Bad News for South African Electricity Users As Rising Prices Keep Getting Worse

• Energy expert Chris Yelland has described South Africa's electricity situation as a classic utility death spiral, where rising prices push consumers to use less power
• NERSA has released a draft inquiry report revealing that electricity tariffs have increased by more than 1,100% since 2003
• Hidden charges on electricity bills mean the real price increase is far higher than the official 8.76% tariff hike announced for 2026/27

SOUTH AFRICA - South Africa's electricity crisis is no longer just about load shedding or ageing infrastructure. According to energy expert Chris Yelland, the country is now caught in a death spiral where rising electricity prices drive people and businesses to use less power or switch to alternatives, which then forces Eskom to hike prices again to make up for the lost income.

Yelland said the cycle started with massive cost overruns at Eskom's Medupi and Kusile power stations. This pushed prices up and caused delays that created capacity shortages, which pushed prices up further still.

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How the spiral works

As electricity becomes more expensive, big users like smelters shut down or cut consumption dramatically, and households and businesses look for cheaper alternatives like solar.

This reduces the total amount of electricity being sold, leaving Eskom with less revenue. Under the pricing methodology approved by the National Energy Regulator of South Africa,

Eskom is then permitted to raise prices to recover that lost revenue, which drives even more consumers away from the grid. Yelland said the process has reached a point where raising prices no longer helps.

Making things worse is the fact that official tariff increases do not tell the full story. While Eskom's approved increases for 2026/27 sit at 8.76% for direct customers and 9.01% for municipalities, the actual increase people pay is higher.

This is because of a range of fixed charges built into electricity bills, including generation capacity charges, network access charges, and legacy costs, which must be paid regardless of how much electricity a customer actually uses.

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What NERSA found

NERSA launched its own inquiry after receiving concerns that the real electricity price increases being felt by consumers and businesses were going well beyond the approved tariff adjustments.

The regulator's draft report confirmed those concerns, finding that while the policy behind Eskom's tariff plan was reasonable in theory, the way it played out in practice had produced very uneven results.

Industrial electricity demand has fallen by around 40% since 2003 as tariffs climbed more than 1,100% over the same period. Energy-intensive industries like mining, manufacturing, and agriculture have been hit hardest, with some businesses forced to close entirely.

More on electricity in SA

A Gauteng municipality is considering charging solar users a R2 400 annual fee, drawing sharp criticism from residents and questions from AfriForum about whether the charge is even legally permissible.

Many South Africans are unknowingly spending far more on electricity in winter because of how they manage their geysers.

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Municipal electricity tariff hikes took effect on 1 July 2026 across major metros, with Buffalo City facing the steepest increase at 14% and Cape Town receiving the lowest at 7.5%.

Source: Briefly News