The National Energy Regulator of South Africa (Nersa) has launched a market inquiry into the impact of fixed charges being levied by Eskom and municipal electricity distributors, which it claims have already resulted in hikes for some customers that are substantially higher than the 12.74% increase approved for 2025/26.

A terms of reference document has been published with a deadline for written comments set for October 25, and with public hearings scheduled for November 17.

Nersa indicates that the inquiry has been prompted by concerns being raised in relation to the fairness of recent increases in fixed charges, including those made by several customers that have lodged formal disputes before the regulator.

Nersa will continue with the adjudication of these disputes, but has also decided to initiate the inquiry in parallel. This, owing to similarities in the nature of the complaints, including concerns about potential market distortions and the abuse of market power.

"Although the inquiry is not targeted at investigating any particular licensee, nor does it intend to make allegations against any licensee, Eskom will be included in the inquiry due to the imposition of significant fixed charges following the approval of its Retail Tariff Restructuring Plan in March 2025," Nersa has confirmed.

In its terms of reference document, Nersa said the market inquiry will focus on municipal fixed charges, as well as the split of Eskom's generation charge into a generation capacity charge, a legacy charge and the variable energy charge.

"While such changes may be necessary, they must be carefully managed to ensure that they meet the principles of fairness, transparency, and equitability. An imbalance in the unbundled tariff designs threatens affordability, reliable service delivery, and broader socio-economic resilience," the document adds.

The inquiry will assess the impact of the charges across various business and residential customers, including those exposed to Eskom's Megaflex tariff and those that have installed rooftop solar.

The aim will be to assess the impact that the fixed charges are having across all customer segments, as well as to evaluate their alignment with approved tariff methodologies.

Full-time regulator member responsible for electricity regulation Nomfundo Maseti reports that the aim of the inquiry is to provide regulatory guidance that "promotes fairness, cost-reflectivity, and stability in the electricity market".

Nersa indicates that the market inquiry will have three phases, with the first phase involving written and oral submissions.

During the second phase, Nersa will draft a report, which will again be released for public comment, with hearings to be held in January.

During the third phase, the final report will be drafted for approval by the Energy Regulator, Nersa's highest decision-making body, in February, with the final report scheduled for release in March.