OUTA recognises the significance of the Bill in establishing essential legal, regulatory, planning and pricing frameworks for the restructuring of the electricity supply industry, but it needs more work. 

In its submission, OUTA urges the government to proceed with liberalising, reforming, and restructuring the electricity supply and distribution industries in South Africa. Electricity supply constraints inhibit investment, economic growth and job creation, and a stable electricity supply is urgently needed to unlock the economic potential of the country. 

Chris Yelland, energy expert and OUTA energy advisor, explains that the whole point of the ERA bill is to move away from regulated pricing to more market-orientated pricing with greater levels of competition and efficiency. 

Here is a list of OUTA's comments on the ERA Bill:  

• OUTA supports increased policy, regulatory, planning and pricing certainty, and this Bill goes a long way in clarifying the intentions of government.

• We are in favour of the Bill’s efforts to reduce unnecessary red tape and overly restrictive/ prescriptive policy regarding government and state institution’s regulatory and planning positions.  

• We support the wheeling of power across both Eskom and municipal networks and believe the removal of unnecessary bureaucratic red tape around this issue will facilitate the uptake of embedded-, distributed- and self-generation. This will relieve some of the demand on Eskom, reducing load shedding and load reduction. 

• We are in favour of the facilitation of self-generation and co-generation by electricity customers. Apart from supplementing their own electricity needs they can feed any surplus generated energy back into the Eskom and municipal networks.

• OUTA supports the opening-up of trading of electricity within the electricity supply industry, to facilitate a competitive and diversified retail electricity sector to serve residential, commercial, industrial, mining, and agricultural customers of electricity.

• We support the restructuring and unbundling of Eskom, by initially ringfencing its generation, transmission, and distribution business activities into separate operating divisions.

• OUTA supports the establishment of an independent transmission system operator (TSO), as this will improve electricity supply industry performance, cost efficiency and security of electricity supply.

• However, it is our view that the ERA bill is still unclear regarding the treatment of energy storage. No mention is made of energy storage at all. OUTA therefore recommends that there should be a specific new category for energy storage in the ERA bill.

• OUTA supports streamlining of the National Energy Regulator (Nersa) registration processes for embedded generation. Currently, Schedule 2 of the Electricity Regulation Act requires registration by Nersa of all grid-connected embedded, distributed, and self-generation installations above 100 kW.

• We believe that there is room for improvement in the definitions of the terminology used in the ERA bill and regulations. This is important to ensure consistency with the definitions and terminology used in various other legislation and regulations relating to the electricity supply industry.

• We recommend that the Select Committee should carefully review the ERA bill, and that the designated roles, responsibilities, and powers of the “Minister” should be carefully considered and defined within the ERA bill, and correctly allocated between the Minister of Mineral Resources and Energy and the Minister of Electricity.

• OUTA is of the opinion that the discretionary powers of the minister and National Energy Regulator of SA (Nersa) should be limited to the maximum extent possible, and more work is needed on this.

Our recommendation 

OUTA recommends that the ERA bill should include a clear requirement for the government to annually publish an Integrated Energy Plan (IEP), an Integrated Resource Plan (IRP) for electricity, as well as a Transmission Development Plan. 

In addition to that, the role of Nersa needs to be reviewed when it comes to the setting and approval of prices. It should be minimised and restricted to instances of market failure, and that this should be 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.

Find the full submission here.