Eskom's sales are declining, but its revenue is climbing—but this is not sustainable as the age of double-digit price hikes comes to an end.
Power utility Eskom has generated significant profits despite shrinking sales to customers—but its days of double-digit price hikes are drawing to a close.
Because of this, the group has made it clear that it will secure and retain its revenue by imposing tariffs on customers, including those who self-generate, like solar, or buy power elsewhere.
“Eskom will retain revenue through network charges, customer wheeling and revised tariff structures, which separate energy charges from the recovery of fixed costs,” Eskom said.
In its annual financial report for the year ended 31 March 2026, Eskom recorded a profit of over R30 billion, up from the R15 billion profit the year before.
While the group acknowledged that this higher figure was “distorted” by significant fuel levy rebates totalling R14 billion, it still reflects a massive turnaround from the billions in losses previously.
The catch in Eskom’s profits is that they come despite the group’s sales declining year-on-year, continuing the trend that began during the load shedding crisis.
Sales volumes decreased to 178.0TWh (2025: 189.7TWh) during the year.
While sales declined during load shedding due to Eskom’s inability to generate enough electricity, that issue is largely resolved.
In 2025 and 2026, Eskom turned its operations around and now carries an energy surplus of between 2 and 3 Gigawatts.
Instead, the sales decline in 2026 has been driven by once-paying customers turning to their own generation facilities or wheeling electricity from other generators.
It has also been driven by large industrial users—such as the ferrochrome smelters—shutting down operations due to escalating energy costs and hardship.
In their place, Eskom’s revenue and profitability have been driven by multiple double-digit increases in electricity tariffs over the years, with the latest being a near-9% hike in 2026/27.
Another 9% hike is planned for 2027/28.
This has resulted in electricity tariffs rising by nearly 900% since 2008, compared with consumer inflation of around 230% over the same period.
The result: Eskom’s revenue still grew by 4%, while sales declined by more than 6%, as the burden shifted to the remaining customers.
Eskom has acknowledged that its revenue path, reliant on tariff hikes, is unsustainable, and the rise of self-generation and wheeling activity is a threat to its future cash flows.
“Improved generation performance, together with increased customer self-generation and growing wheeling activity across Eskom and municipal networks, has contributed to lower grid demand and periods of excess supply,” it said.
“This creates uncertainty regarding future electricity sales volumes, revenue recovery and the utilisation of Eskom’s generation fleet, which may affect the achievement of forecast cash flows.”
To address this uncertainty, the group said it is implementing “a range of initiatives” to address the decline in sales and support demand.
One of the initiatives includes an amended negotiated pricing agreement framework for industrial users.
This, it said, will not increase tariffs for Eskom’s broader customer base, require additional borrowings or require further government support.
However, while the group acknowledged that its revenue growth based on price hikes is unsustainable, this does not mean that customers won’t be hit hard.
It explicitly stated that it would lean on network charges, customer wheeling and revised tariff structures to secure revenue.
Eskom reiterated its commitment to ending double-digit price hikes.
Despite this promise, the group is still factoring in future price hikes that are at least double the South African Reserve Bank’s inflation target of 3%.
In an assessment of the group’s cash-generating unit (CGU), the group noted that the CGU’s recoverable amount may be lower than its carrying amount if the long-term price path after 2028 is limited to inflationary increases.
Because of this, the current path in its forecast sees price increases averaging 6% from 2029 through to 2050.
However, the group noted that the long-term price path remains a “significant source of estimation uncertainty.”
This is considering future tariff increases, RCA decisions, the ability to liquidate in the future, revenue recovery mechanisms, and the extent to which tariffs become cost-reflective.
These are also subject to regulatory approval and future market developments, it said.
Eskom’s CGU pricing assumptions in 2026
