Industry bodies have welcomed news that the National Council of Provinces (NCOP) passed the Electricity Regulation Amendment Bill (ERA Bill) last week and are urging President Cyril Ramaphosa to sign it into law.
The bill will help reshape the electricity market and provide the legal framework to set up the structures needed to fully liberalise electricity trading in the country, thus breaking Eskom’s monopoly.
However, as the bill now awaits assent by the president, the DA-run Western Cape provincial parliament and the City of Tshwane, where the DA leads as part of a coalition, have indicated possible challenges to the bill.
After the ERA Bill was passed by the NCOP last week with only the Western Cape not supporting it and the Free State not submitting any mandate, a whip for the DA in the NCOP, Cathlene Labuschagne, sent a letter to the chair of the NCOP affirming a previous request that the bill be revived in the seventh parliament after the elections at the end of May.
The ERA Bill was not subjected to “meaningful public participation” by provincial legislatures, which was particularly concerning given that some of the provisions could “reduce the constitutional powers of municipalities” in the distribution of electricity, Labuschagne said.
Such changes, the letter stated, could have a far-reaching financial impact on local governments.
“The timelines that were provided for in the bill in the select committee’s programme were objectively inadequate to facilitate adequate public participation given the technical nature of the bill and the major economic importance.
The Western Cape therefore cannot support this bill as it does not comply with constitutional requirements for adequate public participation.
— Cathlene Labuschagne, a whip for the DA in the NCOP
“The Western Cape therefore cannot support this bill as it does not comply with constitutional requirements for adequate public participation,” Labuschagne said.
Provincial legislatures had less than two months after the ERA Bill was passed in the National Assembly in mid-March to consider the bill and hold additional public hearings.
The DA supported the bill in the National Assembly despite having some reservations about certain amendments.
At the time, Kevin Mileham, DA MP and spokesperson for mineral resources & energy, said the party was concerned the bill did not “go far enough” in ensuring the independence of the transmission system operator because the National Energy Regulator of SA (Nersa) would still be assigned the power to approve prices and tariffs.
News24 reported the City of Tshwane said it would write to Ramaphosa on Monday to lobby him against signing the ERA Bill into law. City officials were concerned that the bill gave too much power to Nersa to determine electricity tariffs.
Mlindi Nhanha, NCOP delegate for the DA, told Business Day there was no certainty yet about what steps the DA might take to oppose the signing of the bill into law.
“This bill will have a negative impact on the ability of metros to deliver electricity. We still have to look at this more thoroughly and after some consultation we will be able to confirm what our next steps will be,” he said.
The bill received a much warmer reception from energy industry representatives.
It will make energy cheaper, cleaner and more reliable. We hope President Ramaphosa will sign this legislation into law.
— Rethabile Melamu, CEO of Sapvia
According to James Mackay, CEO of the Energy Council SA, the ERA Bill had the backing of business and the government as a “priority reform for restoring investor confidence and unlocking investment into the nation’s energy system”.
The council represents companies such as Exxaro, Sasol, Shell, TotalEnergies and Anglo American, as well as associations such as the Energy Intensive Users Group of Southern Africa and Naamsa.
He said the ERA Bill unlocked the two most critical enablers of SA’s energy transition. First, an independent state-owned and state-run transmission network and operator that must expand grid capacity in line with Eskom’s Transmission Development Plan. Second, an independent and efficient market operator that must ensure a fair and competitive energy market.
“An ambitious implementation period of five years has been set, but if effectively executed with efficient and independent market regulation, the bill will enable significant levels of investment, economic growth and job creation, Mackay said.
The passing of the ERA Bill was also welcomed by the SA Wind Energy Association (SAWEA) and the solar power industry.
The Solar PV Industry Association (Sapvia) urged Ramaphosa to “find his pen and sign it into law”.
The adoption of the bill, it said, was a “milestone in SA’s journey to a power-secure future”.
“The bill will open the market to suppliers of electricity and bring us much closer to a competitive market. There are several benefits ... but, crucially, the bill allows for the systematic unbundling of Eskom into a transmission system operator and market operator.
“It will make energy cheaper, cleaner and more reliable. We hope President Ramaphosa will sign this legislation into law,” said Rethabile Melamu, CEO of Sapvia.
SAWEA CEO Niveshen Govender said key provisions of the ERA Bill, such as establishing an open market platform for competitive electricity trading and creating a transmission system operator, would help unlock opportunities for wind energy development.
“These measures should streamline grid access and facilitate more electricity transactions, enabling greater integration of new wind power into SA’s energy mix,” he said.
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