- The National Energy Regulator of South Africa (NERSA) has released a consultation paper on Eskom’s application to amend the methodology used to calculate losses charges for embedded electricity generators.
- Eskom plans to implement the revised methodology in its 2026/27 Schedule of Standard Tariffs.
The proposed amendment seeks to update the existing formula for determining technical losses incurred by generators connected to Eskom’s distribution network. The aim is to ensure that the calculation more accurately reflects actual costs, based on findings from recent technical studies.
The generator losses charge represents the cost paid by electricity producers to account for power lost during transmission and distribution. Because some electricity is inevitably lost as heat in conductors, transformers, and other equipment, generators must produce more energy than what is ultimately delivered to consumers.
Eskom argues that the charge plays a crucial role in signalling generators to locate closer to demand centres, as plants situated far from major load areas typically result in higher losses. However, new technical studies and power flow simulations suggest that embedded generators now contribute to higher network energy losses in most regions.
Eskom’s findings also indicate that the current rebate system — which has provided financial advantages to embedded generators — is no longer cost-reflective and has created unintended subsidies. As a result, the utility is proposing changes to the losses charge methodology to ensure it more accurately represents the true cost of using the distribution network.
The amendment, which affects section 5.5.1 of the Tariff Code, requires approval from NERSA in terms of section 5.1 of the Governance Code. According to the Code, any changes, exemptions, or derogations from the Grid Code must be approved by NERSA, following recommendations from the Grid Code Advisory Committee (GCAC).
NERSA has opened the consultation process to gather input from stakeholders and the public. Submissions will help inform the Energy Regulator’s decision-making process, ensuring compliance with the principles of procedural fairness as required by section 10 of the National Energy Regulator Act, 2004, read with sections 4 and 5 of the Promotion of Access to Information Act, 2000.
Eskom’s application is available on the NERSA website at http://www.nersa.org.za under ‘Notices>Public Hearings’. Members of the public and stakeholders are requested to submit written comments to ertsa@nersa.org.za by Thursday, 13 November 2025.
A virtual public hearing to make oral representations on this application will be held on 24 November 2025 via MS Teams, and livestreamed on X and YouTube. Members of the public and stakeholders who wish to attend or present their views at the hearing must submit their requests by 16:30 on Monday, 17 November 2025 to: publichearings@nersa.org.za
Author: Bryan Groenendaal
