Eskom announced on Wednesday night that it was going to challenge energy regulator Nersa’s Tuesday approval of four electricity trading licences.
This is after Nersa dismissed Eskom objection, raised during a public hearing on the matter in July.
Eskom argued that trading licences, awarded to GreenCo Power, CBI Electric Apollo, Green Electron Market and Discovery Green, cannot be granted within its exclusive distribution areas.
In its statement issued on Wednesday night, the power utility said the trading licences were approved without the necessary trading rules for the industry being developed and pointed out that the regulator’s members had acknowledged this during their deliberations.
“The decision by the Regulator, according to Eskom, infringes upon and breaches Nersa’s own rules and the licences issued to Eskom by Nersa,” it said.
The power utility said it disagreed with that decision and had instructed its attorneys to initiate legal proceedings in the high court.
“Eskom, like all other participants in the electricity industry, operates based on established rules and subscribes to a rule-based transition. However, this adherence to the rules has been misinterpreted as anticompetitive behaviour, which Eskom firmly denies.”
It said Eskom remained committed to accelerating the reform of the rules to enable a competitive energy market. “As presented during the public hearing, Eskom will collaborate with various stakeholders to ensure that a competitive market is developed through a consultative legal framework.
“Eskom advocates for a dynamic electricity market that ensures energy security, access and affordability, fosters growth, and delivers long-term benefits for South Africa and Sub-Saharan Africa.”
The rapid growth in the number of licensed traders comes as SA is rapidly moving towards a competitive wholesale electricity market. Currently, most traders have bilateral agreements with one independent power producer (IPP) as supplier and one large power user as off-taker.
Nhlanhla Gumede, Nersa full-time regulator member for electricity, said during the regulator meeting the number of traders was expected to increase further, especially when the Electricity Regulation Amendment Act came into operation and the current bilateral market evolved into a competitive market with multiple suppliers and multiple off-takers.
“Traders will be the interface between generators with long power purchase agreements and off-takers with short agreements,” he said.
He also stated that the distribution licences, which Eskom seems to rely on for exclusivity in a specific area, excluded trading and that multiple traders could operate in an area.
Brian Day, chair of the SA Independent Power Producer Association (SAIPPA) said Eskom’s move was “regressive and against the excellent progress being made in reforms”.
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