Mayibongwe Maqhina|Published
Electricity and Energy Minister Kgosientsho Ramokgopa says the 9.01% average increase in Eskom’s tariffs was applicable to municipal bulk purchasers for the 2026/27 financial year following the National Energy Regulator of South Africa’s tariff determination.
“This increase applies to the cost of electricity supplied by Eskom to municipalities and does not automatically translate into an equivalent percentage increase in every household’s electricity bill,” Ramokgopa said.
He was responding to parliamentary questions from EFF MP Nazier Paulsen, who asked whether his department had assessed the impact of the increase that took effect on July 1, 2026, on Cape Town households, especially low-income and indigent households.
In his response, Ramokgopa explained that the country’s electricity supply industry operates through a framework in which Eskom supplies electricity directly to certain customers and supplies electricity in bulk to municipalities, which distribute and sell electricity to consumers within their areas of supply.
Subsidised lifeline tariff
He said in the case of the City of Cape Town, a separate household-level assessment specifically isolating the impact of the 9.01% Eskom bulk tariff increase has not been confirmed.
“The reason is that the bulk tariff increase alone is insufficient to determine the actual financial impact on households. Such an assessment would require an analysis of the City’s approved 2026/27 retail tariffs, household consumption profiles, applicable fixed charges, indigent support arrangements and the extent to which changes in bulk electricity costs are reflected in the tariffs charged to different consumer categories.”
However, the minister said his department recognised the importance of protecting vulnerable consumers against energy poverty.
Ramokgopa noted that the City of Cape Town’s existing support measures included a subsidised lifeline tariff for qualifying residential customers and free basic electricity allocations for eligible households.
“The City’s 2026/27 tariff information provides for qualifying lifeline customers to receive either 60 kWh or 25 kWh of free basic electricity per month, depending on their average electricity consumption. Eligibility requirements apply.”
Asked about the City’s decision to procure up to 200 megawatts of electricity from Independent Power Producers (IPPs), Ramokgopa said his department supported the diversification of electricity supply and the participation of municipalities in procuring electricity from IPPs.
This, he said, formed part of broader efforts to improve security of supply, reduce dependence on a single electricity supplier, encourage private-sector investment and promote the development of a competitive electricity market.
“The City of Cape Town’s procurement of 200 megawatts of electricity from IPPs is consistent with the broader objective of diversifying electricity supply.”
Municipalities increasingly procuring electricity from IPPs
Ramokgopa also said his department has engaged with the City in considering its application for the relevant determination in line with the Electricity Regulation Act.
He stated that municipal procurement of electricity from IPPs remained subject to the applicable legislative, regulatory, grid-connection, environmental and procurement requirements.
This, he said, formed part of broader efforts to improve security of supply, reduce dependence on a single electricity supplier, encourage private-sector investment and promote the development of a competitive electricity market.
“The City of Cape Town’s procurement of 200 megawatts of electricity from IPPs is consistent with the broader objective of diversifying electricity supply.”
Paulsen also asked Ramokgopa whether he has assessed the implications of municipalities increasingly procuring electricity independently of Eskom.
In response, Ramokgopa said Eskom has recognised that the energy landscape was changing, with municipalities increasingly procuring electricity from IPPs.
“Eskom has developed a new business model aimed at adapting to this evolving market, strengthening its competitiveness and ensuring long-term sustainability. The model positions Eskom to respond to increased competition through the development of additional products and services, more flexible customer offerings, and new revenue streams across the energy value chain.”
He stated that Eskom’s sustainability will depend not only on electricity sales, but also on its ability to diversify its offerings, retain and attract customers, improve operational efficiency, and adapt to the changing needs of municipalities and other customers.