Special Occasional Bulletin of Economic Notes 23/01 Review of Administered Prices in South Africa: The Electricity Tariff
Zaakirah Ismail Christopher Wood
Last Modified Date:
2023-08-07, 01:31 PM
Publications > Special Occasional Bulletin Of Economic Notes | What's New
The current electricity pricing regime ties prices to Eskom’s costs, with decades of mismanagement and crisis spending passed along to consumers. Despite this, efforts to contain costs risk undermining the capacity for reform at Eskom, by cutting off funding needed for key interventions like buying diesel. There is limited scope for reforming the electricity pricing regime to resolve this impasse – the trade-off is real and has no obvious resolution. Implementing reforms to the electricity market is likely the only route to truly resolving this impasse, but this is a very complex process that will take a long time to complete. There is clear scope for Eskom to improve efficiencies, but given the governance inertia and active resistance to change at Eskom, it is unlikely that this will be realised quickly. Improving municipal financing regimes, and strengthening measures to protect vulnerable consumers, could be one route to increasing prices while cushioning the inflationary impact.