The Department of Minerals Resources and Energy (DMRE) has made “significant progress” in the process of promulgating the Electricity Regulation Amendment (ERA) Bill, DMRE deputy director-general for mining, minerals and energy policy Ntokozo Ngcwabe has told the Windaba 2022 conference in Cape Town. Approval by the Minister of Mineral Resources and Energy, and submission to the full Cabinet, should both happen next month.

Subsequently, it would be tabled in Parliament. She explained that, at that point, Parliament’s own processes, procedures and timescales took over and the DMRE no longer had any control over the progress of the Bill. The department would follow and monitor the parliamentary process, to be ready to respond to any queries or comments that might be generated by the parliamentary process.

She explained that the ERA was needed because of major developments in the country’s electricity sector since the passing of the Electricity Regulation Act of 2006. These included the electricity supply “shortfall”, coupled with the deteriorating availability of generating units; the vertical structure of the market and the lack of competition; and the introduction of independent power producers (IPPs). Further, there was also the need to accommodate a just energy transition (from high-carbon-emitting generation to low- or zero-carbon-emitting generation technologies).

She pointed out that, around the world, vertically-integrated utilities such as South Africa’s Eskom suffered from the same problems: they were natural monopolies, delivering poor quality service, with high system losses. “These are the issues we’re trying to respond to.”

The changes the ERA Bill contained included the introduction of transmission system operation as a licensable activity. The regulator – the National Energy Regulator of South Africa – would be strengthened, including by being allowed to set standards to deal with registrants. The ERA would add a section on revocation and deregistration, as well as strengthening the provisions empowering the Minister to invoke determinations. The Bill also proposed limiting the time for the processing of licensing applications from the current 120 days to 60 days. And it would make provision for the establishment of a National Transmission Operator. 

Concerning the future structure of the country’s electricity market, Ngcwabe observed that South Africa currently imported electricity from neighbouring countries and that these imports would increase. There were IPPs and in the future there would be more of them. There was Eskom. There were and would be some municipalities generating power. There would be companies generating their own electricity and selling the surplus. There would be a need for ‘balancing’ plants. There would be a ‘market system operator’, energy distributors and traders.

She assured that the power trading platforms and mechanisms would be transparent and non-discriminatory. Market participants would supply information on their power reserves in the Day Ahead Reserve Market. The purchasing of power from generating entities, including IPPs and neighbouring countries, would be done by the Central Purchasing Agency (this already existed, within Eskom, and would be strengthened to handle the new system). As for legacy IPP contracts, these would be managed by mechanisms that already existed within Eskom.