- This article reports on a study by EE Business Intelligence conducted for the Organisation Undoing Tax Abuse (OUTA) on the impacts on Eskom’s direct residential customers of the utility’s restructured electricity tariffs and electricity price increases for the 2025/26 financial year.
Eskom’s restructured residential electricity tariffs and the utility’s new standard electricity tariff rates result in a 12.74% average electricity price increase for its 2025/26 financial year, and will come into effect on 1 April 2025.
Some residential customers will experience a much higher increase than the 12.74% average electricity price increase, while others will see much lower increases. Some customers will even experience reductions in their monthly electricity spend.
Eskom has three main suites of residential tariffs, namely Homelight, Homepower and Homeflex.
Homelight
The Eskom Homelight tariffs are divided into two options, namely Homelight 20A and Homelight 60A.
The Homelight 20A tariff is intended for low-income residential customers with a limited capacity, 20 A, 1-phase, 230 V ac supply, with a prepayment meter.
The Homelight 60A tariff is intended for low-income residential customers with a 60 A, 1-phase, 230 V ac supply, with either a prepayment meter or a credit meter.
Homepower
The Eskom Homepower tariff is intended for middle- and higher-income residential customers, and is divided into five options, namely Homepower 1, 2, 3 and 4, and Homepower Bulk, depending on the number of phases of the supply (1-phase, 2-phase or 3-phase) and the supply capacity.
For the purposes of this study, only the Homepower 4 tariff comprising an 80 A, 1-phase, 230 V ac supply is considered, as this covers the significant majority of Homepower residential customers, and is adequately illustrative.
The Homepower 4 tariff is implemented with a credit meter or a smart meter.
Homeflex
The Eskom Homeflex time-of-use (TOU) tariffs are intended for middle- and higher-income residential customers that can respond to time-of-use pricing signals by shifting their energy consumption to standard- and off-peak periods of the day through selective use of home appliances.
In addition, the Homeflex tariffs are mandatory for residential customers with solar photovoltaic (PV) and battery energy storage (BES) systems.
The Homeflex tariffs are divided into five options, namely Homeflex 1, 2, 3 and 4, and Homeflex Bulk, in the same way as the Homepower tariffs.
Again, for the purposes of this study, only the Homeflex 4 tariff comprising an 80 A, 1-phase, 230 V ac supply is considered, as this covers the significant majority of Homeflex residential customers, and is adequately illustrative.
Homeflex tariffs require an expensive time-of-use smart meter with remote meter reading capabilities that can record both imported and exported energy separately for the different hours of the day (on-peak, standard and off-peak), types of day (weekdays, Saturdays, Sundays and public holidays) and seasons (summer and winter).
Changes in tariff structure
Several changes have been approved by NERSA in respect of the Homelight, Homepower and Homeflex residential tariffs. These changes to the structure of the tariffs and the increase in the 2025/26 tariff rates have far-reaching impacts on the monthly electricity spend by residential customers.
The structural changes to Eskom’s residential electricity tariffs are detailed as follows:
Elimination of inclined block tariffs for Homelight 20A, Homelight 60A and Homepower 4
Homelight 20A, Homelight 60A and Homepower 4 have been simplified by doing away with inclined block tariff rates.
For Homelight 20A, there were previously two separate energy rates – one for consumption less of than 350 kWh per month, the other for consumption greater than 350 kWh per month. Similarly, for Homelight 60A and Homepower 4 there were also separate energy rates – one for consumption less than 600 kWh, the other for consumption greater than 600 kWh per month.
From 1 April 2025, these former inclined block tariff rates for Homelight 20A, Homelight 60A and Homepower 4 will be replaced by flat energy rates that do not change depending on any defined consumption thresholds.
As a result, from 1 April 2025, for customers with low energy consumption of less than 350 kWh and 600 kWh, the flat-rate energy components of the Homelight 20A, Homelight 60A and Homepower 4 tariffs will increase by 13.6%%, 18.3% and 9.5% respectively.
On the other hand, for customers with higher energy consumption of greater than 350 kWh and 600 kWh, the flat-rate energy components of the Homelight 20A tariff will increase by only 0.2%, while those of the Homelight 60 and Homepower 4 tariffs will decrease by 30.4% and 31.9% respectively.
Increased monthly fixed charges for Homepower 4 and Homeflex 4
For Homelight 20A and Homelight 60A, there is no fixed monthly component in the tariffs.
However, for Homepower 4 and Homeflex 4, in addition to the variable energy component, there are fixed monthly components in the tariff that are charged whether energy is consumed or not.
With effect from 1 April 2025 the fixed components of the Homepower 4 and Homeflex 4 tariffs will both increase very significantly by 88%.
Changes to the peak, standard and off-peak times the Homeflex tariff
With effect from 1 April 2025, there will be several changes in the times of the peak, standard and off-peak periods of all Eskom’s time-of-use (TOU) tariffs, including Homeflex 4.
The morning peak period has been reduced from three hours to two hours, while the evening peak period has been increased from two hours to three hours. In addition, a two-hour standard period has been introduced on Sundays.
From 1 April 2025, the revised times of the peak, standard and off-peak periods for weekdays, Saturdays and Sundays in the high demand winter season (comprising the months of June, July and August), and the low demand summer season (comprising the remaining months of the year), are shown below:
Fig 1: Time-of-use peak, standard and off-peak times applicable from 1 April 2025. (Source: Eskom.)
Tariff rates for 2025/26 compared to 2024/25
Tables 1, 2 and 3 detail the 2024/25 and 2025/26 tariff rates, and the associated tariff rate increases or decreases for the Homelight, Homepower 4 and Homeflex 4 tariffs respectively:
Table 1: Tariff rates for Homelight 20A and Homelight 60 A excel VAT. (Data Source: Eskom.)
Table 2: Tariff rates for Homepower 4 excel VAT. (Data source: Eskom)
Table 3: Tariff rates for Homeflex 4 excluding VAT. (Data source: Eskom)
Residential electricity costs and increases
Based on a customer’s monthly electricity consumption, the 2024/25 and 2025/26 Homelight 20A, Homelight 60A and Homepower 4 tariff rates are translated into electricity spend per month by the customer, together with the relevant percentage increase or decrease from 1 April 2025, as follows:
Table 4: Electricity costs and increases for Homelight 20A, Homelight 60A and Homepower 4, 80A. Source: EE Business Intelligence. Note: The costs shown exclude VAT.
Analysis of the impacts of the new tariff structures and tariff rates
An analysis of the impacts of Eskom’s new residential tariff structures and tariff rates for the 2025/26 financial year is provided as follows:
Homelight 20A
For the Homelight 20A tariff, which is intended for low-income and indigent customers with limited capacity 20 A prepayment meters, it can be seen in Table 4 that customers with low consumption of 350 kWh and less per month face increases of 13.57%, which is above the average Eskom increase of 12.74%.
Customers on the Homelight 20A tariff using more than 350 kWh per month experience progressively lower increases than the average Eskom increase of 12.74%. This is a direct result of eliminating the highly subsidised component of the inclined block tariff for monthly consumption of less than 350 kWh per month in favour of a higher flat-rate energy tariff.
It is noted that indigent customers on the Homelight 20A are supposed to receive 50 kWh of free basic electricity (FBE) per month, and this will, to some extent, offset the 13.57% electricity price increase for low consumption indigent households in 2025/26.
However, it is recognised at the highest levels in Government that more than 80% of indigent households in South Africa are not on the relevant municipal indigent registers, and therefore the significant majority of indigent households do not, in fact, receive any free basic electricity from Eskom or their local municipality.
Homelight 60A
For the Homelight 60A tariff, which is intended for low-income customers with prepayment or credit meters, it can be seen in Table 4 that customers with low consumption 600 kWh and less per month face increases of 18.26%, which is significantly higher than the average Eskom increase of 12.74%.
Customers on the Homelight 60A tariff using more than 600 kWh per month will experience progressively lower cost increases than the average Eskom increase of 12.74%, while customers using more than 650 kWh per month will experience significant cost reductions.
This is a direct result of eliminating the highly subsidised component of the inclined block tariff for monthly consumption of less than 600 kWh per month, in favour of a higher flat-rate energy tariff.
Homepower 4
For the Homepower 4 tariff, which is intended for middle- and higher-income customers with credit meters or smart meters, it can be seen in Table 4 that customers with consumption of 750 kWh and less per month face massive cost increases significantly higher than the average Eskom increase of 12.74%.
Customers on the Homepower 4 tariff using 800 kWh and more per month will experience significantly lower cost increases than the average Eskom increase of 12.74%, while customers using 1100 kWh and more per month will experience significant cost reductions.
This is a direct result of eliminating the inclined block tariff of Homepower 4 in favour of a flat-rate energy component, with a 31.9% reduction in the variable energy rate for consumption above 600 kWh, and a corresponding massive increase of 88% in the fixed monthly component of the Homepower 4 tariff from R192.90 per month to R362.70 per month which impacts low consumption customers the hardest.
Homeflex 4
For the Homeflex 4 tariff, it is not possible to determine the cost increase for various monthly energy consumptions based on the new tariff rates for 2025/26, as was done above for the Homelight and Homepower tariffs in Table 4.
This is because the actual cost increase/decrease will depend not only on the monthly energy consumption of the customer, but also on the customer’s load profile and response to time-of-use pricing signals by shifting their energy consumption to standard- and off-peak periods of the day through selective use of home appliances.
Suffice be it to say, however, that massive price increases in the Homeflex 4 summer and winter peak, standard and off-peak energy rates, as well as in the fixed monthly components of the tariff, come into effect on 1 April 2025, as indicated in Table 3.
While there is a significant 60.8% reduction in “other variable charges” (i.e. auxiliary, legacy and network charges), it should be noted that these form a relatively low portion of the total variable charges, thus reducing the impact of this reduction.
Conclusion
The increases and reductions in a customer’s monthly electricity spend with Eskom detailed above result primarily from substantial increases in residential electricity tariff rates, as well as changes in the structure of residential tariffs that adjust the previous cross-subsidies between larger and smaller customers, between rural and urban customers, and between richer and poorer customers.
To the extent that the impact of Eskom’s restructured Homelight and Homepower residential electricity tariffs and tariff rates for 2025/26 results in higher electricity costs for smaller (generally poorer) customers and lower costs for larger (generally more well-off) customers, the perception is created that these adjustments are “anti-poor”.
The Homeflex 4 tariff is intended for middle- and higher-income residential customers that are in a position to respond to time-of-use pricing signals by shifting their energy consumption to standard- and off-peak periods of the day through selective use of home appliances.
While the Homeflex 4 tariff will have significantly increased time-of-use energy rates in 2025/26 across the board, these rate increases provide strong incentives to well-off customers to effect savings through load shifting.
Unfortunately, such cost savings are generally not available to smaller (generally poorer) customers that do not have the necessary home appliances needed to effect meaningful load shifting to standard and off-peak periods. This further cements perceptions that the Eskom structural and tariff rate adjustments detailed for residential customers are “anti-poor”.
Authors: Chris Yelland, EE Business Intelligence
Mr Chris Yelland,
This article was originally published by EE Business Intelligence and republished with permission.
Disclaimer: The articles and videos expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of Green Building Africa, our staff or our advertisers. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part Green Building Africa concerning the legal status of any country, area or territory or of its authorities.
