Eskom CEO Dan Marokane reports that the State-owned company is being geared towards receiving no more than single-digit tariff increases in future in recognition of the affordability pressures being experienced by its business and residential customers.

“We have it very loud and clear that South Africa cannot afford high prices of electricity, and so we have modelled the business on a single-digit tariff increase going forward.

“That requires us as a business to tighten our belts, to do things smarter, and we are very clear around that part,” Marokane said when presenting the utility’s 2025 financial results, which included the group’s first profit in eight years.

Eskom reported a R16-billion after-tax profit, representing a major swing from the R55-billion loss of 2024, on the back of tariff hikes, higher sales as loadshedding reduced and a material reduction in diesel costs as the coal fleet’s performance improved.

Marokane’s price-path message was reinforced by Electricity and Energy Minister Dr Kgosientsho Ramokgopa, who said Eskom needed to “learn to live” with lower increases.

He also indicated that the electricity pricing policy being developed by his department would seek to protect poor consumers and support large industrial consumers, with a package being prepared ahead of that policy to provide discounted electricity to the ferrochrome smelters.

“For the record, since 2007 to 2024 electricity prices have increased by 937% whilst inflation over the same period increased by 155% – it's untenable, so we have to change that situation,” the Minister averred.

While stressing that many of the costs faced by Eskom were not linked to inflation, Marokane said that it was committed to remaining within the single-digit framework and was targeting to remove R50-billion of costs in the business by 2029.

CFO Calib Cassim also indicated it would be possible to keep tariff hikes within the range, despite a recent R54-billion settlement reached with the National Energy Regulator of South Africa (Nersa), as well as a further R40-billion in outstanding regulatory clearing account allowances granted in favour of Eskom.

Having acknowledged that it had made errors in the calculation of Eskom’s regulated asset base, Nersa announced that the first R35-billion of the R54-billion could be recovered over the coming two years, with R12-billion in 2026 and R23-billion in 2027.

As a result, tariffs will rise by 8.76% in April instead of the 5.36% approved previously, and by 8.83% in the following year instead of 6.19%.

Cassim said it was possible to recover the R19-billion balance as well as the other R40-billion outstanding without breaching the single-digit level by maintaining the R23-billion amount recovered in 2027 for the subsequent three-year tariff cycle.

In a separate presentation made ahead of the results, Eskom chairperson Mteto Nyati took an even more aggressive posture on tariffs, arguing that future increases should not exceed the rate of inflation.

Speaking during a PSG webinar Nyati said the board’s new directive to management was to ensure a moderation in tariff increases.

“We should not be able to see tariff increases that are above CPI,” he said. “They need to be single digits, very much in line with everything else in society.”

Statistics South Africa announced that the consumer price index, or CPI, was 3.3% in August.