Minister of Electricity and Energy Kgosientsho Ramokgopa yesterday, 18 August 2026, introduced South Africa’s Revised Electricity Pricing Policy, which cabinet approved for public comment last month. The revised policy reflects a proposed set of measures that are intended to reduce the high cost of electricity while ensuring that tariffs remain cost-reflective and that vulnerable households and strategic economic sectors are protected.
Minister Ramokgopa recently introduced government’s proposed Revised Electricity Pricing Policy, which is to be published shortly for public comment. [Photo: Electricity + Control]
The revised policy updates the 2008 Electricity Pricing Policy to reflect developments in the electricity supply industry, including ongoing market reforms linked to the unbundling of Eskom and the implementation of the Electricity Regulation Amendment Act, 2024.
It establishes national principles and introduces a degree of tariff-path certainty, it provides a framework for transparent, efficient and cost-reflective tariffs, offers guidance for the National Energy Regulator of South Africa (NERSA), Eskom and municipalities, and indicates prices that align with a competitive market, and strengthens social protection and accountability.
Briefing the media on the Revised Electricity Pricing Policy, Minister Ramokgopa said: “Over a period stretching back to 2007, electricity tariffs have increased by about 977%. A number of things have changed since then, which is why we have developed this set of proposals that we are presenting to you today.”
A ten-year price forecast
The minister highlighted that the policy seeks to establish a tariff path that will provide some certainty on the cost of electricity over the next 10 years.
“In terms of this new policy, NERSA will be required to publish a 10-year price forecast. This is important because, particularly for heavy industries, when people want to make significant investments in the South African economy, and they’re investing in a sector that relies on electricity, they want to compute their return on investment. If electricity is a big part of the input cost, they need to have an appreciation of what the price path looks like,” Ramokgopa said.
The pricing policy will provide a framework for transparent and efficient cost-reflective tariffs to avoid hidden costs being included in electricity tariffs.
Once adopted, the policy will guide the work of NERSA, Eskom, municipalities and other actors across the electricity ecosystem.
Opening the market to competition
Through reforms in the electricity sector, government is liberalising the electricity market, opening the market to competition so Eskom no longer holds a monopoly on electricity supply.
Reforms in the sector already allow for new electricity generators – independent power producers – and increasingly, bilateral arrangements for electricity supply between IPPs and offtakers. Ramokgopa said a new set of rules is required to govern this new dispensation.
Furthermore, as South Africa moves towards a wholesale electricity market, the new policy proposed extends beyond the traditional electricity supply system.
Strengthening social protection
Ramokgopa also emphasised that the Revised Electricity Pricing Policy will strengthen social protections.
“It articulates more clearly the support we are providing to the poor, the indigent and the vulnerable,” he said.
He emphasised too that Eskom debt increases when consumers do not pay municipalities and, in turn, municipalities do not pay Eskom.
The current tariff structure enables Eskom to recover municipal debt through the tariff.
“In the current tariff, anything between 1% and 2.5% of the tariff you are paying is on the basis that Eskom is unable to recover what the people are owing,” the minister said. “And municipalities, they put in the cost of supply studies and the fact that they are owed a lot of money, which means they are putting additional pressure on diligent, paying consumers. In terms of the new policy, that’s not allowed,” the minister said.
Ramokgopa said the policy will enable action against those who do not pay for electricity and those who are illegally connected to the grid. “We are insisting that the provider of electricity must be efficient. And when it is efficient, the price of electricity will not be what we are currently charging,” he said.
Free basic electricity
The new policy also provides for modernisation of the administration system on free basic electricity for indigent households.
“We will establish a central and nationally accessible free basic electricity database. With new technology, we can put that database in place. We can integrate this database with existing databases of Home Affairs and with the social grant databases, and there’s a good chance that someone who qualifies for the social grant will also qualify for free basic electricity,” Ramokgopa said.
Supporting energy-intensive industries
With the Revised Electricity Pricing Policy government is also introducing a Negotiated Pricing Agreement instrument to support industries that rely heavily on electricity.
“The current articulation of the Negotiated Pricing Agreement only triggers industry to qualify for, or to make an effort to qualify for, a negotiated price agreement when it is in distress.
“We are introducing another criterion that allows for industries not in distress, but which, if they were to receive concessional funding, would be able to support the national interest – in that they would be able to accelerate growth in priority sectors of the economy and create employment. This is intended to support the rejuvenation of the South African economy,” Minister Ramokgopa said.
For more information visit: www.sanews.gov.za
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