Steeper electricity price hikes due to regulator error: 'The impact is going to be devastating' - Zwelinzima Vavi

The Money Show's Stephen Grootes is joined by Zwelinzima Vavi, General Secretary of the South African Federation of Trade Unions, and Chris Yelland, MD of EE Business Intelligence.

'I almost feel personally failed by Nersa because they get their sums wrong with Eskom almost all the time when it comes to tariff applications, and now, again!'

That's Stephen Grootes commenting on the news that South Africans will be subject to even steeper increases in electricity prices over the next two years.

This comes after the National Energy Regulator of South Africa (Nersa) admitted to errors in its earlier tariff determination for Eskom's rate increase application.

The result of the settlement now reached between the two means that there will be an additional increase of 3.4% for the 2026/27 financial year, resulting in a price hike of 8.76%.

For 2027/28, the additional increase will be 2.64%, resulting in a hike of 8.83%.

The move will lead to even greater energy poverty, warns SAFTU's Zwelinzima Vavi.

"At three times the rate of inflation, the increase makes SA the country with the highest electricity price in Africa, and in a context where 62% of its population live below the upper-bound poverty line of R1 158 for a whole month."

Zwelinzima Vavi, General Secretary - SAFTU

"The poor will be forced to disconnect and more families now are facing the reality of the kettles, the geysers and the stoves being reduced to white elephants within our homes. People in the townships, informal settlements and the rural areas face wood again, reversing the gains of electricity provision that has nearly reached universal access in the country."

Zwelinzima Vavi, General Secretary - SAFTU

Vavi points out that it's not only the poor who will suffer - the 'devastating' effects will also be felt by municipalities, businesses and industry in general.

Energy analyst Chris Yelland also warns that 'this is not where it ends'.

"This 'mistake' made apparently by Nersa, means an increase in the price of electricity by about 18%, spread out over three years."

Chris Yelland, MD - EE Business Intelligence

"And, considering the previous judgment recorded just before this settlement, it takes Eskom's clawback up from R54 billion to over R90 billion. The impact of this is to add 18% and make it 31%... and what we don't know is over what period of time this is going to happen."

Chris Yelland, MD - EE Business Intelligence

Scroll up to the audio player to listen to the full conversation (Nersa discussion starts at 3:35)