Energy transformation no guarantee of lower electricity prices – Ramokgopa

Electricity and Energy Minister Kgosientsho Ramokgopa has cautioned that new legislation to transform South Africa's electricity sector will not necessarily ease cost pressures on households.

Responding to a parliamentary Q&A, he said there could be no guarantee the reforms would eliminate cost pressures immediately, energy journalist Jonathan Hoyle writes for Business Tech.

Ramokgopa said the aim is rather to reduce the upward pressure on prices over the medium to long term.

Electricity prices are expected to keep rising, though not at previous double-digit rates; Eskom's tariff path still points to roughly 6% annual increases through 2050, with an 8.8% hike already planned for 2027.

Ramokgopa has gazetted an Electricity Sector Transformation Position Paper and a Revised Electricity Pricing Policy aimed at making the sector more competitive and transparent. The overhaul would end Eskom's monopoly by splitting it into three entities covering generation, transmission and distribution, while opening the market to private players. Eskom has already seen sales decline as customers shift to alternatives such as rooftop solar.

Under the new pricing policy, inefficiencies such as electricity theft, bad debt and excessive technical losses would no longer be recoverable through tariffs, with the National Energy Regulator required to rigorously vet costs before approval.

The policy will be phased in over five years, standardise tariff methods across municipalities, and break down charges by category to improve transparency.

Ramokgopa said greater competition, including provisions allowing customers to buy power from alternative suppliers, should help lower system costs over time.