2 September 2025
Electricity prices have consistently posed a significant challenge for our members, particularly since Eskom began implementing frequent double-digit price increases over the past two decades. Consequently, the average price of Eskom electricity rose from 19.9c/kWh to 165.43c/kWh between 2008 and 2024, representing an eight-fold increase. This rate of increase in such a short period is not sustainable.
During the same period, electricity sales dropped, in part due to affordability, from 224TWh to 183TWh, a decline of nearly 20% from 2008 levels. Specifically, electricity consumption by large power users in the Industrial and Mining sectors decreased by 23% between 2008 and 2024, while the number of customers declined by 709 (17%) during the same period.
This period has been characterized by not only rapidly increasing prices but also high volatility and an uncertain price trajectory, which complicates investment decisions and general production planning for our members. Given that some intensive electricity consumers have electricity costs constituting up to 40% of their production costs, the price increases, volatility, and uncertainty are major factors contributing to some operations shutting down and to low investment levels in the South African market.
The decision by NERSA in January 2025 on MYPD6 brought a glimmer of hope that, as a country, we are moving away from high increases and uncertainty, particularly because Eskom and their shareholder had indicated acceptance of the NERSA MYPD6 decision. However, this behind close door settlement of R54 billion is a complete shock to consumers.
It is not only about the quantum of the additional revenue but also about a lack of transparency on a decision that has fundamental consequences for consumers who have to bear this settlement. While the argument of the judicial nature of the decision may have merits, the lack of transparency of the settlement leaves much to be desired.
This is especially so when it comes to the implementation period of this settlement, which was also not consulted upon and yet directly affects consumers who are already facing serious financial constraints. Additionally, there is the matter of reported RCA settlements which, if true, will be an added burden to consumers, not to mention outstanding RCA decisions that have not been liquidated yet.
Making the matters even worse is that some operations already see as high as 19% increase against the 12.74% NERSA decision due to the changes in the Retail Tariff Plan. With these additional costs their situation will get even worse.
Given all these price uncertainties, EIUG calls on NERSA to consider reopening MYPD6, as an increase of over 4% is a consideration for RCAs. In this case, R54 billion is also over 4% of the original MYPD6 decision.
Such a review may reset the base and afford the industry a starting point for a predictable price path. EIUG further calls on NERSA to consider reviewing the MYPD pricing methodology or its implementation, as it has not succeeded by and large in bringing price stability and predictability.
NERSA must also explain the basis of its decision and commit to consistency of decision making in future. On the other hand, Eskom must ensure ongoing efficiency improvements in their operations to reduce costs.
Recently, the Minister of Electricity and Energy also announced a review of the Electricity Pricing Policy (EPP) to enhance affordability. The EIUG supports this review and hopes it will address affordability across all customer segments, as our members face significant competitive pressures due to electricity prices, and some even face uncertainty regarding the operations continuity.
We stand ready to contribute to this review once it is open for public consultation. We also call on all relevant stakeholders to collaborate in finding immediate and long-term solutions for the financial sustainability of the Electricity Supply Industry (ESI).
These solutions should ensure the financial sustainability of Eskom and utilities while also guaranteeing energy affordability for consumers.
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