Eskom’s turnaround story begs scrutiny, not applause
If you digest all the good news stories doing the rounds about electricity supplier Eskom, you could be forgiven for thinking all of South Africa’s state-sponsored woes are over. Alas, nothing could be further from the truth. Just ask the hundreds of businesses affected by continuous, multi-day power outages in Silverton and surrounds, as reported this week.
Gaslighting in action
As a freelance writer for FAnews and other insurance and investment clients, your writer attends hundreds of economic and financial market presentations each year. Almost without fail, the CEO, economist or portfolio manager taking to the podium will single out Eskom as an example of how the state and private sector have come together to facilitate a new path for businesses at the southern tip of Africa. If you drink that Kool-Aid, dear reader, what comes next is on you.
This allegedly ‘fixed’ operation has become the source of countless unpalatable stories, including the NERSA ‘oops we undercharged’ fiasco; the looming ‘going all in on nuclear’ dogma; the ‘punish the solar installers’ threat and, more recently, the ‘power cuts to bail out municipalities’ conspiracy theory. You might conclude this behemoth is putting up the ‘open for business’ sign merely to continue remunerating its 40 000-odd workers at multiples of the national average.
A quick run-through of the major stories will leave local businesses and consumers, particularly those with no alternative power source, feeling somewhat green. As reported on BusinessTech and elsewhere, the country’s energy regulator, NERSA, is hell-bent on getting consumers to chip in another R76 billion for electricity following errors in previous price-setting calculations. These hikes are over and above the significant electricity increases consumers have already taken on the chin through 2025.
The danger in regulated prices
Digging into this story reveals just how damaging regulated pricing can be. For example, did you know that NERSA allows Eskom to factor depreciation on its regulated asset base into its pricing equation? As events played out, NERSA initially ignored Eskom’s request for an extra R107 billion in its MYPD6 application. BusinessTech writes: “NERSA subsequently admitted to mistakes being made in its calculations, but posited that it only underestimated by R44 billion; the two parties then agreed to settle on a R54 billion difference.” This clawback would have resulted in a 9% hike in electricity tariffs in 2026 and again in 2027.
It looks fairly certain that local consumers will eventually foot the bill, which has since grown to the R76 billion headline number, declared by NERSA as R14-odd billion in returns and R62-odd billion in depreciation. NERSA was kind enough to run one of those ‘rubber stamp’ public participation processes that local citizens are so familiar with. Why the ‘rubber stamp’ accusation? Well, just ask the thousands of businesses and individuals who had input into BELA, or expropriation, or NHI over the past few years. These allegedly public consultations seldom lead to fundamental changes in the law.
Per Moneyweb, we learned recently that hundreds of Tshwane-based factories were at a standstill due to a widespread power outage, then into its fifth or sixth day. In this article, a business owner revealed between 43 and 72 outages over the past 16 months. So, while the mainstream laps up the headline news of two-hundred-and-something days without loadshedding, businesses in some areas have been subjected to countless outages of indeterminable duration. Power outages are commonplace; they are just not labelled loadshedding anymore.
Is this false economy?
Elsewhere, entire industries face closure due to a combination of power shortages and cost. There were some celebrations when NERSA announced tariff relief for large employers in the smelting industry; but the 87c/kWh concession will end up being lumped onto the rest of the electricity user base.
On an unrelated rant, there is something wrong with offering prices that are too low, through murky backroom deals, to keep industries afloat. This approach is not sustainable. A better alternative is to price energy efficiently countrywide, allowing for bulk offtake where it makes sense.
Travel back a couple of years and readers might remember government’s plea to businesses and households to help share the electricity generation load caused by the country’s then-ailing coal-fired infrastructure. Alas, the thousands who went scrambling for the cash to install batteries, inverters and solar panels now face the ultimate insult of Eskom sabre-rattling over the forced registration of these systems. Eskom has engaged in “quite aggressive” communication to compel homeowners to register their solar installations before 31 March 2026.
Your writer turned to a YouTube video in an attempt to get to the bottom of this mess. In a lengthy clarification discussion, OUTA CEO Wayne Duvenage and electricity analyst Chris Yelland sought to untangle confusion around Eskom’s solar registration drive. The pair were critical of both the tone and substance of Eskom’s messaging, saying that residential solar PV and battery systems below 100kW, installed behind the meter, and supported by a valid Certificate of Compliance (COC), are governed by the Occupational Health and Safety framework rather than the Electricity Regulation Act cited by Eskom.
Money first, then safety
A lawful COC constitutes proof of safety and technical compliance under national legislation. Yelland said the campaign was being conducted “under the cloak of safety” but argued that the agenda was likely commercial. Addressing the threat of penalties directly, he added that “Eskom has no authority to fine a customer” for failing to register a compliant home solar installation.
Duvenage closed the discussion by drawing a parallel with the recent e-tolls debacle and urging similar resolve. “Do not register your systems with Eskom or your municipality unless you want to push electrons back into the grid and be compensated for it, or unless your system is bigger than 100 kilowatts.” He added that homeowners should ensure their installations are supported by a valid COC issued by a registered electrician.
Today’s op-ed is as much a rant about price regulation as it is about electricity. Imagine, for example, you are a broker or financial adviser running a small practice. Your electricity bill has surged. Your rent has climbed. Your staff, who are also battling higher living costs, need increases. You would love to pass those pressures straight through to clients by lifting your hourly rate. Test the market and clients push back or walk away. Why? Because private sector prices are set by supply and demand in a competitive environment, not by decree.
The price follows cost debacle
So, you do what every disciplined business owner does. You interrogate your expense lines. You trim overhead. You delay hires. You renegotiate supplier contracts. And you adjust your cost base to fit realistic revenue expectations. Contrast that with regulated pricing. Eskom compiles its projected expenditure, including headcount, wage agreements, capital charges and returns on its regulated asset base. That revenue requirement is then divided by the volume of electricity it expects to sell before being submitted to NERSA for approval. Price follows cost.
The fundamental difference is that Eskom operates a regulated monopoly. There is no competitive discipline forcing it to reduce costs before seeking higher revenue. If expenditure rises, the regulatory framework provides a pathway to recover that from customers. This structural paradigm weakens the incentive to right-size the organisation or to pursue meaningful efficiency gains. South African consumers end up funding a monster where cost control is, at best, muted.
And that brings us full circle to the earlier ‘power cuts to bail out municipalities’ conspiracy claim. Your writer recently heard mention that the extensive outages afflicting sections of Tshwane could have something to do with municipal arrears to Eskom. The thinking goes that cutting off an area with enough defaulting users would help the municipality's cash flow, as it would end up giving away less energy for free. Hmmm. Surely, they would not be so devious.
Does loadshedding make a comeback?
Finally, as a parting gift, you might enjoy another headline circulating in early February 2026. In a piece on DailyInvestor, the utility warned of a high likelihood of load-shedding in the future, and certainly in 2029 and 2030. The parastatal also introduced a new phrase, unserved energy levels, which readers may as well think of as synonymous with load-shedding or rolling blackouts. The good stories about the Eskom turnaround may, in the end, prove too good to be true.
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