The National Energy Regulator of South Africa (Nersa) has initiated a focused market inquiry to assess the implementation and effects of fixed electricity charges. This investigation will examine the generation capacity charge, legacy charges, and other fees imposed by Eskom and municipal power distributors throughout the country.
On Friday, 26 September 2025, Nersa announced the publication of the Terms of Reference (TOR) for the inquiry. The primary focus will be on municipal fixed charges and Eskom’s unbundled generation tariffs, which include the generation capacity charge, legacy charge, and variable energy charge. The inquiry will involve document requests, data analysis, benchmarking, stakeholder input, and public hearings.
This market-wide inquiry has been prompted by significant concerns from customers and stakeholders regarding the impact of these charges. It will be conducted in accordance with the Electricity Regulation Act, aiming to clarify how distributors set these charges.
Nersa noted that the fixed electricity charges have led to substantial increases on top of the approved 12.74% rise for Eskom. The investigation will also evaluate how these fixed charges affect different customer segments and their compliance with approved tariff methodologies.
The inquiry is designed to enhance transparency, promote regulatory certainty, and ensure that tariff structures remain fair and economically viable. Nomfundo Maseti, a member of Nersa responsible for electricity regulation, emphasised the regulator’s commitment to protecting the interests of electricity consumers. By engaging stakeholders, the inquiry aims to provide regulatory guidance that fosters fairness and stability in the electricity market.
Stakeholders are invited to submit written representations and supporting evidence by 25 October 2025, with a public hearing scheduled for 17 November 2025. Following this, a Market Inquiry Report will be drafted in December 2025, with the final report expected in early 2026.
Context of Recent Price Changes
In April 2025, Nersa approved a retail tariff plan (RTP) from Eskom that significantly altered electricity pricing principles. This shift adversely affected lower and middle-income households as well as individuals who installed solar panels and rely less on Eskom’s grid power.
The RTP introduced higher fixed connection charges while lowering the per-unit cost of electricity. Consequently, those consuming less electricity saw their bills rise, while higher consumption resulted in lower costs. For instance, a two-person household using 500kWh monthly experienced a 29.56% increase in their bill, while a single-person home consuming under 300kWh faced a 34.41% hike.
In contrast, customers using over 1,100kWh monthly benefited from reduced bills. A household consuming 1,500kWh saw its monthly bill drop from R5,220 to R4,796, an 8.12% decrease. The Electricity Resellers Association of South Africa (Erasa) reported an average 30% increase for its customers, primarily in multi-dwelling properties.
While the lowest tier customers on Eskom’s 20A Homelight tariff saw smaller increases, those on the next tier, the Homelight 60A, experienced an 18.26% rise if they consumed less than 550kWh. Additionally, Eskom has eliminated the Incline Block Tariff for Homelight users, meaning higher consumption is no longer penalised with elevated variable tariffs.