Electricity pricing draft sparks high-voltage resistance

"We Don't Buy It": Stakeholders Push Back on Draft Electricity Pricing Policy

Government's proposed new Electricity Pricing Policy is a thinly veiled attempt to mollycoddle Eskom, at the expense of new market players, energy stakeholders say in response to the EPP.  

Despite the recent passage of the Electricity Regulation Amendment Act—which formally legislates for a competitive, unbundled electricity market—analysts warn the draft policy carries over outdated assumptions from 2008 ((the original EPP framework published when Eskom was an absolute monopoly and private generation was virtually non-existent). While background sections acknowledge an emerging multi-party power market, the core tariff rules still prioritise protecting Eskom’s balance sheet over fostering fair competition. Under the proposed framework, Eskom’s assets will be valued at modern replacement cost, allowing the utility to leverage user tariffs to cover its debt servicing and bolster its standalone credit rating rather than pricing against efficient operational costs. 

For embedded generation and solar prosumers, the main threat lies in the policy’s pivot toward unbundled fixed network and demand charges, analysts say. Unlike the 2008 policy, which discouraged wholesale capacity charges, the revised EPP allows utilities to levy higher recurring connection fees regardless of actual electricity consumption. Industry voices argue this approach unfairly penalises customers who have invested in behind-the-meter generation to offset Eskom’s historical supply failures. 

Highlighting the risk to private generation returns and market growth, renewable energy expert Frank Spencer stressed that grid connection fees must remain strictly cost-reflective rather than serving as a penalty on clean energy adoption:  "Fixed network charges should relate purely to the physical cost of being connected to the grid—they must be cost-reflective and fair. They should not rise simply because a customer generates electricity behind the meter, nor should they be used as a blunt instrument to protect legacy revenue models." 

Beyond penalising embedded generators, stakeholders warn that the EPP drops previous commitments to grant independent electricity traders access to wholesale pricing structures, threatening private wheeling arrangements. Compounding these structural defects, the policy introduces eight new regulatory frameworks due within 12 months, while leaving the critical question of whether social subsidies should be funded through tariffs or the national fiscus unresolved. 

Peter Haylett, Cape Chamber Infrastructure Portfolio Committee Chairperson, said: "The problem Eskom faces and has done since before load shedding is the inability to provide sufficient electrical power. Their remedy has been to increase prices as their cost per unit to generate has increased, due to a number of factors of their own making. This has led to a death spiral, which will continue. Eskom balance sheet does not enable them to provide meaningful improvements to the system."