The City of Cape Town has criticised the National Energy Regulator of South Africa (Nersa) after it approved higher electricity tariff increases for Eskom. The City says the decision shifts more financial pressure onto households and businesses already struggling with rising costs.

According to the City, Nersa lifted Eskom’s permitted increases from the originally proposed 5% to 6% to almost 9% a year for the next two years. The change follows a calculation error identified in Eskom’s initial tariff application.

‘Rubber-Stamping’ Claims and a Call for a Full Redo

Cape Town argues Nersa should have scrapped the additional increase and started a full reassessment of Eskom’s multi-year price determination instead.

Mayoral Committee Member for Energy Alderman Xanthea Limberg said Nersa should have done a complete and accurate review of Eskom’s financials rather than approving an extra increase. She also said Eskom’s financial position does not justify the higher hike, claiming interim results show Eskom is in a better position than forecast to the regulator and is already generating “substantial profits” under the lower, originally approved tariffs.

Limberg said the extra increase is “over 50% higher than originally permitted” and argued this indicates the public is being unfairly burdened.

City Flags More Issues in Eskom’s Application

The City said its formal submission opposing the hike raised concerns beyond the acknowledged calculation error. These include claims that Nersa failed to take asset depreciation into account.

Cape Town also said Eskom’s application may include incorrect financial performance forecasts and outdated asset valuations, which it believes should have triggered a full review process. Limberg said Eskom’s improved performance could only be reasonably explained by higher electricity sales or lower operational costs than what was forecast to Nersa.

The City says it is assessing legal options following what it described as Nersa’s “rubber stamping” of the additional increase. It pointed to Section 15(1) of the Energy Regulation Act, which it says means Eskom is not permitted to generate excessive margins from electricity sales or pass the costs of inefficient operations on to consumers.

Cape Town’s position remains that the additional hike should be scrapped and Eskom’s price application redone to ensure fairness and accuracy.