Why NERSA’s MYPD6 RAB Redetermination Must Be Rejected in Full
South Africans are once again being asked to pay more for electricity—despite getting less of it.
National Energy Regulator of South Africa’s (NERSA’s) Redetermination of Eskom’s sixth Multi-Year Price Determination (MYPD6) Regulated Asset Base (RAB) for the Generation Business (2025/26 to 2027/28) is not merely flawed. It is irrational, regulatorily indefensible, and socially unjust.
This decision attempts to shift the burden of Eskom’s long-standing failures—and NERSA’s regulatory shortcomings—onto consumers. That burden should not be accepted.
This is what I call the “Baggage Problem”: forcing the public to carry the accumulated weight of inefficiency, poor governance, and regulatory incompetence.
More While the System Declines
Electricity tariffs are meant to recover the efficient cost of supplying electricity. They are not meant to compensate for institutional collapse.
Yet South Africa now faces:
- Declining electricity demand
- Chronic load shedding
- Worsening reliability and power quality
- Tariff increases far above inflation
- Severe affordability pressure on households and businesses
This decline is not consumer-driven. It is the direct result of Eskom’s operational failure and NERSA’s inability—or unwillingness—to enforce discipline.
Approving a higher RAB under these conditions forces consumers to pay more for:
- Less electricity
- Poorer quality supply
- Increasing system instability
That is neither cost-reflective nor fair.
Public Participation Without Transparency Is an Illusion
NERSA regularly points to public hearings as evidence of public participation. But participation without information is meaningless.
Key data remains unavailable or inaccessible, including:
- Detailed maintenance and inspection records
- Asset refurbishment and replacement plans
- Cost allocation methodologies
- Productivity ratios and staffing benchmarks
- Performance-linked expenditure justifications
In some cases, organisations have had to resort to court action simply to obtain decision records.
Without transparency:
- Public hearings become procedural theatre
- Objections cannot be meaningfully evaluated
- Decisions appear pre-determined
This undermines trust in the entire regulatory process.
Eskom’s Cost Base Fails the Efficiency Test
NERSA is legally required to allow recovery of only efficiently incurred costs. Eskom’s cost structure clearly does not meet this standard.
Independent research—including World Bank analysis—has repeatedly shown that:
- Eskom is severely overstaffed
- Its staffing levels exceed international norms
- Productivity ratios are fundamentally distorted
The World Bank estimated Eskom required approximately 14,244 employees to operate efficiently—far fewer than its actual workforce.
Instead of enforcing restructuring, NERSA continues to approve escalating personnel and overhead costs, embedding inefficiency directly into the RAB and forcing consumers to fund it indefinitely.
The “Baggage Problem”: Too Many Chiefs, Too Few Engineers
Between 1990 and 2024:
- Eskom’s average cost per employee increased from R38,000 to R913,000
- A staggering 976% increase, vastly exceeding inflation and productivity growth
Eskom has evolved into an administrative-heavy organisation, while its core mission—delivering reliable electricity—continues to deteriorate.
NERSA’s tariff approvals do not correct this imbalance. They entrench it.
Consumers are not just paying for electricity. They are paying for Eskom’s accumulated baggage.
Where Is Zero-Based Budgeting and Cost Discipline?
A competent regulator would demand:
- Zero-Based Budgeting (ZBB)
- Clear, performance-linked KPIs
- International benchmarking
- Cost-to-output validation
NERSA does not appear to require any of this.
Instead, historical inefficiencies are rolled forward year after year and legitimised through tariff approvals. This is not regulation—it is passive endorsement of failure.
Power Quality: The Hidden Economic Drain No One Wants to Fix
While tariffs dominate the conversation, one of the most damaging issues remains largely ignored: poor power quality.
Unbalanced voltages, harmonics, and negative phase sequence conditions:
- Destroy motors and transformers
- Reduce equipment lifespan
- Increase technical losses
- Inflate maintenance and downtime costs
Globally, billions are lost every year due to poor power quality.
Despite formal complaints and documented evidence, NERSA has shown little to no interest in addressing this issue. Consumers therefore pay twice:
- Through higher tariffs
- Through damaged equipment, lost productivity, and premature failures
This silent economic drain is one of the most underreported failures of South Africa’s electricity system.
Regulatory Failure Confirmed by the Courts
NERSA’s weaknesses are no longer a matter of opinion—they are a matter of public record.
NERSA has:
- Lost multiple court cases on tariff methodology
- Been found to rely on unlawful practices
- Shifted statutory obligations to municipalities
- Failed to apply the Electricity Regulation Act’s cost-based requirements
Each legal defeat confirms systemic shortcomings in regulatory competence. Approving a multi-year RAB under these conditions is reckless.
A Complaint System That Doesn’t Work
NERSA maintains that it provides a mechanism for public complaints. In practice:
- Complaints often receive minimal follow-up
- Investigations stall or disappear
- Urgent technical risks are downplayed
This erodes public confidence and reinforces the perception that regulatory oversight exists largely on paper.
The Question That Cannot Be Avoided
Why should South Africans:
- Pay higher tariffs for declining service?
- Fund inefficiency, overstaffing, and mismanagement?
- Absorb the cost of regulatory failure?
They should not.
Final Thoughts: Reject the MYPD6 RAB Redetermination
NERSA’s Redetermination of Eskom’s MYPD6 Regulated Asset Base:
- Rewards failure
- Punishes consumers
- Ignores declining demand
- Violates efficiency principles
- Entrenches systemic dysfunction
The only responsible outcome is to reject this Redetermination in full.
South Africa does not need higher electricity tariffs.
It needs:
- Structural reform
- Cost discipline
- Technical competence
- Transparent regulation
- Accountability
Until those conditions exist, the public must not be forced to carry Eskom’s baggage.
