The National Energy Regulator of South Africa (Nersa) approved an average electricity price increase of 8,76% for Eskom direct customers, effective 1 April 2026. Municipal bulk purchases will increase by 9,01% from 1 July 2026, with a further increase of 8,83% scheduled for April 2027. According to Eskom, these tariff adjustments are necessary to recover operating and debt-related costs.

Electricity costs have also been affected by Eskom’s retail tariff plan (RTP), introduced  in April 2025. While the focus has largely been on fixed charges such as network or line costs, the plan also includes significant changes to unit pricing. These include revised time-of-use (TOU) periods, and adjusted winter and summer TOU ratios.

Higher electricity tariffs and the introduction of unbundled (non-unit) charges, implemented on 1 April 2025, have placed considerable financial pressure on multiple industries, including the agricultural sector. Grain SA warns that rising electricity costs pose serious economic risks across the grain value chain, including for storage, production and processing. Storage facilities are facing sharply increasing operating expenses, threatening crop yields and food security.

According to an independent energy consultancy study, the RTP could increase costs by around 8% for industries with electricity consumption similar to that of large silos, even before unit tariff adjustments.

Impact on agriculture

The National Agricultural Marketing Council (NAMC) considers the sharp rise in electricity tariffs a serious threat to South Africa’s agricultural sector, rural livelihoods,  and food security. Higher electricity costs are driving up production expenses, particularly for irrigation and cold storage, leading to more expensive food and weakened export competitiveness.

The NAMC cautions that these tariff increases will intensify existing cost pressures linked to previous hikes and ongoing energy supply challenges. Given agriculture’s central role in food security, employment, and export earnings, the cumulative impact could undermine sector sustainability and broader economic recovery if left unaddressed.

Profit margins in irrigated maize production have already declined by double digits; in sugarcane farming electricity has become the second-largest input cost after labour. The horticultural sector is similarly exposed, particularly due to rising irrigation and cold-chain costs during the summer season. What was once a producer profitability or sector-expense concern is evolving into a systemic food-security risk.

A recent Agbiz Grain case study highlights the impact of increased non-unit electricity charges on silo operations. According to general manager Dr Charl van der Merwe, structural tariff changes are set to have

a substantial effect on the grain industry. Electricity costs could rise by as much as 9%, even before the standard tariff increase is applied. Businesses operating predominantly during peak periods will be hardest hit, with cost pressures expected to ripple across the entire grain value chain, especially where electricity use is continuous  or cannot be shifted to off-peak periods.

AgriSA raises concern

AgriSA’s chief operating officer, Jolanda Andrag, has submitted an urgent enquiry highlighting serious concerns about Eskom’s tariff structure and its impact on agriculture. The organisation points to three key issues:

Structural tariff increases exceeding approved averages 

Although Nersa approved an average tariff increase of 12,74% for 2025/26  on 1 April last year, structural unbundling and the reallocation of tariff components have resulted in effective increases of 25 to 30% for many agricultural users, with some irrigation operations  experiencing even higher costs. As electricity is a non-discretionary  input, these increases are difficult to absorb or pass on in competitive commodity markets without affecting farm viability and ultimately food prices.

Outstanding electricity market inquiry Nersa launched an electricity market inquiry in October 2025 to assess fixed charges, capacity allocations, and the impact of tariff design. Originally scheduled for completion on 12 December 2025, the inquiry remains unresolved. This delay raises concerns, as the unbundled tariff structure continues without a final determination  on whether the resulting cost shifts are equitable and consistent with the Electricity Regulation Act, 2006 (Act 4 of 2006). The absence of a concluded inquiry means that structural distortions remain embedded in the 2026/27 tariff framework.

High Court redetermination

The impact of structural unbundling is now being compounded by further increases arising from the High Court judgment of 21 December 2025, whichrequires Nersa to redetermine Eskom’s allowable revenue. The regulatory asset base (RAB) redetermination  approved additional allowable revenue of R54,7 billion, to be recovered in phases during 2026/27  and 2027/28. This results in an additional 3,4% increase in 2026/27  and 2,64% in 2027/28, bringing total increases to 8,76 and 8,83%, respectively. While these increases are being phased in, they are layered onto an already elevated structural cost base introduced  in 2025/26, further intensifying cost pressures across the agricultural sector.

AgriSA’s call to action

Beyond the RAB redetermination, the broader multi-year price determination 6 (MYPD6) trajectory remains steep. Electricity tariffs have risen by around 264% since 2011, averaging around 9% annually, well above inflation and commodity price growth. Agriculture operates  in highly competitive  global markets where the ability to pass on rising input costs is limited. The combined impact of structural unbundling, tariff redetermination increases, and projected MYPD6 escalations is eroding sector profitability.

AgriSA is therefore calling for urgent

intervention, including:

•   The immediate conclusion of Nersa’s electricity market inquiry.

•   A review of the unbundled tariff structure introduced in 2025/26.

•   Correction of inequitable cost allocations in fixed and capacity charges before finalising the 2026/27 tariff framework.

•   A comprehensive assessment of the cumulative impact of structural unbundling and the RAB redetermination on national food security

For more information, send an email to Dr Charl van der Merwe at charl@agbizgrain.co.za

By Carin Venter, Plaas Media