The National Energy Regulator of SA (Nersa) announced on Thursday that it had rejected Eskom's proposed electricity tariff hike.
"The decision of the energy regulator is based on facts," Nersa chairwoman Cecilia Khuzwayo said.
"The third multi-year price determination [MYPD3] will be eight percent over the next five years."
Eskom had applied for a 16 percent increase in electricity prices in each of the next five years.
This was more than double the current price, taking it from 61 cents a kilowatt hour in 2012/13, to 128 cents a kWh in 2017/18.
The current multi-price determination, MYPD 2, ends on March 31, 2013.
Both MYPD1 and MYPD2 had spanned a period of three years.
Khuzwayo said it was important to note that the MYPD3 application was made with the backdrop of "continuing global economic recession".
The parastatal has previously said it needs the increase to cover the costs of supplying the electricity needed to power South Africa and invest in infrastructure.
The proposed increase was met with criticism from political parties, unions, civil society, businesses, and South Africans in general. - Sapa