You want to know why your electricity tariffs increase every year? Here are some answers.
- Inflation. Energy prices rely on the national price inflation, which was 5.32 % on average in 2014.
- Eskom decision. The prices are mostly determined by Eskom, which produces almost the totality of electricity supplied in South Africa. Eskom calculates its selling price based on the inflation, the government policy and its own company strategy.
- NERSA approval. The increase asked by Eskom has to be approved by the NERSA – the National Energy Regulator – which checks if the increase is reasonable.
- Municipalities. Finally, for non-direct Eskom consumers, municipalities act as resellers of electricity to the final clients (you, individuals as well as businesses). They decide their electricity tariffs based on Eskom tariffs, adding their margin.
Here is a scheme of the electricity supply in South Africa for a better understanding:
Some alternative solutions to Eskom supply are currently in development, but it will take some time before they are well implemented all over the country. Read more about these solutions.