The National Energy Regulator of South Africa (Nersa) has the ability to fail to execute its regulatory duties in a spectacular manner, unfortunately causing harm to the country’s economy and inducing conditions for bankruptcy of state-owned utility Eskom, according to energy expert Tshepo Kgadima.
Kgadima said the fundamental problem was the dearth of knowledge, experience and expertise on elementary aspects of an energy system with unique characteristics of South Africa within the Cabinet, Nersa and Eskom.
“Nersa’s bizarre and absurd decision to transfer Eskom Holdings’ powers and duties related to Section 34 power purchase agreements (PPAs) with independent power producers to the National Transmission Company of South Africa (NTCSA), in accordance with Section 21(1) of the Electricity Regulation Act, spells a sure death knell for the NTCSA as it stands to settle it with egregiously onerous legacy contracts which are the root cause of Eskom Holdings SOC Limited’s precarious and dire financial situation as they constitute irregular, fruitless and wasteful expenditure.
“To demonstrate the extent of indolence, ineptitude and dereliction of fiduciary duty of both the Nersa and Eskom boards, take their apparent oblivion to the conditions of financial hardship which will be visited upon the nascent NTCSA under Section 22(2) which stipulates the following: a licensee may not discriminate between customers or classes of customers regarding access, tariffs, prices and conditions of service, except for objectively justifiable and identifiable differences approved by the regulator,” he said.
Kgadima said the pertinent question that needed to be asked was whether the NTCSA would purchase every megawatt hour of electricity from the Eskom Generation Company, renewable energy independent producers, etc, at Eskom’s primary cost of energy which is below 50 cents per kilowatt hour?
He said the greediness of the private sector in profiteering meant it would never agree to have its “dripping roast” taken away.
“The decision to unlawfully break up Eskom, which was once a world-class integrated electricity utility, is nothing short of economic treason by the ANC government.”
Kgadima’s response follows the energy regulator’s announcement that it would transfer Eskom Holdings’ powers and duties related to Section 34 PPAs with independent power producers to the NTCSA, in accordance with Section 21(1) of the Electricity Regulation Act, 2006.
The regulator further sanctioned the issuance of a cost recovery letter to the NTCSA for Section 34 IPP projects, and the amendment of the IPP’s generation licences to designate the NTCSA as the buyer in terms of Section 16(1)(d) of the Electricity Regulation Act, replacing Eskom Holdings in this role.
“The NTCSA’s trading licence will be amended accordingly. Eskom's application to Nersa on 21 December 2023 for consent to transfer its powers and duties under Section 34 of the Electricity Regulation Act to the NTCSA was a pivotal step in its unbundling process, as outlined in the ‘Roadmap for Eskom in a reformed electricity supply industry’ published by the Department of Public Enterprises in 2019.
“The transition of the buyer role for Section 34 IPPs from Eskom to the NTCSA is a critical component of this process. Mr Nhlanhla Gumede, Nersa’s regulator member responsible for electricity regulation, expressed enthusiasm for these approvals, describing them as great and momentous decisions that are significant in advancing the unbundling process, and good for the transformation of the electricity supply industry at large,” the regulator said.
According to Nersa, the decision marked a significant milestone in the unbundling process for the establishment and operation of the NTCSA.
The Star