The rapid increase in South African electricity prices in the past eight years has been overseen
by a proactive, policy-oriented regulator, NERSA. Regulatory governance theory proposes
that regulation is most effective when the roles of different organisations are clearly defined.
While the laws establishing the regulator comply with this requirement, effectiveness of
regulation is challenged by a weak ministry, overlapping spheres of regulatory influence and
competing goals amongst the parties involved. It is hypothesised that this impacts the
outcomes of the regulatory institution. Using Institutional analysis and development as a
framework, the interactions between the regulator, the energy ministry, municipal electricity
distributors and National Treasury are investigated. Attempts to change the institutional rules
have generally failed because of the threat they posed to the constitutional and financial
interests of municipalities. The regulator, with support from National Treasury, has achieved
success in ensuring compliance by municipalities to its administrative processes and its
prescribed tariff escalation rates. It has been less successful at ensuring standardisation of
business tariffs across electricity distributors. The regulator’s tariff objectives have prioritised
protection of the poor rather than economic development. The major pro-poor initiative of the
regulator is the inclining block tariff which has effectively subsidised electricity consumption of
low usage households. This is primarily at the expense of municipalities, rather than other
consumers