Eskom has acknowledged that there will be differentiated tariff impacts for various categories of electricity customers following the regulator’s approval of a new retail tariff plan (RTP) for implementation on April 1, alongside the 12.74% tariff increase approved for the 2025/26 financial year.

Eskom regulation GM Hasha Tlhotlhalemaje describes the restructuring associated with the RTP as a necessary “shock”, as it begins aligning Eskom’s tariff structure with underlying system costs and changes to the electricity supply industry, while removing unintended cross-subsidies.

“It is a shock to the system but it needs to happen,” Tlhotlhalemaje adds, noting that Eskom has been seeking to change its tariff structure for several years to ensure long-term sustainability.

The RTP approved by the National Energy Regulator of South Africa (Nersa) in February unbundles the energy charges into variable time-of-use charges, and fixed charges that are made up of a generation capacity charge and a so-called legacy charge to recover costs from the renewables programme.

The regulator also approved the Eskom Retail Tariff and Structural Adjustment in March, giving effect to the tariff increase of 12.74% for Eskom direct customers and 11.32% for municipalities on April 1, with the difference taking account of the fact that rates to municipal customers rise only on July 1.

Nersa has also stipulated that the generation capacity charge be phased in over a number of years.

A 20% phase-in has been approved for 2025/26, followed by 30% for each of the subsequent two years, implying that the phasing in will continue into the next tariff cycle, which will begin on April 1, 2028.

For direct Eskom residential customers, the unpopular inclining block tariff, where the cost per unit increased as consumption rose during a month, has been removed for prepayment customers on the Homelight and Homepower tariffs, while a fixed charge will be phased in for Homepower and Homeflex customers.

Eskom is also shepherding households with rooftop PV systems towards its Homeflex arrangement, where homeowners will be expected to register their system and invest in a new smart meter in order to benefit from net-billing credits.

Through the RTP, Eskom has rationalised its municipal tariff offering from 15 to three main categories known as Municflex for large power users and Municrate for smaller users, while sustaining its Public Lighting category.

Service charges will also be levied against the number of points of delivery, while the affordability subsidy credit has been removed for customers wheeling energy.

Senior manager for electricity pricing Terry Njuguna describes the new structure as fairer, more transparent and simplified but says that, while some customers will receive immediate benefits, others will face higher charges.

Some of the potential negative impacts have been quantified by electricity commentator Chris Yelland, who is EE Business Intelligence MD and also energy advisor to the Organisation Undoing Tax Abuse.

He cautions that the changes could have serious and unfair consequences for poorer households, while also discriminating against households with PV systems.

Describing some of the adjustments as “anti-poor”, Yelland has calculated that the poorest households, which consume less than 450 kWh month, face the steepest hikes, while higher consuming households could enjoy a decrease.

“The inclined block tariffs effectively were a way of providing lower, or subsidised, prices to smaller customers (0 to 350 kWh/month and 0-600 kWh per month).

“So doing away with the inclined block tariff reduces the subsidy and pushes up price increases for the poor (small customers), while reducing prices for the rich (larger customers),” Yelland explains.

In addition, the fixed component of the Homepower 4 80A tariff more than doubles from R193 a month to R484 a month, which he says impacts poorer customers with low consumption much more than richer customers with higher monthly consumption levels.

There is also an over-reliance, in his view, on the free basic electricity allowance to mitigate the impact on poor households, given research indicating that the allowances are generally not reaching the intended indigent beneficiaries.

Yelland also contends that Eskom’s requirement for households with PV systems to transition to Homeflex, which requires the installation of a new smart meter at the homeowners own expense, could sterilise the market by restricting PV to affluent households.

Njuguna insists that the RTP remains pro-poor, as it has sustained the subsidy to poor and rural households, which Eskom estimates at R11-billion yearly.

She adds that it rebalances the industrial tariffs such that factories with higher load factors will face higher charges than those with medium to low loads, and which have previously cross-subsidised their high-load counterparts.

The Homeflex tariff, Njuguna says, represents an attempt to integrate rather than discriminate against households with rooftop PV systems, with the tariff and the associated investment in a new meter remaining voluntary for those seeking to claim net-billing credits.

She also stresses, however, that Eskom remains open to making further adjustments should a case be made for an alternative approach for households with PV systems.

Eskom will also publish tariff-comparison tools on its website to provide customers with visibility of the impacts, as well as to potentially equip them to improve billing outcomes by adjusting their consumption patterns.