South Africa’s High Court on Monday rejected a proposed R54 billion (US$2.9 billion) settlement between state power utility Eskom and the National Energy Regulator of South Africa (Nersa), dealing a blow to efforts to resolve the utility’s long-running tariff dispute behind closed doors.
The ruling follows concerns that the proposed settlement would have allowed Eskom to recover billions of rand from electricity consumers without proper investigation or meaningful public participation.
Civil rights group AfriForum, which intervened as a party with direct interest in the proceedings, welcomed the decision, saying it protects consumers from substantial tariff increases imposed without transparency.
“The court reviewed and set aside Nersa’s original revenue determination and refused to make the settlement agreement an order of court,” AfriForum said in a statement.
Eskom had argued that the settlement would correct an error in its allowable revenue determination, bypassing further investigations or referral back to Nersa. Under the agreement, the power utility would have been entitled to recover R54 billion (US$2.9 billion) roughly equivalent to about 0.9 percent of South Africa’s gross domestic product through increased electricity tariffs.
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AfriForum and other consumer advocates contended that the settlement lacked due process, arguing that proper public consultation was essential given the scale of the proposed tariff hikes and the impact on households and businesses across the country.
South Africa has faced persistent electricity supply and cost challenges in recent years. Eskom, which generates roughly 95 percent of the country’s electricity, has struggled with ageing infrastructure, operational inefficiencies, and financial pressures. The utility has often sought tariff increases to cover rising costs, sparking tensions with regulators and civil society groups.
The High Court ruling underscores the importance of regulatory oversight and consumer protection in the electricity sector, particularly when state-owned entities attempt to recover large sums without extensive scrutiny.
“The decision ensures that any adjustments to Eskom’s revenue requirements must follow a transparent process, including thorough investigation and public participation,” AfriForum said.
Eskom’s financial woes have been compounded by years of rolling blackouts, known locally as load shedding, which have disrupted households, businesses, and industry. The utility’s debt stands at more than R400 billion (US$21 billion), prompting repeated calls from government, regulators, and the public to ensure more accountable financial management.
Nersa, the independent regulator tasked with overseeing electricity tariffs, has faced criticism in the past for its handling of revenue determinations, particularly amid Eskom’s ongoing requests for tariff increases. The rejected settlement was seen as an attempt to fast-track tariff approval without proper oversight, raising concerns among consumer rights organisations and civil society groups.
Analysts say the ruling may delay Eskom’s efforts to shore up its finances but is expected to strengthen regulatory processes and protect consumers from sudden and significant price shocks.
The outcome is likely to prompt further discussions between Eskom, Nersa, and consumer advocacy groups to establish a tariff framework that balances the utility’s financial needs with the protection of electricity users, particularly low-income households already affected by high energy costs.
Background to the Dispute
South Africa’s state-owned electricity utility, Eskom, has been at the centre of a long-running legal and regulatory dispute over its allowable revenue and electricity tariffs. The company, which generates about 95 percent of South Africa’s electricity, relies heavily on tariffs to cover operating costs, debt service, and infrastructure investment.
The dispute revolves around Eskom’s 2023–2025 revenue determination by the National Energy Regulator of South Africa (Nersa). Eskom claimed that Nersa had under-calculated its allowable revenue, effectively limiting the utility’s ability to cover costs and service debt. The under-recovery would have left the utility in financial distress, potentially exacerbating load shedding and infrastructure challenges.
In response, Eskom and Nersa reached a proposed settlement in 2025 that would have allowed the utility to recover R54 billion (US$2.9 billion) through tariff adjustments. However, civil society organisations, notably AfriForum, argued that the agreement bypassed critical safeguards.
AfriForum intervened in court as a party “with a direct and substantial interest,” emphasising that the settlement would impose significant costs on electricity consumers without adequate oversight.
The High Court ruling in December 2025 rejected the proposed settlement, setting aside Nersa’s original revenue determination and refusing to convert the agreement into a court order. The decision effectively halted Eskom’s plan to recover the US$2.9 billion in tariffs without further investigation and stakeholder input.
The case highlights broader tensions in South Africa’s electricity sector: Eskom’s financial vulnerability due to ageing infrastructure, operational inefficiencies, and rising debt currently estimated at more than R400 billion (US$21 billion) versus the public’s demand for transparency and protection from sharp tariff hikes.
Previous attempts to adjust Eskom tariffs have triggered legal challenges, public protests, and scrutiny from the energy regulator. Analysts say the court’s ruling strengthens regulatory accountability, ensuring that any future tariff increases follow proper procedures and involve consultation with stakeholders, including civil society and consumer advocacy groups.
The outcome has implications not only for Eskom’s finances but also for the broader energy sector, as the utility seeks ways to balance operational stability, infrastructure investment, and affordability for households and businesses.
