Paying to live is getting harder in South Africa. Electricity tariffs are climbing almost 9%, hitting households and small businesses at a time when budgets are already tight.
Families will have to juggle food, transport, school fees - and electricity bills - while economists warn that the 8.76% and 8.83% tariff hikes over the next two years will push up the cost of living nationwide.
The increases follow a High Court ruling requiring the National Energy Regulator of South Africa (NERSA) to recalculate Eskom’s allowable revenue using proper methodology and public consultation. This reassessment has resulted in the additional allowable revenue of R54 734 million for Eskom, which will be phased in to cushion consumers from sudden price shocks while addressing the utility’s financial needs.
“NERSA announced today that based on the information at its disposal and the re-determination of Eskom’s Generation Regulatory Asset Base (RAB) for the 2025/26, 2026/27 and 2027/28 financial years, the Energy Regulator, at its meeting held on February 7, 2026, approved Eskom’s additional allowable revenue of R54 734 million,” the regulator revealed.
Frank Blackmore, Lead Economist at KPMG South Africa, told the Saturday Star the tariff increases will force many families, particularly those in low- and middle-income brackets, to divert money away from essential needs in order to cover rising electricity bills.
“The impact will clearly be negative, as it would direct income from spending on other necessities such as food, transport, clothing, schooling, etc. to paying for the increased cost of electricity,” Blackmore said.
Blackmore said the impact goes beyond electricity bills, as higher energy costs push up prices across the economy.
“A consequence of electricity price increases would also be the inflationary cost of nearly all products and services rising as businesses adapt their prices to higher electricity prices,” he said.
“This means that apart from electricity, all other goods in the baskets of consumers will also increase, meaning that unless their incomes increase by the same amount, they will be worse off overall.”
Blackmore added that higher inflation could also lead to higher interest rates, further increasing the financial burden on consumers already struggling with debt.
Some poor households receive free basic electricity, but many middle-income South Africans earn too much to qualify yet not enough to absorb the rising costs.
“We should also remember that households that can’t afford electricity and are below some financial thresholds are provided some free basic electricity, which would continue. However, this free electricity is really only a minimum amount,” he said.
He noted that households earning slightly above the qualifying threshold are likely to be hardest hit.
“As in other areas of our economy, such as housing, there is a cohort of people with a basic level of income that is both above the free basic electricity threshold but would not have excess funds to afford the continual rise in electricity costs that will be most affected.”
The tariff hikes are also expected to affect small businesses, which often operate on thin profit margins and may struggle to absorb higher operating costs.
“As with consumers, small businesses will also face increased operating costs with limited room to claw back expenses through price increases,” Blackmore said.
He also warned that businesses may be forced to cut costs in other areas, including employment.
“The result will be that such businesses will need to cut costs elsewhere, which could mean hiring fewer employees as well as finding cheaper suppliers or limiting goods and services available.”
This could have knock-on effects on employment levels and local economies, particularly in communities already facing economic hardship. While acknowledging Eskom’s financial pressures, Blackmore said addressing the deficit through tariff increases inevitably shifts the burden onto consumers.
“It is not easy to recommend alternative approaches to dealing with the deficit since the reasons or necessity for incurring the deficit are not covered,” he said.
Reacting to President Cyril Ramaphosa’s State of the Nation Address (SONA), David McDonald, CEO at SolarAfrica, said the final adjustments were higher than initially expected.
“The President was right to say that electricity used to be cheap, but, due to past state capture, mismanagement and years of underinvestment, it is no longer. In fact, to add salt to the wound, NERSA has just confirmed that tariff adjustments will be higher than initially anticipated, with a 5.36% increase effectively rising to 8.76% following calculation corrections. For C&I users, cost certainty is critical. Businesses need predictability if they are to invest and grow.”
In his SONA, Ramaphosa defended the government’s long-term energy reforms, arguing that structural change is necessary to secure future stability.
“Having put load shedding behind us, we must now transform our energy system to ensure long-term energy security,” Ramaphosa said.
“For decades, our economy grew on the back of cheap electricity. But then state capture, mismanagement, inadequate maintenance and inflated megaprojects drove up the cost of electricity for businesses and our citizens.”
He said regulatory reforms have unlocked significant private-sector investment in renewable energy and that the country is on track to fundamentally reshape its energy mix.
“By 2030, more than 40 percent of our energy supply will come from cheap, clean, renewable energy sources,” he said.
Ramaphosa added that the government is restructuring Eskom and creating an independent state-owned transmission entity to operate the electricity market and ensure fair competition.
“We are establishing a level playing field for competition so that we are never again exposed to the risk of relying on a single supplier to meet our energy needs.”
“The target of more than 40% renewable supply by 2030 is encouraging. If transmission reform and grid expansion keep pace with generation, South Africa can restore competitiveness and build a more resilient, affordable energy system.”
Murray Crow, Managing Director of Kwikot, said households are increasingly feeling the financial strain despite electricity being more available.
“As South Africans head into 2026, the energy conversation has shifted. Load shedding may be less dominant than in previous years, but electricity prices, infrastructure strain and climate volatility remain firmly in the spotlight,” Crow said.
Kwikot analysis shows a stark reality: electricity may be more available, but increasingly unaffordable - especially for heating water.
“South Africa has spent years asking whether we have enough electricity,” Crow said. “Now households are asking a different question: even if it’s available, can we afford to use it?”
Opposition parties have intensified criticism of the latest electricity tariff increases, warning of deepening poverty, job losses and political consequences ahead of local government elections.
In a statement, ATM’s Vuyo Zungula said the increases are not just percentage adjustments but a direct blow to struggling households.
“This increase is not merely a number; it represents a palpable burden on households already struggling to make ends meet,” he said.
With nearly 37.9% of South Africans living below the lower-bound poverty line, Zungula argued that families will be forced to redirect money away from essentials such as food, healthcare and education to pay higher electricity bills.
“This is unacceptable,” he said.
The party warned that many households are already experiencing energy poverty, where electricity costs consume as much as 20% of household income.
According to the ATM, the new hikes will intensify the crisis, leaving families to choose between keeping the lights on and meeting other basic needs.
“This is a violation of the basic rights of South African citizens to access affordable energy,” Zungula said.
Beyond households, the ATM believes the impact will spill over into the broader economy. The party cautioned that high electricity costs are making sectors such as manufacturing and agriculture increasingly unprofitable.
“This situation threatens to cause significant job losses and economic contraction, a jobs bloodbath that could transform vibrant communities into ghost towns,” Zungula warned.
The Democratic Alliance (DA) has also come out strongly against the decision, with Kevin Mileham MP, the party’s spokesperson on electricity and energy, pledging resistance.
“The DA will fight tooth and nail against the National Energy Regulator of South Africa’s upcoming 18.36% increase in electricity tariffs,” Mileham said.
He criticised the (NERSA, arguing that the regulator remains unaccountable while municipalities will bear the brunt of public anger when implementing the increases.
“In a local government election year, NERSA will put municipalities in the crosshairs of angry residents,” he said.
Morné Mostert, AfriForum’s Manager for Local Government Affairs, emphasises that a mere announcement regarding the increase is not enough. “Complete evidence regarding the decision is now essential. The energy regulator will have to be able to demonstrate that the decision was thoroughly thought through and that the methodology was correctly and consistently applied.”
“Electricity tariffs affect everyone in the country. It is therefore not acceptable that billions of rand are simply redirected to Eskom without NERSA being able to fully and convincingly explain why this is necessary, legitimate and fair,” explains Deidré Steffens, AfriForum’s Advisor for Local Government Affairs.
Once the full details of the decision are available, AfriForum says it will carefully study NERSA’s reasons for the Eskom tariff increases. The organisation will then discuss the matter with its legal team to determine what further steps are needed to protect consumers’ rights.
Saturday Star