Parliament’s portfolio committee on mineral resources and energy is planning a redo of public hearings on the Electricity Regulation Act Amendment Bill (ERA) after some hearings were poorly attended during the previous round.
The committee Tuesday proposed re-hosting public hearings in the bill in Bethlehem, Welkom and Zeerust in January.
This will delay parliament’s ultimate passing of the bill which government and the private sector described and urgent and critical to addressing SA’s energy crisis.
The amendments to the bill will, among other things, provide a legal framework for setting up and operationalising the National Transmission Company of SA and later the transmission system operator — these are essential steps towards liberalising the electricity market.
The most important objectives of the bill are creating a competitive electricity market and establishing an independent transmission system operator which will manage the national electricity grid.
During oral presentations on the bill in parliament last week, the government’s Operation Vulindlela, presented by officials from the Treasury and the presidency, said the ERA bill “represents the most fundamental reform of SA’s energy system in decades”.
Rudi Dicks, head of the project management office in the presidency, said the reforms contained in the ERA Bill would result in “huge new investment in energy generation in SA, helping to end load-shedding while creating jobs and driving economic growth”.
The changes proposed in the Bill, he said, would allow multiple electricity generators to invest in new generation capacity based on clear price signals, thus reducing the risk of reliance on a single supplier (Eskom).
Introducing competition in the energy generation market would result in lower energy prices.
In addition, the financial sustainability of the energy sector will be increased, as risk is spread across multiple entities rather than concentrated in Eskom, Dicks said.
Highlighting the urgency of these reforms, Dicks said the current structure of the energy system has resulted in high levels of inefficiency and a shortage of energy generation capacity, due to a lack of investment in the sector.
This was one of the reasons SA was grappling with load-shedding. Information shared by Dicks showed how load-shedding has worsened since 2018, with load-shedding up to end-September having already surpassed the amount of load-shedding SA experienced in five proceeding years combined.
The critical role of the energy market reforms contained in the ERA Bill was also underscored by the Energy Council of SA, whose members include Sasol, Exxaro, Anglo American and the Energy Intensive Users Group SA.
CEO of the Energy Council, James Mackay, said the implementation of the new transmission company envisioned in the bill (and already legally established by Eskom), will help to facilitate and accelerate the investment, policy development and skills required to modernise the grid for a low-carbon future and energy security.
Critically, said Mackay, the bill does not privatise the electricity system.
“Rather, it provides an independent state-owned and run transmission and market that enables private sector investment and generation to supplement Eskom generation and meet national electricity demand. If executed effectively, the bill will enable significantly increased levels of investment, job creation and economic growth in the process of meeting our short- and long-term energy needs.”
Labour unions objected to the bill because of the provisions it makes for greater private sector participation.
Cosatu, the National Union of Metalworkers of SA and the National Union of Mineworkers said they did not support the unbundling of Eskom and the invitation this gave to the private sector to participate in generation.
Labour unions also rejected the creation of the transmission system operator as envisaged in the bill, demanding that that be removed.
In its response to the comments in parliament on Tuesday, the department of mineral resources and energy said the comments did not address specific provisions in the bill.
Deputy director-general of mining, minerals and energy policy at the department, Ntokozo Ngcwabe, said dividing Eskom into three separate divisions for generation, transmission and distribution and the subsequent setting of a transmission system operator under the national transmission company was core to the establishment of an unbiased and open electricity market in SA.
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