The South African government is working to reduce electricity costs as high tariffs continue to strain households and businesses. The Department of Mineral Resources and Energy has tasked the South African National Energy Development Institute (SANEDI) with analyzing the country’s pricing structure to find ways to lower bills while ensuring Eskom’s financial stability.
President Cyril Ramaphosa acknowledged last year that rising electricity prices have placed severe pressure on consumers. Electricity Minister Kgosientsho Ramokgopa echoed this concern, stating that many families are being pushed into “energy poverty,” forced to choose between buying food and paying for power.
“The cost of electricity is unsustainable,” Ramokgopa said in a recent interview. “For some, it’s a decision between recharging their prepaid meter or buying bread—and bread will always win.” He emphasized that the government must take action to address the crisis.
Why Are Electricity Prices So High?
Historically, South Africa benefited from artificially low electricity prices, which helped attract investment and support industries. However, these rates did not reflect the true cost of production, especially as Eskom’s aging coal fleet required costly maintenance.
Professor Sampson Mamphweli, head of SANEDI’s energy secretariat, explained that Eskom’s current pricing model allows for minimal profit, just enough to maintain infrastructure. The government has previously covered shortfalls through bailouts, but this approach is no longer sustainable.
Possible Solutions
SANEDI is now reviewing the pricing system, exploring options such as:
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Removing fixed charges (like those previously scrapped in Johannesburg) that consumers pay regardless of usage.
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Balancing costs between coal and renewables, as solar and wind power have become cheaper over time.
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Addressing inefficiencies, including cost overruns at Medupi and Kusile power plants, where R400 billion has been spent amid delays and design flaws.
The Road Ahead
While load shedding has eased, the focus has shifted to making electricity more affordable. Mamphweli noted that consumers are indirectly paying for past mistakes, including early renewable energy subsidies. However, with renewables now more cost-effective, their lower tariffs could help offset coal’s higher expenses.
The review is still in early stages, but the goal is clear: a fairer pricing system that reduces household burdens while keeping Eskom operational. The outcome will be crucial for both economic stability and public trust in South Africa’s energy future.
