The immediate priority of the Electricity Market Advisory Forum (EMAF), which was appointed by the National Energy Regulator of South Africa (Nersa) in December, will be to offer input on the regulatory instruments needed to facilitate the launch of the South African Electricity Wholesale Market (SAWEM), including the market code and rules, as well as the trading arrangements and platform.

The 14-member EMAF is yet to be formally convened, but Nersa executive manager for electricity regulation Rhulani Mathebula has been appointed by the regulator to chair the forum, which is expected to be formerly launched in the coming weeks.

The other members have been named as Mutshidza Nndwamato, of the Association of Municipal Electricity Utilities; Letlhogonolo Tsoai, of Business Unity South Africa; Mutenda Tshipala, of Eskom Holdings; Dr Willem den Heijer, of the Ferro Alloy Producers Association, Shreelin Naicker, of the Financial Sector Conduct Authority; Lovemore Chilimanzi, of the South African Electricity Traders Association; Craig Morkel, of the South African Oil and Gas Alliance; Dr Nicole Loser, of The Green Connection; Dr Graeme Chown, an independent consultant, Professor Katleho Moloi, of the University of South Africa; Professor Simon Roberts, of the University of Johannesburg, Dr Thando Vilakazi, of the Competition Tribunal; and Dr Tracy Ledger, of the Public Affairs Research Institute. Alternate members include Professor Vally Padayachee, of the Association of Municipal Electricity Utilities and Tendani Mutshutshu, of Eskom Holdings.

The EMAF, which has been appointed to advise the regulator in line with provisions for such structures in the National Energy Regulator Act, is expected to be in place for six years; enough time to oversee the creation of the SAWEM and the establishment of the independent Transmission System Operator envisaged in the Electricity Regulation Amendment Act.

The forum’s composition and mandate could be revised following the completion of a mid-term review in three years, however, Nersa has also reserved the right to appoint further members at its discretion.

Mathebula tells Engineering News that the terms of reference and operational model, including meeting schedules, will be finalised collectively once the EMAF has been formally convened.

However, the forum’s initial agenda will be driven by the impending launch of the SAWEM, which is still set for April; a timeline that depends in large part on Nersa providing its approval to the faciliatory regulations and instruments required for the functioning of the market.

“I also want to stress that the EMAF does not replace public consultations and hearings and is not a decision-making body.

“Rather, what the regulator is acknowledging is that there are expertise in the industry … that can benefit the work of the regulator, as well as the country, and the regulator is using this vehicle to access that pool of expertise to improve the quality of its decisions.”

The members of the EMAF were selected from a long list of about 40 names arising from nominations made by the public.

While electricity supply industry knowledge was an important criteria in the final selection, Nersa strategic adviser Mark Beare said the regulator also wanted to include individuals with other expertise, particularly in relation to the environment, consumer protection and competition.

“The Electricity Regulation Amendment Act is clear that it wants a competitive market. So, it was felt that in amongst all the other skill sets, competition was going to be an important one,” Beare tells Engineering News.

The issue of genuine and fair competition within the SAWEM also arose during recent hearings into the National Transmission Company South Africa’s application for a Market Operator licence, which was subsequently approved.

Some stakeholders urged Nersa to play close attention to the balance between Eskom Generation’s fixed and variable costs. They cautioned that should the balance in the vesting contracts be tilted too heavily towards fixed costs, the marginal costs bid into the SAWEM by the coal power stations would be artificially low, making it difficult for independent power producers to raise finance to build new capacity to bid into SAWEM.

Once the SAWEM is operational, Mathebula anticipates that EMAF’s focus will then shift from the market code, rules and platform to an analysis of whether it is functioning in a way that is supportive of competition.

This post-launch role is also supported by the Electricity Regulation Amendment Act, which states that the regulator should exercise regulatory oversight and facilitate the transition to a competitive market.