The Minister of Electricity and Energy, Dr. K. Ramokgopa, announced that his department is overhauling our electricity pricing system. The problem of excessive tariffs, which have outpaced inflation by more than sixfold since 2007, confirms MCCI’s point about the negative impact of electricity costs on businesses.

Since the current electricity pricing policy was introduced in 2007/08, electricity prices have increased by approximately 907%, compared with inflation over the same period, which has risen by only about 150%.  MCCI warned the Eskom delegation that its pricing structure was not sustainable for business.

Key Points from Ramokgopa’s Announcement for Business

10-year electricity price forecast – NERSA will be required to publish a long-term electricity price outlook, enabling businesses, municipalities, and households to plan for future electricity costs with greater certainty.

More transparent tariffs – Electricity bills will increasingly distinguish between generation, transmission, distribution and retail/administration charges. This is intended to show consumers what they are paying for. Providing the municipality’s accounts department is up to an itemised billing system.

Support for industry – Government wants electricity pricing to improve the competitiveness of energy-intensive industries and reduce the economic burden of high electricity costs.

NERSA approved an 8.8% tariff increase for Eskom direct customers from July 2026. Customers supplied through municipalities saw an average increase of 9%. STLM has increased our electricity costs by the full NERSA 11.7%. As the Steve Tshwete Municipality has not defaulted on Eskom tariffs, the rest of his comments do not apply, as MCCI trusts STLM will continue paying Eskom on time.

The cumulative financial impact since 2008, rather than the projected rise in 2026/27, is a significant concern for companies. According to energy-intensive industry associations, South African electricity rates have surged from roughly 19.9 c/kWh in 2008 to more than 165 c/kWh by 2024, an increase of more than 700% over this period.

STLM’s economy is dependent on energy-intensive sectors such as mining, steel production, ferrochrome, and engineering and manufacturing. The cumulative effect of electricity tariff increases since 2008 continues to erode the competitiveness of businesses in the municipality and has affected the municipality’s attractiveness to investors.