OUTA warns revised electricity pricing policy protects utility revenues

South Africa Electricity Pricing Policy Faces Backlash Over Fixed Charges

South Africans face substantially higher monthly electricity charges regardless of power consumption if the government adopts its revised Electricity Pricing Policy without major changes. The Organisation Undoing Tax Abuse submitted comments to the Department of Electricity and Energy on Friday, arguing that the draft framework goes to extreme lengths to protect utility revenues while citizens struggle with high tariffs.

The updated policy replaces a framework from 2008 and will guide the National Energy Regulator of South Africa in setting tariffs for years to come. While OUTA supports revising the outdated rules and unbundling Eskom, the organisation warned that several provisions discourage competition and fail to lower prices through consumer choice.

Eskom Revenue Protection Shifting Financial Risk to Customers

The revised policy creates a wall of fixed charges stipulating that revenue lost when customers reduce consumption must still be recovered, according to OUTA. Eskom saw electricity sales drop 6.2 percent to 178 terawatt-hours in the 2026 financial year, marking the lowest amount of energy sold since 2000. Despite this decline, the utility posted an increase in after-tax profit from R14 billion to R30.3 billion due to consistent electricity price hikes.

The revised EPP instead serves to guarantee the revenue of the incumbents come what may and shifts their business risk onto the customer, OUTA CEO Wayne Duvenage said.

Duvenage noted that 15 years of above-inflation tariff increases under a regulated monopoly demonstrate that regulation alone does not deliver efficiency. The organisation rejected the notion that fixed and variable components of a tariff should match the fixed and variable cost structure of the supplier.

OUTA Recommendations for Tariff Reform and Independent Oversight

OUTA submitted several key recommendations to the Department of Electricity and Energy regarding the draft policy framework:

• Costs arising from wasteful expenditure, inefficient contracts, and capital overruns, including those for Kusile and Medupi, must not be recovered from customers.
• An independent review of asset value methodology is required before replacement value becomes entrenched in the policy.
• Allowed return on assets should be set at the lower end of the range consistent with efficient financing.
• Generation and transmission must be treated as direct pass-through costs while eliminating municipal mark-ups.
• Technical and commercial losses that distributors pass on to customers must be capped and require annual reporting.
• Ongoing network charges, capacity fees, and levies for customers with embedded solar who disconnect from the grid should be waived in their entirety.
• Every negotiated pricing agreement must include an independent, published cost-benefit analysis and public consultation.

Frequently Asked Questions About the Revised Electricity Pricing Policy

What is the primary purpose of the revised Electricity Pricing Policy?

The revised EPP is designed to replace a 2008 policy and guide the National Energy Regulator of South Africa in determining electricity prices and tariffs for future years.

How did Eskom’s financial performance change amid falling sales?

Eskom recorded a drop in electricity sales to 178 terawatt-hours in the 2026 financial year, yet its after-tax profit increased from R14 billion to R30.3 billion following substantial tariff hikes.

What are OUTA’s specific proposals regarding solar energy users?

OUTA recommended that customers with embedded solar who disconnect from the grid should have all ongoing network charges, capacity fees, and levies waived in their entirety.

Which government body received OUTA’s submissions on the policy?

The Organisation Undoing Tax Abuse submitted its comments and recommendations directly to the Department of Electricity and Energy.

Every negotiated pricing agreement should be preceded by an independent, published cost-benefit analysis and public consultation, with its cost to other customers and the fiscus quantified and disclosed, OUTA stated in its submission.