Electricity price pain for poor South Africans

From 1 April 2025, Eskom’s restructured residential electricity tariffs and the utility’s new standard electricity tariff rates will result in a 12.74% average electricity price increase for its 2025/26 financial year.

However, some residential customers will experience a much higher increase than the 12.74% average electricity price increase, while others will see much lower increases.

This is based on a study by EE Business Intelligence conducted for the Organisation Undoing Tax Abuse (OUTA) on the impacts of tariff increases on Eskom’s direct residential customers.

This study found that some customers will even experience reductions in their monthly electricity spend.

Eskom has three main suites of residential tariffs, namely Homelight, Homepower and Homeflex.

The Eskom Homelight tariffs are divided into two options, namely Homelight 20A and Homelight 60A.

The Homelight 20A tariff is intended for low-income residential customers with a limited capacity, 20A, 1-phase, 230 V ac supply, with a prepayment meter.

The Homelight 60A tariff is intended for low-income residential customers with a 60 A, 1-phase, 230 V ac supply, with either a prepayment meter or a credit meter.

The Eskom Homepower tariff is intended for middle- and higher-income residential customers and is divided into five options, namely Homepower 1, 2, 3, 4, and Homepower Bulk, depending on the number of phases of the supply and the supply capacity.

For the purposes of EE’s study, only the Homepower 4 tariff comprising an 80 A, 1-phase, 230 V ac supply is considered, as this covers the significant majority of Homepower residential customers and is adequately illustrative.

The Homepower 4 tariff is implemented with a credit meter or a smart meter.

The Eskom Homeflex time-of-use (TOU) tariffs are intended for middle- and higher-income residential customers who can respond to time-of-use pricing signals.

They do this by shifting their energy consumption to standard- and off-peak periods of the day through selective use of home appliances.

In addition, the Homeflex tariffs are mandatory for residential customers with solar photovoltaic (PV) and battery energy storage (BES) systems.

The Homeflex tariffs are divided into five options, namely Homeflex 1, 2, 3 and 4, and Homeflex Bulk, in the same way as the Homepower tariffs.

Homeflex tariffs require an expensive time-of-use smart meter with remote meter reading capabilities that can record imported and exported energy separately for the different hours of the day, types of days, and seasons. 

Tariff changes

NERSA has approved several changes to the Homelight, Homepower, and Homeflex residential tariffs. 

These changes to the tariff structure and the increase in the 2025/26 tariff rates have far-reaching impacts on residential customers’ monthly electricity spend. 

Homelight 20A, Homelight 60A and Homepower 4 have been simplified by doing away with inclined block tariff rates.

There were previously two separate energy rates for Homelight 20A – one for consumption less than 350 kWh per month and the other for consumption greater than 350 kWh per month. 

Similarly, for Homelight 60A and Homepower 4, there were also separate energy rates – one for consumption less than 600 kWh, the other for consumption greater than 600 kWh per month.

From 1 April 2025, these former inclined block tariff rates for Homelight 20A, Homelight 60A and Homepower 4 will be replaced by flat energy rates that do not change depending on any defined consumption thresholds.

As a result, from 1 April 2025, for customers with low energy consumption of less than 350 kWh and 600 kWh, the flat-rate energy components of the Homelight 20A, Homelight 60A and Homepower 4 tariffs will increase by 13.6%%, 18.3% and 9.5% respectively.

On the other hand, for customers with higher energy consumption of greater than 350 kWh and 600 kWh, the flat-rate energy components of the Homelight 20A tariff will increase by only 0.2%.

Those of the Homelight 60 and Homepower 4 tariffs will decrease by 30.4% and 31.9%, respectively.

For Homelight 20A and Homelight 60A, there is no fixed monthly component in the tariffs. 

However, for Homepower 4 and Homeflex 4, in addition to the variable energy component, the tariff has fixed monthly components that are charged whether energy is consumed or not.

With effect from 1 April 2025 the fixed components of the Homepower 4 and Homeflex 4 tariffs will both increase very significantly by 88%.

Several changes will also occur in the peak, standard, and off-peak periods of all Eskom’s TOU tariffs, including Homeflex 4.

The morning peak period has been reduced from three hours to two hours, while the evening peak period has been increased from two hours to three hours. 

In addition, a two-hour standard period has been introduced on Sundays.

From 1 April 2025, the revised times of the peak, standard and off-peak periods for weekdays, Saturdays and Sundays in the high-demand winter season and the low-demand summer season are shown below:

Tariff rates for 2025/26 compared to 2024/25

The tables detail the 2024/25 and 2025/26 tariff rates and the associated tariff rate increases or decreases for the Homelight, Homepower 4 and Homeflex 4 tariffs. Note that the rates shown below exclude VAT.

Residential electricity costs and increases

The table below shows how, based on a customer’s monthly electricity consumption, the 2024/25 and 2025/26 Homelight 20A, Homelight 60A and Homepower 4 tariff rates are translated into electricity spending per month by the customer.

Note that the costs below also exclude VAT.

Analysis of the impacts of the new tariff structures and tariff rates

Homelight 20A

For the Homelight 20A tariff, which is intended for low-income and indigent customers with limited capacity 20 A prepayment meters, customers with low consumption of 350 kWh and less per month face increases of 13.57%, which is above the average Eskom increase of 12.74%. 

Customers on the Homelight 20A tariff using more than 350 kWh per month experience progressively lower increases than the average Eskom increase of 12.74%. 

This is a direct result of eliminating the highly subsidised component of the inclined block tariff for monthly consumption of less than 350 kWh per month in favour of a higher flat-rate energy tariff.

It is noted that indigent customers on the Homelight 20A are supposed to receive 50 kWh of free basic electricity per month, and this will, to some extent, offset the 13.57% electricity price increase for low-consumption indigent households in 2025/26. 

However, the highest levels of government recognise that more than 80% of indigent households in South Africa are not on the relevant municipal indigent registers.

Therefore, the significant majority of indigent households do not receive free basic electricity from Eskom or their local municipality. 

Homelight 60A

For the Homelight 60A tariff, which is intended for low-income customers with prepayment or credit meters, customers with low consumption of 600 kWh or less per month face increases of 18.26%.

This is significantly higher than the average Eskom increase of 12.74%. 

Customers on the Homelight 60A tariff using more than 600 kWh per month will experience progressively lower cost increases than the average Eskom increase of 12.74%, while customers using more than 650 kWh per month will experience significant cost reductions. 

This is a direct result of eliminating the highly subsidised component of the inclined block tariff for monthly consumption of less than 600 kWh per month in favour of a higher flat-rate energy tariff.

Homepower 4

For the Homepower 4 tariff, which is intended for middle- and higher-income customers with credit meters or smart meters, customers with consumption of 750 kWh and less per month face massive cost increases significantly higher than the average Eskom increase of 12.74%. 

Customers on the Homepower 4 tariff using 800 kWh and more per month will experience significantly lower cost increases than the average Eskom increase of 12.74%, while customers using 1,100 kWh and more per month will experience significant cost reductions. 

This is a direct result of eliminating the inclined block tariff of Homepower 4 in favour of a flat-rate energy component, with a 31.9% reduction in the variable energy rate for consumption above 600 kWh, and a corresponding massive increase of 88% in the fixed monthly component of the Homepower 4 tariff from R192.90 per month to R362.70 per month which impacts low consumption customers the hardest.

Homeflex 4

Based on the new tariff rates for 2025/26, it is not possible to determine the cost increase for various monthly energy consumptions for the Homeflex 4 tariff.

This is because the actual cost change will depend not only on the customer’s monthly energy consumption but also on the customer’s load profile and response to time-of-use pricing signals.

Suffice it to say, however, that massive price increases in the Homeflex 4 summer and winter peak, standard and off-peak energy rates, as well as in the fixed monthly components of the tariff, come into effect on 1 April 2025.

While “other variable charges” significantly reduce by 60.8%, they form a relatively low portion of the total variable charges, thus reducing the impact of this reduction.

‘Anti-poor’ tariffs

The increases and reductions in a customer’s monthly electricity spend with Eskom result primarily from substantial increases in residential electricity tariff rates and changes in the structure of residential tariffs.

To the extent that the impact of Eskom’s restructured residential electricity tariffs and tariff rates for 2025/26 results in higher electricity costs for smaller, generally poorer customers and lower costs for larger, generally more well-off customers, the perception is created that these adjustments are “anti-poor”.

The Homeflex 4 tariff is intended for middle- and higher-income residential customers who are in a position to respond to time-of-use pricing signals by shifting their energy consumption to standard- and off-peak periods of the day through selective use of home appliances. 

While the Homeflex 4 tariff will significantly increase time-of-use energy rates across the board in 2025/26, these rate increases provide strong incentives to well-off customers to save through load shifting. 

Unfortunately, such cost savings are generally not available to smaller customers who do not have the necessary home appliances needed to effect meaningful load shifting to standard and off-peak periods. 

This further cements perceptions that the Eskom structural and tariff rate adjustments detailed for residential customers are “anti-poor”.