The Electricity Regulation Amendment Bill is likely to cross its final parliamentary hurdle on Thursday when the National Council of Provinces (NCOP) meets for its final plenary session before the sixth parliament rises ahead of the general elections at month’s end.
Less than a year after the bill, which will reshape the electricity market, was introduced in parliament by the minister of mineral resources & energy, provincial delegations will vote on it before the bill goes to the president to be signed into law.
During the tabling of final mandates on the bill earlier this week, all provinces except the Western Cape and the Free State indicated their delegations in the NCOP had received a mandate to support the bill with no amendments. The Free State did not submit mandates and the Western Cape did not support the bill.
The bill represents a big milestone in SA moving away from Eskom’s monopoly on electricity towards a liberalised market in which multiple electricity generators will compete to offer customers access to competitively priced electricity.
Ultimately, the reforms that will be implemented under the bill will make electricity cheaper, cleaner and more reliable.
SA is lagging behind the rest of the world in liberalising its electricity market, but government and the private sector have moved quickly over the past two years to change that.
One of the most decisive moves by government was to change the electricity generation licensing regime at end-2022. The licensing threshold for independent power producers, which was previously raised from 1MW to 100MW in 2021, was removed, which meant that private investors in electricity generation projects would mostly not require licences.
What followed, in 2023, was a huge increase in investment in private generation by businesses and households. New generation capacity (mostly solar) registered with the energy regulator in 2023 increased almost threefold compared with 2022 and was 50 times more than in 2021.
A long time in the making, the unbundling of Eskom into three businesses for generation, transmission and distribution, which is critical to opening up the electricity market to independent power producers, finally started to gain momentum in 2023 as licences and approvals for the operationalisation of the National Transmission Company of SA (NTCSA) started to fall into place.
By April the NTCSA had met all the requirements for it to be established and operationalised, including the appointment of a board and obtaining lender consent. The NTCSA is expected to start trading by July, functioning as an interim facility taking on the role of the transmission system operator, which will be set up later under the bill.
In its interim role, the NTCSA will set up a market platform through which electricity can be bought and sold by multiple buyers and sellers.
The next important step is to have the bill signed into law to provide the legal framework for the transmission system operator, insulating the electricity trading platform from Eskom’s generation assets. It will eliminate any conflict of interest that could arise while Eskom is a power generator and the owner and operator of the monopoly transmission grid.
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