable household income”.

He noted that household expenditure accounted for 60% of South Africa’s economy.

What drove the increase

According to The Citizen, outside countries caught up in wars or with economies collapsing because of hyperinflation, this is the highest increase globally in a country with a stable regulatory system.

According to The Citizen, tariffs escalated from roughly 19 cents/kWh in 2007 to over R3.70/kWh, driven by National Energy Regulator of South Africa (Nersa) approvals, corruption, debt and the costs of uncompleted megaprojects like the Medupi and Kusile power stations.

Short-term tariff moves and municipal action

Earlier in the year, Eskom said it would implement Nersa recommendations that include an average direct Eskom electricity price increase of 8.76% for 2026-27 and an expected 8.83% for 2027-28. Municipal distributors are implementing matching average increases of around 9%.

New pricing policy promised

Ramokgopa said the forthcoming power pricing policy, which will be released for public comment, aims to be more transparent and fair. He said it would seek to keep electricity-dependent industries globally competitive while strengthening “social protections” and providing support to “the indigent, the poor and the vulnerable”.

The minister said he envisioned increasing the amount of free electricity for poor households from the current 50kWh per month to 200kWh or even 300kWh.

On cross-subsidisation, non-payment and losses

Ramokgopa discussed plans to address what he described as municipal cross-subsidisation, in which more affluent areas are charged more to subsidise poorer areas. He criticised those who do not pay their bills, saying they “burden” other consumers who pay on time.

“I’m not talking about the indigent. I am talking about those in a position to be paying who ought to be paying and they are not paying.”

He said these defaults increase municipal debt and Eskom debt because municipalities cannot pay Eskom, and that current tariff structures allow Eskom to recover some of that by adding to what it charges. Under the proposed policy, Ramokgopa said, “You are not allowed to punish those who are paying on account of those who are not paying.”

Technical losses and forecasting

The minister said technical and non-technical lossespartly caused by poor maintenance and illegal connectionscan reach as much as 30% of the electricity bought from Eskom.

He also said Nersa will have to publish a 10-year price forecast so that heavy industries can assess the future price path when making investment decisions.

Responses and concerns

AfriForum local government affairs manager Morné Mostert warned that the policy will be ineffective if Nersa does not enforce electricity legislation and licence conditions. He called for consequence management and enforcement action against licensees that repeatedly fail to comply.

Ramokgopa said the policy will include criteria for concessional funding to support industries that could accelerate growth and create employment in priority sectors.