OUTA Opposes Eskom's Proposed 66% Electricity Price Hike Over Three Years

The Organisation Undoing Tax Abuse (OUTA), a prominent civil society group in South Africa, has publicly opposed Eskom’s recent application to the National Energy Regulator of SA (Nersa), which proposed a significant 66% increase in electricity prices over a span of three years. Estienne Ruthnam, OUTA Senior Project Manager, stands firm on the position that South Africa's fragile economy cannot sustain such steep price increments.

Drawing on detailed analysis and data, OUTA's submission to Nersa elucidates the onerous impact that a cumulative rise of 66% by 2027—starting with a substantial 36.15% in 2025—would implant on the nation's economic framework, its citizens, and societal welfare. The submission comes at a critical juncture as Eskom seeks to elevate its revenues from R446 billion in 2025 to R537 billion by 2027.

OUTA's major criticism targets what they perceive as Eskom's myopic strategy, which leans disproportionately on escalating tariffs for achieving cost reflectivity, neglecting avenues for enhancing operational efficiency, and reducing expenditure. The organization has pinpointed Eskom's inadequate emphasis on stringent cost containment measures, utilization of outdated economic forecasts, and a shortfall in comprehensive cost-cutting strategies.

In response, OUTA has tabled several pivotal recommendations for Nersa’s consideration:

1. Reject the proposed increases as excessive and economically damaging.

2. Encourage Eskom to implement substantive cost cuts, particularly in staffing, maintenance, and procurement.

3. Enhance Eskom's transparency and accountability in financial management and asset valuation.

4. Commission independent evaluations of Eskom’s socio-economic influence, employment, and asset valuation methods.

5. Promote a speedy transition towards renewable energy sources to diminish reliance on fossil fuels.

6. Support structural reforms to increase competition and diversity in energy provisions.

These insights coincide with Nersa’s ongoing assessment of Eskom’s Multi-Year Price Determination (MYPD6) application which outlines a revenue requirement that escalates annually from 2025 to 2027. The scrutiny by Nersa also includes Eskom’s Regulatory Clearing Account (RCA) application, which allows for the recoupment of under-recovered costs from previous years.

The implications of Eskom’s pricing strategy underscore the balance between financial viability and the sustainment of affordable energy prices for consumers. OUTA’s engagement presents a compelling case for a reconsideration of Eskom’s pricing roadmap, one that prioritizes economic resilience and the progress towards a more sustainable and competitive energy landscape for South Africa.