Big announcement about electricity prices in South Africa

Electricity prices in South Africa are likely to undergo major changes as the government seeks ways to alleviate financial pressure on households. 

The head of the ANC’s economic transformation subcommittee and Minister of Human Settlements, Mammoloko Kubayi, said increases in electricity prices are unsustainable. 

Speaking after the ANC’s National Executive Committee (NEC) meeting this past weekend, Kubayi said the government will continue working to reduce price hikes or shield the poorest from the increases.

“As we continue pushing forward measures to reduce electricity costs, our commitment to protecting households from unsustainable tariffs is unwavering,” Kubayi said. 

“We are working tirelessly to stabilise the electricity sector and ensure subsidies and protections are in place for those most vulnerable.”

“Electricity must serve as a public good and not an unaffordable luxury. We aim to ensure a stable and reliable energy supply that is affordable for all.” 

Kubayi’s calls echo those of fellow ANC NEC member and Minister Kgosienthsho Ramokgopa, who has previously warned electricity prices are spiralling out of control. 

“There could be a policy intervention we could make to provide some measure of relief,” Ramokgopa said earlier this month. “We will make an announcement.”

In his weekly media briefings, Ramokgopa has repeatedly cited rising electricity prices as a major problem for the government. 

“Our electricity pricing plan needs to kick in, and that is the primary preoccupation of the ministry now, working with Eskom’s Distribution division and municipalities,” he said. 

Ramokgopa warned that these price increases risk spiralling out of control and that the government’s policy of providing free basic electricity is not working. 

Calls for changes to electricity prices from high-ranking members of the ANC come after Eskom asked regulator Nersa for permission to raise prices by 36.15% to cover the rising cost of producing electricity. 

Eskom has requested total revenues of R446 billion for the 2026 financial year, R495 billion for 2027, and R537 billion for 2028.

The proposed average price hikes for Eskom’s direct customers are 36.15% for the period from 1 April 2025 to 31 March 2026.

For the subsequent years, the utility is seeking increases of 11.81% from 1 April 2026 to 31 March 2027 and 9.10% from 1 April 2027 to 31 March 2028.

South African National Energy Development Institute (SANEDI) Professor Sampsom Mamphweli said it is good that the ANC is considering methods to cushion households from rising electricity costs. 

This is because it is highly unlikely that prices will stabilise or come down in the near future as Eskom faces significant cost pressures. 

Chief among these is the need to expand generation capacity to meet growing demand, particularly when coal plants have to be decommissioned in the future, and the growing municipal debt owed to Eskom. 

These pressures, alongside historical mismanagement at the utility, have greatly increased electricity production costs. 

With the current regime of cost-reflective tariffs, the rising cost of producing electricity directly translates into higher tariffs. 

Mamphweli said measures such as Free Basic Electricity are needed to soften the impact of the increases on poor households but are not a long-term solution. 

The only long-term solution is to ensure Eskom is run efficiently and alternative energy sources come online in the coming years, as many of these are already cheaper than the utility. 

Mamphweli even suggested that the government use the money for Free Basic Electricity to rather build rooftop solar installations in low-cost housing. 

This would sustainably bring down the cost of electricity for poor households and contribute excess electricity to the grid. 

Ramokgopa appears to agree with Mamphweli in saying that this is not a problem with a quick fix and that free electricity is not a solution. 

“The provision of free basic electricity is especially important in the midst of electricity prices that are almost spiralling out of control.”

“Since 2008 to now, the total increase in electricity tariffs has been around 600%. That is untenable. We need to find a way to protect people from these increases.”

He explained that the provision of free basic electricity was always intended as a measure to protect poorer households from high energy costs. 

However, now it is also becoming increasingly important to reduce the impact of higher costs on richer consumers and businesses. 

“It has become a structural problem that needs our attention. You do not resolve this problem by just offering free basic services. You resolve this by growing the economy. It is a crisis of economic production.”