South Africa has introduced a Revised Electricity Pricing Policy aimed at reducing electricity costs, improving competition, and modernizing the country’s electricity market. The policy updates the previous framework introduced in 2008, which was designed around a largely state-controlled electricity system. The revised approach reflects major changes in the sector, including the entry of private power producers and the ongoing restructuring of Eskom.
Electricity and Energy Minister Dr. Kgosientsho Ramokgopa announced the revised policy as the government shifts its focus from managing electricity shortages to improving affordability, efficiency, and economic growth. Electricity tariffs in South Africa have increased significantly over the past two decades, placing pressure on households, businesses, and energy-intensive industries.
A major change under the revised policy is the unbundling of electricity tariffs. Costs related to generation, transmission, distribution, and retail will be separately identified instead of being combined into a single charge. The government expects this approach to improve transparency and ensure that electricity prices better reflect the actual cost of supplying power.
The policy will also support greater competition in electricity supply. Eskom and municipal electricity distributors will be required to provide consumers with access to alternative private electricity suppliers. This is intended to create a more open electricity market and encourage investment from independent power producers.
To provide greater certainty to consumers and investors, the National Energy Regulator of South Africa will be required to publish a 10-year electricity price forecast. The forecast is expected to help households plan their energy expenses while enabling businesses and industries to assess future investment and operating costs.
The revised framework also includes measures to protect low-income households. Eligible households will receive free basic energy allocations of between 200 and 300 kilowatt-hours per month. These allocations may also be supplied through alternative energy solutions, including local microgrids.
In addition, standardized negotiated electricity pricing arrangements will be extended to support energy-intensive industries and other strategically important sectors of the economy.
The Revised Electricity Pricing Policy has been published for public comment. It forms part of wider electricity market reforms, including the restructuring and unbundling of Eskom. Through increased competition, greater renewable energy integration, transparent pricing, and private-sector participation, the government aims to develop a more reliable, affordable, and sustainable electricity system.
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