The National Energy Regulator of South Africa (NERSA) has published its official Reasons for Decision on the redetermination of Eskom’s Generation Regulatory Asset Base (RAB), following approval by the Energy Regulator during its meeting on July 10, 2026. The publication explains the regulatory process and the reasons behind the revised decision affecting Eskom’s allowable revenue.
The redetermination follows a High Court judgment issued on December 21, 2025, which set aside NERSA’s earlier decision and directed the regulator to conduct a new, procedurally fair review. In response to the court’s ruling, NERSA completed a fresh assessment and, on February 7, 2026, approved an additional allowable revenue of R54.734 billion for Eskom.
To comply with legal requirements, NERSA carried out an extensive public consultation process in line with the National Energy Regulator Act of 2004 and the Promotion of Administrative Justice Act of 2000. The regulator invited comments from Eskom, business organizations, industry associations, agricultural and mining groups, municipalities, civil society organizations, and members of the public.
During the consultation, stakeholders raised several important issues, including the valuation of Eskom’s assets, the impact of electricity tariffs on the economy, affordability for consumers, and the importance of maintaining consistency in regulatory decisions. NERSA stated that it carefully considered all submissions while remaining within the limits set by the court order and the evidence already available. The regulator also confirmed that the review was conducted using the approved Multi-Year Price Determination (MYPD4) Methodology.
As part of the redetermination, NERSA reviewed each component of Eskom’s generation asset base. Costs calculated under the Depreciated Replacement Cost method were approved after international benchmarking showed they were reasonable. Transfers of completed projects into commercial operation were also approved to ensure Eskom could recover eligible costs, while expenditures that did not create additional generation capacity were excluded.
The regulator also limited the inclusion of Work Under Construction to projects that will add new electricity generation capacity. Maintenance expenses and outage-related costs were excluded to avoid consumers paying twice for the same services. For coal inventory, NERSA approved a limit of 42 days in line with Eskom’s stockholding policy. Coal stock held beyond this level because of construction delays was excluded from the regulatory asset base to prevent operational inefficiencies from increasing electricity costs for consumers.
NERSA also approved Eskom’s treatment of asset purchases and depreciation, supported by trend analysis and existing regulatory safeguards. The regulator emphasized that the redetermination was limited to the generation asset base, depreciation, and their impact on allowable revenue. It also confirmed that no retrospective electricity tariff adjustments will be applied for the 2025/2026 financial year. The complete Reasons for Decision document has been published on NERSA’s official website for public access and stakeholder review.
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