The National Energy Regulator of South Africa (NERSA) has approved a re-determination of Eskom’s generation regulatory asset base (RAB) for the 2025/26 to 2027/28 financial years following a High Court ruling that set aside the regulator’s earlier decision and referred the matter back for reconsideration.
The revised determination allows for the recovery of R54,7 billion in additional allowable generation revenue with recovery phased over time rather than applied retrospectively or in a single period. No adjustments will be applied in the 2025/26 financial year.
Under the approved phasing, R12 billion is allocated for recovery in 2026/27 and R23,01 billion in 2027/28. The remaining R19,72 billion will be deferred beyond the current multi-year price determination (MYPD4) period.
The re-determination follows a High Court judgment handed down in December, which found that NERSA’s previous generation RAB decision contained errors and did not adequately comply with procedural requirements. In response, the regulator re-assessed Eskom’s generation asset values in line with the approved MYPD4 methodology and conducted a new public consultation process, as directed by the court.
“This decision reflects NERSA’s obligation to implement the High Court judgment while ensuring price stability and protecting consumers from sudden tariff shocks,” said Charles Hlebela, Head of Communications at NERSA.
NERSA said the phased recovery approach seeks to balance the financial sustainability of the licensee with electricity affordability considerations. The re-determination contributes 3,4% to allowed tariff increases in 2026/27 and 2,64% in 2027/28 while avoiding any retrospective tariff recovery in 2025/26.
According to NERSA, the decision was taken as an independent regulatory determination conducted in accordance with the Electricity Regulation Act and the MYPD4 methodology. The regulator also applied a lower weighted average cost of capital than proposed by Eskom – a measure intended to moderate returns while supporting cost-reflective revenue recovery, NERSA says.
