(Dean Hutton/Bloomberg via Getty Image
South African households are battling with the high cost of living and further double-digit Eskom tariff hikes, on top of accumulative 440% increases since 2007, will drive consumers into a cost-of-living crisis.
Small businesses would fold, the manufacturing sector would falter and farmers would be forced to cut jobs or close their businesses due to the exorbitant price of electricity, while big multi-national firms get cheap power under preferential pricing agreements.
This was the warning from the South African Federation of Trade Unions (Saftu) during the National Energy Regulator’s (Nersa) public hearings on Eskom’s latest tariff increase application held in Durban on Friday and Saturday.
Eskom has proposed a 36.15% increase for 2025, 43.55% for 2026, 3.36% for 2027 and 11.07% for 2028.
The utility has raised electricity prices by more than 400% over the past 16 years and households are buckling under the burden, Saftu representative Pinky Cele told Nersa, urging the regulator to reject the application.
“This proposed increase will imperil the already complicated lives of the working class,” Cele said.
The cost of living for working-class communities is already prohibitively high because of climbing fuel, food and transport costs, she said.
“The rising fuel prices have led to a dramatic increase in commuter transport costs, which constantly filter into the prices of other consumables indispensable to the survival of the working class,” Cele said.
The Pietermaritzburg Economic Justice and Dignity Group’s household affordability index indicates that sustained high inflation rates in the past few years have led to the soaring cost of household food and hygiene baskets.
“Year-on-year, the household food basket has increased by 6.2%, taking the total cost of household groceries to R5 277 30. This is in a country in which 30 million people live below the upper-bound poverty line of R1 634.
“Unemployment is 12.3 million people, with over 29 million working-class people reliant on social grants,” Cele said.
“The increased cost of living across all areas shows that an electricity tariff will worsen the burden and cause a cost-of-living crisis.”
The working and middle classes are finding it increasingly difficult to meet their debt obligations, she added.
DebtBusters’s Debt Index for the fourth quarter of 2024 revealed that consumers applying for debt counselling allocate 66% of their take-home pay to servicing debt — the highest debt-to-service ratio since 2017. South Africans earning R35 000 monthly spend 72% of their take-home pay on debt servicing costs.
Cele said the proposed tariff increases should be viewed in the context of long-term trends in electricity prices. Eskom’s astronomical increases far outpaced cumulative inflation for the period 2007 to 2003, making it increasingly difficult for households and businesses to survive.
Working-class households, mainly in townships, paid R0.37 per kilowatt-hour in 2007 and by 2023-24 were paying R1.97/kWh.
“This represented a nominal increase of 432% in electricity. The 36.15% increase for 2024-25, if accepted by Nersa, will mean electricity prices will increase to more than 442% nominally between 2007 and 2024,” Cele said.
“If adjusted for inflation, the working-class members will pay between 316 and 345% more than in 2007.”
She said the tariff for households and businesses that rely on municipal electricity would increase by 44% due to levies and surcharges.
The cumulative increases over the next few years would mean a household with an average consumption of 900kWh could pay an additional R1 600 monthly.
“Households on a minimum wage will see 30% of their monthly earnings going to the cost of electricity. In comparison, households earning between R12 000 and R20 000 will now have to allocate 8 to 12% of their income to the cost of electricity.
“These ever-rising energy costs, compounded by the prices of food, fuel and transportation, have compelled working-class families to reduce the amount of money spent on food.
“The Pietermaritzburg Economic Justice and Dignity Group has indicated that working-class families underspend on food by 52.2%. This is in a country with a children’s malnutrition rate of 21%.”
Current average household expenditure on electricity amounts to R2 948.98, Cele said.
“If Eskom’s proposed tariff hike is granted, the average household expenditure will skyrocket to R4 015.04 by 2025.
“When coupled with water charges, which have increased by a staggering 2 100% since 1996, it becomes clear that it will be impossible for the working class to survive,” she said, adding that small businesses and farms had also felt “the wrath of Eskom’s relentless tariff hikes”.
A report by the Small Enterprise Development Agency (Seda) indicates that about 40% of small and medium enterprises cite electricity as one of their highest operational costs.
“Seda’s report showed a direct correlation between small and medium business closures and electricity tariff hikes between 2010 and 2023.
“The manufacturing sector has, since 2010, shed about 150 000 jobs, with 60% of the manufacturers citing electricity costs as one operational cost that renders them unsustainable, leading to downsizing or outright closure,” Cele said.
AgriSA says 55% of local farmers have seen their profits decline due to electricity costs. This leads to closures, food insecurity and the monopolisation of food production which has been highlighted by The Competition Commission.
Cele said high energy-consuming industries — known as the Energy intensive User’s Group (EIUG) — consume a significant amount of power without paying the “commensurate prices”.
“There are 27 EIUGs in South Africa, whose combined consumption of Eskom’s electricity is 42%. These companies pay a fraction of what an ordinary consumer pays per kilowatt-hour of electricity. By some estimates, EIUGs pay one-eighth of what an ordinary consumer pays for a unit of electricity,” she said.
The companies, she argued, were given favourable tariffs to stimulate investment but these account for just 4% of jobs and some repatriate their profits abroad.
“The working class is not only shouldering a more significant proportion of Eskom’s revenue per capita but is also effectively subsidising the EIUG,” said Cele.
Ethekwini Ratepayers Protest Movement chairperson Asad Gaffar highlighted that municipal electricity tariffs have risen by 151% between 2014 and 2024. In the last five years, they were up 70%.
He noted that, according to the South African Reward Association, salaries will only increase by 6% in the 2024-25 financial year, while the government has offered public servants 4.7%.
Gaffar said corruption at Eskom has a direct impact on the cost of electricity, especially for the poor.
“We, as consumers, we are picking up the tab for poor governance. We talk about the audit outcome of Eskom in the current audit year — it has remained stagnant with the qualification on the completeness and accuracy of the irregular expenditure disclosure. This follows five financial years of a stagnant position of qualified audit opinion with findings,” Gaffar said.
He added that poor governance had also allowed municipal debt to Eskom to balloon to more than R73 billion.
“We strongly object to Eskom’s proposed 2026 tariff increase,” he said.
Democratic Alliance mayor of Howick Christopher Pappas said the implications of such a significant hike were of “great concern”.
“Our municipality, like many others across the country, is already facing considerable economic challenges. Unemployment remains high and the cost of living continues to rise.
“An increase of this magnitude in electricity tariffs will place an untenable financial burden on our residents, many of whom are already struggling to manage their household expenses.”
The repercussions of the proposed increase were far-reaching and would lead to the exacerbation of poverty and inequality; place strain on small businesses, which are the cornerstone and job creators of the local economy; put pressure on the municipality’s ability to maintain services and force paying households and businesses to switch to renewable energy, he said.
“This will have a further negative effect on municipalities since it is the paying customers that have the means to opt out of Eskom supply. This runs counter to our national objectives of rebuilding municipalities and making them financially viable,” Pappas said.