Eskom's court challenge to electricity trading licences is a dangerous reactionary strike against reform

Daily Maverick

5 days ago

Eskom's court application opposing the National Energy Regulator of South Africa's decision to issue five new electricity trading licences is not only regressive – it is dangerously disingenuous.
In a filing to the Gauteng Division of the High Court on 24 July 2025, Eskom alleges that the National Energy Regulator of South Africa's (Nersa) decision represents a radical and unconsulted 'new policy' threatening to 'upend the entire landscape of electricity provision' in South Africa.
This accusation reeks of institutional amnesia, denialism and resistance to long-standing reform commitments that Eskom itself has acknowledged for decades.
Let us be clear: the liberalisation of South Africa's electricity sector is not new.
The notion of third-party electricity trading, open access to the grid and competitive supply was explicitly articulated as early as 1998 in the White Paper on the Energy Policy of the Republic of South Africa.
The emergence of electricity traders is not a deviation – it is the fulfilment of a long-standing policy commitment. Eskom knows this.
That seminal document – endorsed by the government and cited countless times by Eskom itself – called for the unbundling of Eskom and the creation of a competitive electricity supply industry to improve efficiency and ensure energy security.
In the white paper the government unequivocally stated: 'The electricity sector will be gradually opened to greater competition, and the current single-buyer model will be reformed.' This included plans for retail competition and multiple electricity suppliers.
Fast-forward to 2019, and the Department of Public Enterprises' Roadmap for Eskom in a Reformed Electricity Supply Industry reaffirmed this vision.
It clearly mapped out the unbundling of Eskom into three independent businesses – generation, transmission and distribution – and explicitly supported the facilitation of competition in generation and supply.
The Eskom roadmap stated: 'To enable fair and non-discriminatory access to the grid, electricity traders will be allowed access to customers, and mechanisms will be put in place to ensure equitable pricing.'
In other words, the emergence of electricity traders is not a deviation – it is the fulfilment of a long-standing policy commitment. Eskom knows this. And yet, in a desperate attempt to cling to its monopoly, Eskom's court papers now argue that these licences represent 'a unilateral policy shift' that 'has not been the subject of public consultation'.
That claim is not only false – it is egregiously dishonest.
The five trading licences that Eskom now seeks to nullify were granted by Nersa after following due process, including public participation by Eskom itself, as mandated under both the Electricity Regulation Act of 2006 and the Electricity Regulation Amendment Act that came into effect on 1 January 2025.
Eskom also had the opportunity to comment on the Acts themselves during the industry consultation process and parliamentary promulgation processes, and no doubt did so. By waiting until after the licences were granted to launch a legal challenge, reeks of strategic delay and corporate obstructionism.
Retail competition is not 'poaching' – it is how liberalised and competitive energy markets function.
Worse still is Eskom's inflammatory language. The utility claims that traders are now allowed to 'poach the best of Eskom's customers' without bearing any of the 'redistributive responsibilities' enabled by Eskom's current tariff structures. This argument is deliberately misleading.
Eskom Distribution holds two distinct licences: a distribution licence, which grants it exclusive rights over the wires business in its service areas, and a trading licence, which is non-exclusive and places Eskom in direct competition with other energy retailers.
The tariffs charged for network access are regulated and paid by the customer, regardless of who supplies the electricity. In other words, Eskom continues to recover its costs for maintaining infrastructure even when it loses customers to another licensed electrical energy trader.
This is a thinly veiled attempt to weaponise social justice rhetoric in defence of institutional self-interest.
To conflate distribution revenues with energy trading revenues – as Eskom does – is a sleight of hand aimed at preserving an outdated monopoly. Retail competition is not 'poaching' – it is how liberalised and competitive energy markets function.
Eskom is free to compete for customers based on service quality, price and energy attributes such as green credentials. If Eskom cannot compete on those terms, that is a reflection on its product offering – not on the rules of the game.
Even more farcical is Eskom's suggestion that allowing competition will cause prejudice to 'users of electricity generally, the many poor people reliant on subsidisation… and to the taxpayer.'
This is a thinly veiled attempt to weaponise social justice rhetoric in defence of institutional self-interest. Eskom's bloated operating model, high losses and culture of inefficiency are the primary threats to affordability – not the emergence of competitors who can deliver electricity more efficiently or more sustainably.
Let us also not forget: the Electricity Regulation Amendment Act, which came into force on 1 January 2025, was the result of years of public engagement and parliamentary debate. It entrenches the legal foundation for competitive electricity markets and affirms the legal standing of electricity traders. Eskom did not oppose this Act or its predecessor. It cannot now claim surprise.
Furthermore, PowerX – South Africa's first licensed trader – was granted its licence as early as 2009, 16 years before this court application. The licensing of several other traders has followed.
Eskom never challenged these licences. To now cry foul – after traders have operated for more than a decade and with policy clearly evolving towards competition – is both disingenuous and opportunistic.
Instead of adapting to the market evolution it helped script, Eskom is now deploying legal tactics to delay the inevitable.
Eskom's challenge also betrays a deep contradiction at the heart of its rhetoric.
On one hand, it laments the risk to its revenue and its ability to cross-subsidise poor households. On the other, it has consistently failed to deliver on its service obligations to those very households – many of whom face load reduction, unaffordable tariffs or outright disconnection.
What Eskom fears is not harm to the poor – it is the erosion of its customer base by more agile, customer-centric alternatives.
The true risk to Eskom's business model is not Nersa's licensing of traders. It is Eskom's failure to reform itself in line with the policy it helped shape. This case reveals Eskom for what it is: a state-owned behemoth engaged in regulatory brinkmanship to preserve its dominance, even as the sector moves on.
Instead of adapting to the market evolution it helped script, Eskom is now deploying legal tactics to delay the inevitable: a competitive, diversified electricity supply industry where customers have choice and innovation can flourish.
If the court entertains Eskom's arguments, the result will be profound uncertainty for all prospective market entrants. It will deter investment, undermine regulatory credibility and signal that vested interests can override both law and policy.
But if Eskom's challenge is dismissed – as it should be – it will reinforce the integrity of South Africa's electricity reform process and signal that the country is serious about enabling a modern, competitive energy sector.
In conclusion, Eskom's court challenge is not merely a legal objection – it is a full-frontal assault on reform. It misrepresents the law, distorts policy history and manipulates socioeconomic concerns to shield its own inefficiencies.
The courts – and the public – must see this for what it is: a desperate attempt to turn back the clock on two decades of progress. DM