- Meridian Economics has urged the National Energy Regulator of South Africa (NERSA) to enforce full transparency from electricity distributors and to give customers greater freedom to source their own generation capacity.
- The recommendations form part of the organisation’s formal submission to NERSA’s Market Inquiry into Fixed Charges, the Generation Capacity Charge (GCC), and other fees levied by Eskom and municipal distributors.
The think tank has also requested that its director, Dr. Grové Steyn, be granted an opportunity to address the upcoming NERSA public hearing.
Call for full disclosure of cost methodologies
Meridian Economics argues that Eskom and municipalities continue to withhold essential cost-of-service information, including cost allocation models and underlying data used to determine tariffs. Without these disclosures, the group says, stakeholders are unable to evaluate whether tariffs are cost-reflective or comply with the Electricity Regulation Act (ERA).
The submission cites two recent High Court judgments, AfriForum NPC v NERSA (2024 and 31 October 2025), which found that treating cost-of-service studies as confidential is unlawful. According to the court, these studies are “public instruments of accountability” and must be made available to ensure meaningful public participation in tariff-setting.
Meridian Economics says Eskom’s lack of transparency now directly hampers public oversight of its Generation Capacity Charge proposals, which NERSA has partially approved.
Debate over “standby capacity” and the generation capacity charge
Eskom’s proposed GCC aims to recover the cost of “standby capacity,” which the utility argues is currently under-recovered through variable charges. However, Meridian Economics warns against assuming that Eskom is the only provider of such capacity.
Under the new South African Wholesale Electricity Market (SAWEM) framework, the System Operator will procure reserves through competitive day-ahead markets. This includes privately supplied capacity from batteries, demand response, and standby generation.
The organisation argues that if the GCC is intended to fund system reserves, then revenues must be allocated not only to Eskom but to all providers of these services in the new competitive market.
Customers should be able to avoid GCC by providing their own capacity
Meridian Economics also argues that customers should be permitted to reduce or avoid GCC payments if they provide their own standby capacity. Currently, customers can reduce their annual utilised capacity (AUC) and thus their GCC liability, through behind-the-meter options such as batteries or generators.
The group says this principle should be extended to allow customers to use wheeled energy from external providers, not just on-site systems. Existing standards, such as NRS 048-9, already allow wheeled energy to offset certain tariff components, setting a precedent for this approach.
Allowing wheeled resources to count toward GCC reductions would strengthen the business case for private battery investments and demand response, which are both essential to stabilising the power system.
Recommendations and warning against market power abuse
Meridian Economics concludes that:
- Eskom must publish all cost-of-supply studies and methodologies used in tariff development.
- The System Operator should competitively procure standby capacity and use GCC revenue to compensate all contributors.
- Customers should face GCC charges only when they rely on Eskom for standby capacity.
- Customers must have the option to provide their own capacity behind or in front of the meter.
The organisation warns that failure to implement these measures would entrench Eskom’s dominance and allow it to abuse market power, contrary to both the ERA and constitutional requirements for transparency. Ensuring disclosure and creating fair market signals, the group argues, will drive more efficient investment and consumption, ultimately supporting a more reliable and affordable electricity system.
Link to Meridians full NERSA Market Inquiry HERE
Author: Bryan Groenendaal
