The National Energy Regulator of South Africa (NERSA) has published a consultation paper regarding an application from Eskom to amend the losses charge calculation methodology for embedded generators.
The generator losses charge is the cost that electricity generators pay to account for power lost when transporting electricity through the grid.
“The proposed change aims to modify the existing formula for calculating technical losses incurred by embedded generators connected to the Eskom distribution network, ensuring that it better reflects the actual costs based on recent technical studies,” NERSA said on Thursday.
Eskom intends to implement the amended methodology in the 2026/27 financial year’s Eskom Schedule of Standard Tariffs.
According to NERSA not all the generated electricity reaches end-users.
Some of it is lost as heat in conductors, transformers and other network equipment.
“In practice, this means a generator must supply more electricity than what is delivered to consumers, with the difference representing transmission or distribution losses.
Eskom motivates that the charge provides a financial signal that encourages generators to locate closer to demand centres, since plants that are far from major load areas typically result in higher losses,” the Regulator explained.
Eskom’s recent technical studies and power flow simulations revealed that seemingly embedded generators now contribute to increased network energy losses in most geographical areas.
Moreover, Eskom’s studies show that the current rebate system, which offers financial advantages to embedded generators, is no longer cost-reflective and results in an unintended subsidy.
Subsequently, Eskom considers it necessary to amend the losses charge methodology to more accurately represent the costs linked to the use of the distribution network by embedded generators.
Eskom’s application proposes changes to the formula, thereby constituting an amendment to section 5.5.1 of the Tariff Code.
In terms of section 5.1 of the Governance Code, NERSA is the approval authority for the Grid Code, and any amendment, derogation or exemptions from the Grid Code shall therefore be approved only by NERSA, as guided by the Grid Code Advisory Committee (GCAC).
The recommendations from and input of the GCAC on Eskom’s application will be considered during the decision-making process of the Energy Regulator.
This public consultation process is undertaken in accordance with the requirement of procedural fairness, which necessitates that the Energy Regulator undertake a public consultation process to ensure that its decisions comply with section 10 of the National Energy Regulator Act, 2004 (Act No. 40 of 2004) (‘NERA’), read with sections 4 and 5 of the Promotion of Access to Information Act, 2000 (Act No. 2 of 2000) (‘PAIA’).
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. -SAnews.gov.za
