South Africans set to pay billions for Eskom mistake

The South African public currently has the opportunity to comment on a proposed R76 billion settlement between Eskom and the National Energy Regulator of South Africa (NERSA).

Should this adjustment be approved, electricity tariffs are expected to rise by about 10.5% in 2026. This would contribute to an average annual increase of around 15% over the last five years.

Impower Solar has urged South Africans to take the opportunity to submit public comments by the 21 January 2026 deadline.

This comes as NERSA is seeking input on a proposed R76 billion adjustment, a significant increase from the R54 billion settlement previously rejected by the High Court.

In June 2025, NERSA and Eskom agreed on a settlement figure of R54 billion behind closed doors following an error in calculating electricity tariffs, a mistake that will be passed on to consumers.

This would have enabled the power utility to recoup the funds through price hikes in the 2026/27 and 2027/28 financial years.

Had this settlement been confirmed, South Africa’s electricity tariffs would have increased by around 9% in 2026 and 2027.

However, the Pretoria High Court rejected the settlement in December 2025 because it lacked the necessary transparency and public consultation required for such high-impact economic decisions.

Furthermore, the court instructed NERSA to launch a short public consultation phase to ensure those impacted by the increases can give their input.

As instructed, NERSA published the relevant consultation paper on 30 December 2025, inviting public comment.

In this paper, NERSA also revealed that Eskom’s generation business will be awarded R76 billion, significantly more than the R54 billion figure previously reported.

Impower Solar explained that the R76 billion figure stems mainly from a R62 billion shortfall in depreciation and a R14 billion return on assets that NERSA admitted were incorrectly calculated in previous determinations.

The company warned that, if the R76 billion adjustment is approved, electricity tariffs could rise by approximately 10.5% this year, compared to the 5.36% projected before the redetermination. 

“This would contribute to an average annual increase of roughly 15% over the last five years,” it said.

South Africans on the hook

Impower Solar business development expert Matthew Cruise noted that the timing and nature of the consultation document present challenges for meaningful public engagement.

“The release of a document of this significance on 30 December, with a submission deadline of 21 January, provides a very narrow window for the public and businesses to respond,” Cruise said.

“Furthermore, the consultation paper focuses on technical, legal and accounting questions rather than simply asking if the increase is acceptable.” 

“It effectively asks the public to provide input on how to prevent Eskom from receiving undue compensation across ten specific areas.”

He said it is concerning that, after 15 years of price determinations, NERSA and Eskom are still in dispute over fundamental accounting principles, such as asset depreciation.

“The depreciation in question often relates to power stations where construction costs were significantly higher than originally budgeted,” he said. 

“South African consumers are now being asked to cover the accounting consequences of those overruns.”

In addition, Cruise warned that the significant electricity tariff hikes this settlement could trigger risks further straining the national economy.

“We are seeing a trend where the regulator seems to struggle with its core mandate – ensuring electricity remains affordable while holding the utility accountable for cost management,” he said. 

“When major industrial players or specific sectors receive tariff relief, that revenue shortfall is typically recouped from other businesses and households.”

Therefore, Impower Solar encouraged all energy users to review the NERSA consultation paper and submit comments before the 21 January deadline.

The regulator is expected to make its final decision by 30 January 2026, with approved adjustments likely to take effect on 1 April 2026 for direct Eskom customers and 1 July 2026 for municipal customers.