South Africa’s energy landscape tilted again this month after the National Energy Regulator (NERSA) reached an out-of-court settlement with Eskom that will raise electricity tariffs well above earlier projections, a move the South African Federation of Trade Unions (SAFTU) says will push millions of households deeper into poverty.
SAFTU argues the settlement corrects technical errors but leaves working-class families to shoulder a heavier bill at a time of mounting cost-of-living pressures.
How the Settlement Translates Into Higher Costs
NERSA’s settlement with Eskom effectively adds R54 billion to Eskom’s allowed revenue over the multi-year pricing period. This means tariffs for 2026/27 and 2027/28 will rise by nearly 9% instead of the earlier 5–6% estimates. In the short term, households face about a 3% higher burden over the next two years, but the real squeeze will come when compounded increases hit.
This is how the decision filters down: every rand added to Eskom’s revenue allowance gets recovered through consumer bills. Even small percentage hikes translate into hundreds of rands more per month for households already surviving on thin margins.
How Rising Tariffs Push Families Toward Poverty
Electricity is not just a utility, it determines whether food can be stored safely, whether children can study at night, and whether households can run small businesses from home. When tariffs rise, poor households cut back on meals, on heating, on children’s schooling resources. Others fall into debt just to keep the lights on.
This is the process SAFTU warns about:
- Households sacrifice essentials to cover electricity costs.
- When income no longer stretches, prepaid meters run out leading to disconnection.
- Families slide into “energy poverty,” where electricity becomes a luxury rather than a necessity.
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The tariff increases hit everyone, but this is how the poor suffer disproportionately:
- Low-income families spend a far greater share of income on electricity. A 9% increase for a wealthy household is manageable; for a minimum-wage earner, it is devastating.
- Prepaid customers face instant disconnection when they cannot afford tokens. Unlike those with postpaid billing, there is no buffer.
- Informal traders and microbusinesses that depend on refrigeration or lighting see rising costs eat away already razor-thin profits, threatening livelihoods.
The increases don’t just affect households. Here’s how the wider economy is dragged down:
- Small and medium businesses pay more, passing costs to consumers and fuelling inflation.
- Farmers and manufacturers face higher production costs, which ripple across food and goods prices.
- Investor confidence suffers as uncertainty around tariff-setting deepens mistrust in regulatory stability.
How SAFTU Frames the Crisis
For SAFTU, the problem is not just the numbers but the principle: regulators and government appear to be prioritising Eskom’s financial recovery at the expense of the poor. By correcting Eskom’s past revenue claims through future bills, households are effectively paying for technical errors they had no role in.
SAFTU argues that this is how inequality worsens by forcing those least able to absorb price shocks to subsidise a broken utility. The federation has demanded protective measures and warned that without intervention, millions more South Africans could be locked out of reliable electricity access.
How Solutions Could Work
Experts and unions propose several measures to soften the blow. Here’s how they could help:
- Lifeline tariffs and targeted subsidies would shield the poorest by ensuring a basic level of free or affordable electricity.
- Transparent regulatory processes would restore trust and allow for scrutiny before households are hit with unexpected hikes.
- Investing in renewables and decentralised power could reduce reliance on Eskom’s fragile structure, cutting long-term tariff pressures.
- Debt relief or social grants tied to energy costs could cushion the immediate shock for vulnerable households.
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The next steps will be telling:
- Parliament may demand accountability for how the R54 billion figure was reached.
- Civil society will track disconnections, arrears, and household coping strategies as early signs of deepening energy poverty.
- Government decisions on relief measures will show whether social protection is a priority or an afterthought.
