South Africa’s electricity pricing crisis is deepening financial pressure on households, with calls growing for urgent relief measures such as zero-rating electricity for VAT as government reviews a tariff policy that is not expected to lower consumer prices.
As winter grips South Africa, millions of households face an impossible choice between keeping the lights on, putting food on the table, and paying for essentials such as school fees and transport. Even wealthy consumers are knocking on Eskom and local municipal structures about why their electricity costs keep rising.
Zero‑rating electricity for VAT, similar to basic foodstuffs like brown bread, maize meal, and rice, could offer immediate relief — at least while the underlying cost drivers rooted in Eskom’s ageing coal fleet and operational inefficiencies are being addressed.
Environmental justice organisation The Green Connection has warned that the country’s tariff structure is deepening poverty and inequality, while forcing ordinary citizens to shoulder the cost of institutional failures.
Eskom's institutional failures, including mismanagement, over-staffing and corruption, have been well documented through the past few years.
“Every tariff increase further entrenches inequality and places an unbearable burden on families already struggling to make ends meet,” said Neville van Rooy, the group’s outreach ambassador, this week.
In response to a question from The National, Van Rooy said zero-rating VAT will provide immediate relief.
Democratic Alliance spokesperson on energy, Kevin Mileham, said Cabinet should consider cutting VAT on electricity ahead of the next National Budget, depending on the impact on the government's total VAT income.
Mileham argued that the entire electricity pricing mechanism needed to be overhauled to make it more transparent and fair, ensuring that all South Africans benefit equally rather than only a few large users, as some industrial users that have been able to obtain significantly lower electricity tariffs.
“There should be transparency about the costs to generate, transmit and distribute electricity, so that every neighbour knows they’re paying the same price,” he said.
Mileham said the current pricing model used by the National Energy Regulator of South Africa (Nersa) was based mainly on assumptions about Eskom’s asset values and excluded the costs of financial mismanagement, fraud, and overstaffing.
He added that Electricity Minister Kgosientsho Ramokgopa’s recent suggestion to extend the Free Basic Electricity (FBE) allocation from 50 kWh to 150 kWh was welcome, but insufficient, and also because it also shifts the burden of subsidization of the higher free portion onto other consumers.
Since 2015, Eskom has implemented 12 consecutive annual tariff increases — all approved by Nersa. Electricity costs have risen by around 190% in real terms over two decades, far outpacing inflation. Stats SA reports that more than 23 million South Africans live below the lower‑bound poverty line, underscoring the social impact of rising energy costs.
“Consumers are paying for historical inefficiencies, cost overruns, and governance failures. For many South Africans, rising electricity tariffs are no longer simply a matter of economics but a matter of survival,” Van Rooy said.
He added that municipal consumers are hit hardest, paying additional charges to fund local infrastructure and public services.
“Families are being forced to make impossible decisions between electricity, food, medicine, and school fees.”
Lisa Makaula, advocacy lead at The Green Connection, said increasing tariffs without addressing systemic inefficiencies “simply shifts responsibility onto those least able to bear the cost.”
She pointed to a R54.7 billion loss linked to poor planning and regulatory failures, arguing that accountability must be central to reform.
The organisation’s submission to Nersa’s Multi‑Year Price Determination (MYPD6) process calls for greater transparency, stronger public participation, and a comprehensive review of the pricing framework.
Makaula said South Africa’s reliance on costly coal infrastructure, including Medupi and Kusile power stations, was unsustainable given the falling cost of renewables.
“Renewable energy is already cheaper to build than new coal plants. Yet electricity pricing continues to be influenced by outdated assumptions. Access to affordable energy should not be a luxury — it’s essential for dignity, health, and economic opportunity.”
In coastal communities such as Elands Bay and Doring Bay, rising electricity costs are threatening the livelihood of small‑scale fishers.
“Electricity is not a luxury — it’s the difference between putting food on the table and going hungry,” said Reinett Pullen, a fisherwoman and activist from the Eastern Cape.
Deborah De Wee, founder of the Spirit of Endeavour Fisherwomen, added that many families were reverting to firewood because electricity has become unaffordable.
Michelle Engelbrecht, a pensioner from Cederberg, said half her R2,400 monthly grant now goes to electricity: “It’s simply unliveable. I’m cooking over an open fire again because I can’t afford power.”
Fishing communities warn that escalating tariffs are driving households deeper into poverty.
“Electricity tariffs are currently beyond what we can afford,” said Patrick Adonis of Elands Bay. “Our households are struggling, our expenses are greater than our income, so we have to stretch every cent as far as possible. But the electricity increases and tariffs have gone through the roof. This hits us very hard.”
Eskom’s 2026 financial year revenue reached R370bn, up 5.4 % from 2025, with VAT collections from electricity estimated at R55 – R60bn annually.
The Revised Electricity Pricing Policy (REPP) — released for public comment on July 30, 2026 — updates the 2008 framework to align with Eskom’s unbundling and the country’s evolving energy market.
While it promises greater transparency and cost separation between generation, transmission, and distribution, it only foresees that greater competition in the electricity generation, transmission and distribution market might result in less steep price increases, in the next five years or so.
The REPP is seen by analysts as a measure to stabilise tariffs by preventing unjustified municipal mark‑ups and improving efficiency, but average prices per kWh are unlikely to fall in the short term.
edward.west@nationalmg.co.za