South Africans are once again preparing for higher electricity costs after the National Energy Regulator of South Africa (NERSA) approved new tariff increases for Eskom as part of its multi-year price determination (MYPD6). The decision allows Eskom to secure additional revenue over the next few years, with increases set to impact households, businesses, and the broader economy.
Understanding MYPD6 (Multi-Year Price Determination)
The tariff increases fall under MYPD6 – the sixth Multi-Year Price Determination cycle. This regulatory framework governs Eskom’s allowable revenue over a defined multi-year period and determines how electricity tariffs are structured nationally.
In simple terms, MYPD6:
Sets Eskom’s allowable revenue over several financial years
Determines how tariffs are adjusted annually
Accounts for infrastructure investment, operating costs, fuel expenses, and debt servicing
Balances financial sustainability with consumer affordability
The multi-year structure is designed to create pricing predictability while enabling long-term planning for generation capacity, grid modernisation, and energy transition initiatives.
Eskom Tariffs, NERSA Decisions and the Bigger Energy Pricing Shift
South Africa’s electricity pricing landscape continues to evolve following the National Energy Regulator of South Africa’s latest tariff determinations under the Multi-Year Price Determination (MYPD6) process. The regulator approved electricity tariff increases of 8.76% from April 2026 and 8.83% from April 2027, reflecting a balance between Eskom’s requested revenue requirements and consumer affordability considerations.
From Eskom’s perspective, tariff adjustments remain essential to sustain operations, maintain ageing infrastructure, and fund future grid expansion. Before the final decision, Eskom applied for substantially higher tariff increases than what was ultimately approved. The utility argued it needed stronger double-digit hikes to recover rising generation costs, diesel usage, maintenance backlogs and infrastructure investment pressures.
NERSA ultimately scaled these requests back to reduce the immediate burden on consumers. Even so, the approved increases still represent a meaningful cost escalation for businesses and households already managing tight budgets. Eskom has consistently maintained that historical tariff decisions often fell short of covering its full operating costs, contributing to financial strain and limiting investment in maintenance, generation stability and transmission upgrades.
While NERSA positions these tariff adjustments as necessary for long-term grid stability, infrastructure investment, and energy security, the reality on the ground is more complex. For many consumers and businesses already grappling with rising living costs, the increases approved for Eskom still sit above national inflation, placing additional pressure on an economy where households and companies are already stretched.
In theory, stronger energy funding benefits South Africa through improved reliability and future resilience but in practice, it also means higher operational costs, tighter budgets, and tougher financial decisions for those who rely on electricity every day.
Why Electricity Prices Are Increasing – The MYPD6 Context
Infrastructure maintenance and upgrades
A key driver within MYPD6 is the need for sustained infrastructure investment. South Africa’s electricity network requires ongoing investment to maintain reliability, and support future energy demand. Maintenance costs have also risen drastically as ageing power stations and transmission networks require more frequent repairs to remain operational.Supply chains vs the energy demand
Power utilities face higher fuel prices, particularly for coal, diesel, and gas, which are often used to stabilise the grid during peak demand or when renewable generation is unavailable. At the same time, global supply chain disruptions, inflation, and currency fluctuations have pushed up the price of spare parts, equipment, and specialist services.Revenue recovery and regulatory adjustments
Electricity tariffs are also influenced by regulatory reviews that correct past cost estimates. This can include recovering unexpected expenses such as fuel price changes, project delays, or shifts in electricity demand. At the same time, approved tariffs help fund essential infrastructure upgrades like transmission lines, substations, and grid improvements needed to keep the power system reliable and future-ready.Growing demand for energy security
MYPD6 also reflects the increasing national focus on energy security. Reliable electricity supply has become essential for economic stability, business continuity and household resilience. As a result, the pricing framework supports investment in stronger grid infrastructure while indirectly encouraging alternative generation, efficiency improvements and energy diversification to reduce long-term system risk.
Why Solar adoption continues to accelerate
Even within the MYPD6 tariff environment – where electricity prices are expected to rise in a structured but ongoing manner – solar energy continues to stand out as one of the most cost-effective long-term investments for businesses. Rising grid tariffs, supply uncertainty and operational cost pressures have shifted solar from a sustainability “nice-to-have” to a strategic infrastructure decision that helps organisations manage costs, improve resilience and gain greater energy certainty over time.
The Leading Reasons for Solar Adoption
Every electricity price increase strengthens the financial value of self-generated energy. Businesses with solar capacity effectively lock in a portion of their electricity costs, reducing exposure to unpredictable tariff hikes and improving long-term budget stability.
Energy reliability is now directly linked to productivity. Stable power supply helps protect manufacturing output, commercial operations, IT infrastructure and tenant satisfaction. For many organisations, energy independence is no longer just about savings. It’s about protecting uptime and avoiding costly disruptions.
Unlike grid electricity, where costs can fluctuate annually, solar offers predictable long-term energy generation. This stability allows CFOs, investors and financial managers to model returns with greater confidence, supporting more accurate capital planning and stronger investment cases.
Environmental performance is increasingly influencing investor decisions, procurement policies and brand perception. Renewable energy adoption supports ESG reporting, corporate responsibility commitments and long-term sustainability strategies, often strengthening stakeholder trust and market positioning.
Solar installations are increasingly viewed as operational assets rather than expenses. They enhance property value, reduce operational risk and demonstrate future-focused business planning. Particularly important for industrial, commercial and property investment sectors.
Looking Ahead
NERSA’s latest decision reflects the ongoing challenge of balancing affordability with the urgent need to maintain and modernise South Africa’s electricity infrastructure. While tariff increases are never welcome, they highlight the importance of proactive energy planning both at national level and within homes and businesses.
For many consumers, this environment is accelerating a shift toward proactive energy planning, smarter electricity use, renewable adoption and long-term cost stability rather than reacting to each new tariff increase as it arrives.