President Cyril Ramaphosa has signed into law the Electricity Regulation Amendment Act, which sets out far-reaching reforms of South Africa’s electricity sector, including the establishment of a competitive electricity market.
The bill assented to by Ramaphosa amends the Electricity Regulation Act of 2006 to respond to current realities in the electricity sector and open up pathways to greater competition and reduced energy costs; increase investment in new generation capacity to achieve energy security; establish an independent transmission company as the custodian of the national grid; and impose severe penalties for damage to and sabotage of infrastructure.
Spokesperson to the president, Vincent Magwenya, said the Act provides for the establishment, duties, powers and functions of the Transmission System Operator SOC Ltd (TSO) – which must be established as an independent entity within five years – and for the National Transmission Company of South Africa to act as the TSO in the interim. It also provides for an open market platform that allows for competitive, wholesale or retail buying and selling of electricity.
Magwenya said the Act provides for market operation as a new activity that may be licensed by the National Energy Regulator of South Africa (Nersa). In addition, it requires the development of a market code that will establish rules to govern the future competitive market, and outlines the process through which the code will be approved.
He said the Act further clarifies the principles that apply to the setting or approval of prices, charges and tariffs, providing, among others, that Nersa must enable an efficient licensee to recover the full cost of the licensed activity, must allow for a reasonable return proportionate to the risk of the licensed activity, and may provide for incentives for continued improvement of technical and economic efficiency.
Magwenya said as it does so, the regulator may consider factors such as security of supply, the diversity of supply and the promotion of renewable energy.
“The Act distinguishes between tariffs that must be set or approved by the Regulator, such as network charges, and those which are subject to a direct supply agreement or arise as an outcome of a competitive market,” Magwenya said.
He said to ensure a level playing field for competition between multiple electricity generators, the Act provides that the system operator shall not discriminate between different generators or customers in relation to dispatching or balancing the system, except for objectively justifiable and identifiable reasons approved by the Regulator. He further said access to the transmission and distribution power system must be objective, transparent and non-discriminatory.
“These changes are in line with the broader reforms guided by the Energy Action Plan and the Eskom Roadmap, which aim to modernise and transform South Africa’s electricity system to end load shedding and ensure long-term energy security.
“It is anticipated that diversity of supply and the promotion of renewables will stimulate a demand for new skills, innovation and technology in the electricity sector, which will generate new industrial activity and in turn mitigate unemployment,” he said.
Magwenya said reinforcing the protection of public infrastructure as part of the fight against crime, the law provides for fines of up to R1 million or five years in prison, or both, for persons who, among other offences, damage, remove or destroy any transmission, distribution or reticulation cable, equipment or infrastructure.
He said those who unlawfully receive such cables, equipment or infrastructure face fines of up to R5m or 10 years in prison, or both.
“Going forward, the Act will lead to long-term energy security, a more competitive energy system, more rapid uptake of renewable energy sources, and ultimately, lower energy prices for all South Africans,” he said.
Meanwhile, Eskom said load shedding remains suspended, with the power utility delivering 142 consecutive days of uninterrupted power supply since March 26, including 108 days of constant supply throughout the winter period.
“There has been no load shedding since the start of Eskom’s current financial year on April 1. The Generation Operational Recovery Plan continues to enhance efficiencies for Eskom, resulting in a R10.21 billion reduction in open-cycle gas turbines diesel expenditure from April 1, 2024 to August 15, 2024.
“This represents approximately a 74% decrease compared to the same period last year. The last time South Africa experienced over four months of load shedding suspension was more than four years ago, from March 16, 2020 to July 9, 2020, when load shedding was suspended for 116 days. Eskom maintained an average Energy Availability Factor of 67% over the past seven days,” said Eskom spokesperson Daphne Mokwena.
The Star