Image Source: Polity
Local – The Pretoria High Court’s ruling that the National Energy Regulator of South Africa’s (NERSA) process for approving municipal electricity tariff hikes was unconstitutional has intensified scrutiny of the country’s energy pricing framework.
The court found that NERSA failed to require cost-of-supply studies and neglected adequate public participation, meaning millions of households and businesses may have been paying tariffs that were not adequately justified.
The decision has renewed public debate over who is responsible for the escalating cost of electricity — Eskom, municipalities, or intermediaries.
Energy Expert Zakhele Madela believes the ruling exposes deeper flaws within South Africa’s energy ecosystem and highlights long-standing inefficiencies in how tariffs are set and distributed.
“Eskom has been very lenient with the consumers,” Madela said, explaining that the power utility often deviated from its rigid pricing formulas to shield citizens from the full burden of rising costs.
He explained that Eskom’s structure comprises three main divisions — generation, transmission, and distribution — each of which influences costs differently.
Madela believes that while Eskom’s production expenses are relatively low, inflation occurs properly once the electricity leaves Eskom’s control and passes through multiple intermediaries.
“It costs Eskom about 80 cents a kilowatt hour to produce electricity from coal and nuclear… Eskom would make a lot of money if it charged us one rand 10 cents a kilowatt hour. But that’s not what we are being charged,” he explained.
Madela argued that the real issue lies with a complex web of intermediaries and private billing companies that inflate prices without adding value. He noted that these “middlemen” — including municipalities — are the biggest drivers of high costs.
“There are all these middlemen, including the municipalities themselves… there’s a lack of honesty in this country,” Madela said, referring to private companies profiting from billing systems while producing no electricity.
The Real Cost Behind the Bill
Eskom’s electricity generation is not inherently expensive, but the inflated prices arise from a chain of unnecessary third parties between Eskom and consumers. Madela said these entities continue to profit at the public’s expense, distorting the real cost of power.
“Eskom’s electricity is not expensive. What is expensive is all these middlemen that are part of the daily chain,” he asserted.
Madela believes South Africans must now demand full transparency from both Eskom and NERSA, warning that accountability is essential if consumers are to benefit from the court’s ruling.
“It’s all good for us to say municipalities are overcharging us and the court has ruled in favour of the consumers… but we must look into this,” he urged.
He said the only way to make electricity affordable again is to remove the profit-driven intermediaries standing between Eskom and the end user.
“The people who don’t produce electricity… remove all these middlemen and then we will have affordable electricity.”
