While the Organisation Undoing Tax Abuse (Outa) supports the broad intent of the Electricity Regulation Amendment (ERA) Bill, as it seeks to improve energy security in the country, it says more must be done to move away from regulated pricing to more market-oriented pricing with greater levels of competition and efficiency.
Outa considers the ERA Bill to be extremely important legislation for putting in place the necessary legal, regulatory, planning and pricing frameworks, rules and procedures to implement government policy for a restructured electricity supply energy.
In its comment submission on the ERA Bill, Outa says there is room for improvement in the ERA’s definitions of terminology, to ensure consistency with definitions and terminology used in other pieces of legislation related to electricity supply.
The organisation recommends that the Select Committee on Land Reform, Environment, Mineral Resources and Energy carefully review and state the designated roles and powers of the Ministers of Mineral Resources and Energy and Electricity. That said, Outa says the discretionary powers of the Ministers and the National Energy Regulator of South Africa (Nersa) should be limited to the maximum extent possible.
“The role of Nersa in the setting and approval of prices needs to be reviewed, minimised and restricted to instances of market failure, and incorporated into the ERA Bill.
“Electricity regulation and pricing has an immeasurable effect on all sectors of the economy and therefore it is of utmost importance to enact legislation that diligently deals with the energy crisis in South Africa,” Outa explains.
Outa also suggests that the ERA Bill include a clear requirement for government to publish an Integrated Energy Plan, an Integration Resource Plan for electricity and a Transmission Development Plan, all of which should be updated yearly.
POSITIVE STRIDES
Outa says it appreciates that the ERA Bill provides greater regulatory certainty, particularly on the intentions of government.
It also supports the efforts in the ERA Bill to reduce unnecessary red tape and unnecessarily restrictive or prescriptive policy, regulatory and planning positions of government and State institutions.
In particular, Outa says removal of unnecessary bureaucratic red tape for wheeling, virtual wheeling and token wheeling will facilitate the uptake of embedded, distributed and self-generation in the country. It will also alleviate some of the pressure on Eskom to meet demand and thereby reduce the need for loadshedding, load curtailment and load reduction.