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Long road ahead for electricity regulation bill, with public hearings set to last until December

Long road ahead for electricity regulation bill, with public hearings set to last until December
Power lines run from one of Eskom's coal fired power stations near Villiers, South Africa, 29 August 2019. (Photo: EPA-EFE/KIM LUDBROOK)

The electricity regulation amendment Bill to overhaul the power sector was consulted among Mineral Resources and Energy, Public Enterprises and the Presidency and would not clash with current steps of unbundling state power utility Eskom, MPs were told on Wednesday.

It was the first parliamentary outing for the contested Electricity Regulation Amendment Bill that overhauls the power sector by, among other means, establishing a transmissions operator and national system to wheel privately generated electricity into the national grid.

And MPs got to one of the potentially many sticking points — how this draft law’s proposed transmissions company would dovetail with the unbundling of Eskom. On the cards since October 2019, Public Enterprises Minister Pravin Gordhan announced the full establishment of the Eskom transmissions entity, the National Transmissions Company of South Africa, by November 2023, and a distribution entity by December 2023, in his Budget Vote speech earlier in the year.

rolling blackout exemptions

Public Enterprises Minister Pravin Gordhan. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Proposed section 34A stipulates the public enterprises minister must establish what’s called the “Transmission System Operator SOC Ltd” as a state-owned entity to allow competitive electricity trading, according the the departmental briefing. 

Clause 35C(1) sets out the transitional arrangements, including a five-year window in which the unbundled Eskom entity, National Transmission Company South Africa, is deemed the transmission system operator.

Crucially, the Bill gives the mineral resources and energy minister the power to determine the need for new electricity transmission infrastructure in the national interest and security of energy supply — after consultation with the finance minister and the National Energy Regulator of South Africa (Nersa), according to Clause 27 of the amendment legislation.

‘Reengineering the entire electricity market’

On Wednesday MPs were told the Bill had been consulted and amended “with the structure that deals with Eskom unbundling, National Treasury, Mineral Resources and Energy, Public Enterprises and the Presidency”, according to Ntokozo Ngcwabe, Mineral Resources and Energy Deputy Director-General for policy, global relations and investment promotion.

“The process and situation are quite complex, and it requires very circumspect decision-making at this point… We are reengineering the entire electricity market, but work is being done elsewhere,” she later added.

This interaction talks to some of the difficulties surrounding a draft law eagerly anticipated also in business circles, and touted by government to be on the statute books before the 2024 elections. It’s also on the agenda of structural reforms driven by Operation Vulindlela, the joint initiative by National Treasury and the Presidency. But the introduction in Parliament has been messy and delayed, as the April submission “for information” made it to official tabling only in late August. 

The Bill also aims to streamline administration, facilitate additional electricity, new generation and infrastructure, and provide for “an open market platform that will allow for competitive electricity trading,” according to the DMRE briefing documents.

Among the administrative stipulations are timeframes for applications, appeals and such, and halving to 60 days the period in which the electricity regulator must decide on an application.

Regarding grid access, including wheeling or feeding privately generated power to the national grid, the Bill provides that access was based on published tariffs, applicable to all potential customers without discrimination.

While the Mineral Resources and Energy DDG told MPs, “When we draft law we walk by faith — it is always our hope the Bill is passed by Parliament,” the lawmakers were more sceptical.

The time pressure was “not a desirable situation,” said chairperson of the parliamentary mineral resources and energy committee, ANC MP Sahlulele Luzipo, after the announcement of the proposed provincial public hearings from 26 September to 3 December.

“The problem is that we have to run against time. If this Bill had been here as much earlier as possible, we would not have to run… The level of expectation now puts pressure on us and we need to be seeing doing it – balance the work also balance the time so when it is put under the test there must be quality.”

After the National Assembly processes, the National Council of Provinces (Ncop) must also fully consider the draft legislation because of its impact on provinces.

ANC MPs fudged DA MP Kevin Mileham’s question if the Bill would be considered by the committee after public hearings end, as currently scheduled, on 3 December. Parliament is scheduled to rise on 4 December for the year-end constituency period and recess.

Luzipo said further planning would unfold after the end of the 30-day period calling for submissions. The adverts for that are expected to be published in the next week.

Pending approval by Parliament, on 26 September MPs will hit the road for three weeks’ public hearings in Limpopo, Mpumalanga and North West, set to end in the Western Cape on 3 December. 

But those are just the first steps on the parliamentary law-making road. DM

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