By Charles Mgbolu
A new South African Electricity Regulation Amendment Bill has been presented in the country's parliament as the country tries to find lasting solutions to its crippling power crisis.
The bill is an amendment to the Electricity Regulation Act 4 of 2006 and is anchored on privatising the electricity sector, whereby multiple electricity companies are given operating licences to increase energy distribution in the country.
What is in the bill?
- 1. State-owned utility company to change
The new bill formally states that Eskom, which once controlled the generation, transmission, and distribution of most of the nation’s electricity, is being rebranded and renamed Transmission System Operator (TSO), which would also be state-owned.
The National Transmission Company of South Africa (NTCSA), an independent state-owned entity responsible for overseeing the national electricity grid, will manage TSO.
The new agency, TSO, is tasked with strengthening and developing new electricity infrastructure while ensuring all electricity producers are treated equally and fairly and are allowed access to the national grid without discrimination.
- 2. Energy guarantee
The South Africa Electricity Regulation Amendment Bill further added that multiple electricity-distributing companies will be given licences to compete on a ''level playing field,'' the bill states.
The bill hopes to further guarantee South Africa’s energy security while improving efficiency and bringing down electricity prices in the long term.
The proposed law is also aimed at giving consumers more choices of electricity suppliers.
This is projected to help boost competition among electricity firms and drive down prices as well as improve service delivery, and increase investment in the electricity sector.
More job opportunities and economic growth are also expected according to the draft law.
- 3. Fair access
The bill clarifies that TSO will cover four key areas: (a) as a transmitter, (b) as a system operator, (c) as a market operator, and (d) as a central purchasing agency (CPA).
Under transmission, TSO is responsible for maintaining and expanding the electricity grid and making sure that all electricity-distributing companies have fair access to it.
As system operator, TSO is responsible for safely managing and keeping the integrated power system working properly. This includes dispatching electricity generators and ensuring that the power system is always in the right balance to avoid blackouts.
- 4. Market umpire
The bill seeks to ensure TSO establishes a transparent, open, and fair trading platform, subject to approval by the regulator (NTCSA). It is tasked with setting a market code and rules, which include qualifying criteria for power market participants, and ensuring that the market functions smoothly.
- 5. Buying power
The Electricity Regulation Amendment Bill also seeks to establish the Central Purchasing Agency (CPA), which will further encourage a competitive market.
It will be responsible for ensuring that there is a vibrant electricity market by buying and selling power to and from different companies as the need arises.
This would help shore up electricity market values and encourage foreign investments in a potentially active electricity trading market, the bill proponents hope.
Mixed reactions
The bill has been debated in parliament with mixed reactions. Some MPs have called for Eskom’s unbundling to be reviewed.
They want mechanisms to be put in place to avert any potential negative implications of the move.
The MPs argued that Eskom’s problems arise from poor management, regulation, and control, not the fact that the various operations take place under one entity.
“We have noted all your valuable views and concerns that were brought to the bill, and we will take them into consideration as we finalise the bill,” Portfolio Committee Chairperson Sahlulele Luzipo said.
He asked MPs to email their reactions to the bill and submit them to the House no later than November 30, 2023.
Energy transition
South Africa has been grappling with a crippling electricity crisis for years, leading to frequent blackouts from loadsheddings that have negatively impacted people and businesses.
South Africa has committed to a transition from a heavy reliance on coal for electricity generation to cleaner sources including solar, wind and battery storage. The transition has secured funding pledges of up to $8.5 billion.
However, the country's electricity crisis has led the government to consider prolonging the lifespan of its aging power stations. The country has also launched a programme to secure additional electricity from neighboring countries.
