By: Gofaone Motsamai
The recent approval by the National Energy Regulator of South Africa (NERSA) of a 12,7% electricity tariff increase for the 2025/26 financial year has raised serious concerns about its implications for household budgets, business operations and socio-political stability.
Mpho Lenoke, an economics lecturer at the Mahikeng Campus of the North-West University (NWU), provides expert insights into how this significant rise will impact various aspects of South African life.
According to Mpho, the 12,7% tariff increase approved by NERSA for the 2025/26 financial year will further drain already strained household budgets, especially when viewed against the planned 5,36% increase in 2026 and 6,19% in 2027. These are way above the rate of inflation and will further widen the gap between electricity prices and the cost of living.
He emphasises that for low- and middle-income families, electricity is a non-negotiable and essential expense. Households will now have to reprioritise expenditure on such essentials as food, healthcare and education whenever there is an increase in prices.
Mpho points out that the ramifications extend beyond household budgets. "Businesses will also be affected, since operational costs will rise, contributing to cost-push inflation as businesses pass increased electricity costs on to the consumer. This will contribute to general price increases across various sectors, further straining the economy and affecting households."
He highlights that this situation could result in job losses and reduced economic output, compounding the challenges of an economy where unemployment is above 30%. Continued rises in utility costs without matching wage increases will reduce disposable income and slow down consumer spending, weakening economic growth.
"Although Eskom's Generation Recovery Plan ensured that there were over 10 months of uninterrupted supply of electricity, the fragility of the system was exposed in January 2025 by the sudden Stage 3 loadshedding. Eskom attributed this temporary setback to structural breakdowns that required longer times for repair," notes Mpho.
He also addresses the political and social consequences of the tariff increases. He warns that there is a history of service delivery protests in South Africa, and rising tariffs, combined with intermittent power cuts, could further inflame public frustration, especially among lower-income communities already battling high living costs.
Another concern is the widening inequality in energy access. "While rich households and large companies can invest in solar energy and generators, poor households have nothing to do but bear the high costs, therefore increasing the gap in energy access," he says.
To mitigate these challenges, Mpho suggests several measures that the government could implement. "Strengthening law enforcement to combat electricity theft and vandalism is crucial, as these activities increase costs for Eskom and contribute to higher tariffs for paying consumers."
Encouraging private sector investment in renewable energy through independent power producers (IPPs) is another vital step. "IPPs and increased private sector energy generation will break Eskom's monopoly and make electricity cheaper yet again, as well as increase long-term energy security," he suggests.
In addition, Mpho recommends incentives for alternative energy solutions, such as lowering the costs of solar panels, battery storage systems and energy-efficient appliances through tax incentives. This would increase their adoption by lower- and middle-income households, decreasing the use of Eskom power.
He further emphasises the need for a more predictable tariff path and policies that promote wage growth to help balance rising energy costs with household incomes. "With NERSA having already signed off on tariff increases through to 2027, the government should adopt policies to manage inflation and promote wage growth, ensuring that the rising energy costs are not placed unfairly on the consumers," he explains.
"Improving Eskom’s operational efficiency, reducing its debt and ensuring greater accountability are essential to justify future tariff increases and improve service delivery."
Mpho Lenoke is an economics lecturer at the NWU’s Mahikeng Campus.
