State-owned power utility Eskom says the continuing court proceedings, despite it pausing its litigation against new electricity trading licences granted to other companies, is owing to a commercial and industrial energy company declining Eskom’s request that the matter remain stayed.

The energy company is said to have proceeded with convening a case management conference to pave the way to advancing the application, instead of waiting for the National Energy Regulator of South Africa- (Nersa-) led process to reach its conclusion. In these circumstances, Eskom had no practical option but to participate in procedural steps to protect its legal position, the utility says.

Eskom reiterates that it supports the reform of South Africa’s electricity market, welcomes competition and remains committed and is participating alongside other traders in the Nersa-led process to develop trading rules that enable a fair, transparent and sustainable competitive marketplace.

The period for submission of inputs on the new trading rules is the end of January, which is why Eskom is disappointed that it has been compelled to proceed with the case, given the work under way, it says in a statement.

When Eskom communicated a stay in proceedings, it was communicating its intention to create space for Nersa to conduct consultations and public hearings on the development of new trading rules, it adds.

Eskom has no intention of restarting or escalating litigation as a substitute for regulatory reform and is still not actively progressing the application. To the extent possible, the utility still intends to allow the regulatory process to unfold, but is constrained owing to the circumstances explained, it states.

Eskom’s objective has been to avoid regulatory uncertainty while ensuring that reforms are implemented within a lawful and coherent framework.

Eskom says it supports the introduction of competition on a level playing field. In electricity markets globally, regulated obligations such as cross-subsidies for low-income households and strategic industries are embedded in policy and tariff frameworks.

In South Africa, reforms must ensure that competition does not result in subsidy-contributing customers exiting the system while regulated entities and municipalities are left to shoulder these obligations alone, says Eskom Group chief executive Dan Marokane.

“The original grounds for Eskom’s review application remain unchanged. The granting of trading licences today to new market entrants, such as traders, enables subsidy-contributing customers to avoid contributing towards billions of rands in subsidies, which is why new, fair trading rules are required.

“Until new trading rules are finalised, all market participants, incumbent and new, are required to operate under the existing regulatory framework to preserve the rule of law, maintain public oversight, and avoid unintended consequences for customers and municipalities.

“Proceeding with reform without clear and enforceable rules risks creating uncertainty over obligations, subsidies and consumer protection mechanisms,” he says.

Further, its participation in procedural processes for new electricity trading regulations should not be interpreted as a strategic decision to undermine regulatory reform, as evidence of duplicity, or as a change in its intention not to actively pursue the litigation, Eskom says.

The power utility continues to advocate for two key measures to support fair competition and affordability, namely the redesign of regulated tariffs to ensure cost recovery from all market participants, and the establishment of retailer-of-last-resort obligations to protect customers and system stability.

Eskom recognises the importance of precision and clarity in public communication on legal and regulatory matters and remains committed to transparent engagement with government, Nersa, industry stakeholders and the public.

Eskom will continue to participate constructively in regulatory processes aimed at strengthening energy security, attracting investment, and supporting a just and sustainable energy transition for South Africa, says Marokane.