City of Cape Town cuts power on Eskom tariff hike

The City of Cape Town has condemned the National Energy Regulator of South Africa’s (Nersa) decision to raise Eskom’s tariff to almost nine percent for the next two years.

The permitted hike has increased from between five to six percent. 

This decision follows a court review that revealed earlier calculation errors, leading to an additional R54.7 billion in allowable revenue over the next two years.

As part of the new tariff adjustments, Nersa has approved an additional R54.7 billion in allowable revenue for Eskom over the coming two years. This is expected to contribute to mandatory price hikes of 8.76 percent in April 2026 and 8.83 percent in April 2027.

However, the City of Cape Town said Nersa should have scrapped the hike entirely, pending a full redetermination of Eskom’s multi-year price application. 

The mayoral committee member for energy, Xanthea Limberg, said Nersa should have completed a thorough and error-free assessment of Eskom’s financials. 

She said: “It is now public knowledge that Eskom is in a better financial position than forecasted to Nersa, based on actual interim Eskom financial results.

"In fact, Eskom is already generating substantial profits even under the lower originally approved tariffs. This is strong evidence that the public is being unfairly burdened with this extra Eskom hike, over 50 percent higher than originally permitted."

She reiterated that the City’s position is that the additional hike should have been scrapped, citing likely inaccuracies in Eskom’s application.

Limberg said: "The City’s submission opposing the hike pointed out that – beyond Nersa’s error of failing to take asset depreciation into account – there are likely many more inaccuracies with Eskom’s application, including incorrect financial performance forecasts and outdated asset valuations.

"Eskom’s improved financial performance can only be rationally explained by a combination of higher electricity sales or lower operational costs than what was forecasted to Nersa."

She said the City will now assess its legal options following Nersa’s decision. 

“Under Section 15 (1) of the Energy Regulation Act, Eskom is not permitted to generate excessive margins on electricity sales or make consumers cover the costs of inefficient operations,” Limberg added.