Eskom’s new electricity tariffs, set to take effect from April 1, will disproportionately impact low-income households despite being marketed as a move towards fairness and transparency, says a new study by EE Business Intelligence, which was commissioned by the Organisation Undoing Tax Abuse (OUTA).
The study – Impacts of Eskom’s 2025/26 electricity tariffs on residential customers in South Africa – warns that the removal of cross-subsidies and sharp hikes in fixed charges could leave poorer customers paying more while wealthier, high-usage households see their electricity bills decrease.
Eskom’s revised tariff structure for the 2025/26 financial year, approved by the National Energy Regulator of South Africa (NERSA) on March 11, includes a 12,74% average increase for direct customers.
However, the study finds that individual households will be affected differently depending on their tariff types and consumption levels. “To the extent that the impact of Eskom’s restructured tariffs result in higher electricity costs for smaller – generally poorer – customers and lower costs for larger – generally wealthier – customers, the perception is created that these adjustments are ‘anti-poor’,” says Chris Yelland, Managing Director of EE Business Intelligence and energy adviser to OUTA.
Low consumption, high increase
According to the report, customers on Homelight 20A – typically low-income households with 20 A prepaid meters – will face electricity price increases of 13,6% if they use less than 350 kWh per month. This is higher than Eskom’s overall average increase of 12,74%. In contrast, customers using more than 350 kWh per month will see a much smaller increase of just 0,2%.
For Homelight 60A customers – also intended for low-income households – the report finds that those using under 600 kWh per month will experience hikes of 18,3% while households using more than 650 kWh per month may even see reductions in their bills. These outcomes are attributed to the removal of inclining block tariffs, which previously offered discounted rates for lower consumption levels.
The report also notes concerns about the free basic electricity (FBE) policy, which is intended to provide 50 kWh of free electricity to qualifying indigent households. However, it states that over 80% of these households are not registered on municipal indigent lists and are, therefore, not supported. “The vast majority of indigent households in South Africa are not on the indigent register of their municipality and, therefore, do not actually benefit from the FBE allocation that is supposed to help them manage their electricity costs,” Yelland says.
Fixed charges soar for middle-income households
Meanwhile, the Homepower 4 and Homeflex 4 tariffs – used by middle- and high-income customers – will see fixed monthly charges jump by 88% from R192,90 to R362,70. While this will penalise low-consumption users on these tariffs, it will benefit households using large amounts of electricity, the report notes. The energy rate for usage above 600 kWh will drop by 31,9% – softening the blow of the fixed charge increase for higher-consuming households.
For those on Homeflex, which is mandatory for customers with rooftop solar or batteries, costs are expected to jump significantly. The structure incentivises load shifting through time-of-use pricing but such options are not available to many lower-income customers, the report says. “Unfortunately, such cost savings are generally not available to smaller, generally poorer, customers that do not have the necessary home appliances needed to effect meaningful load shifting,” Yelland says.
Eskom says fairer, simpler pricing
Eskom has defended the new structure, saying it removes unintended subsidies and aligns prices with the cost of supply. It says the shift towards flat rates and separated charges for energy, network and retail services will support equity, affordability and improved energy security.
“Our residential customers will no longer have to pay a higher price for consumption above 350 kWh and will instead pay the same cent per kilowatt-hour for all their consumption,” said Monde Bala, Eskom’s Group Executive for Distribution in a statement welcoming the decision by NERSA.
“Customers with rooftop generation will no longer be subsidised by those without as backup capacity costs are now charged separately,” he added.
The utility says the changes promote transparency and reflect actual usage costs across all residential segments. It has also encouraged low-income customers to register for FBE to help offset higher costs.
