ELECTRICITY REGULATION BILL (Reintroduced) A presentation to the DME

1. ENERGY INTENSIVE USERS GROUP SOUTH AFRICA ELECTRICITY REGULATION BILL (Reintroduced) A presentation to the DME Parliamentary Portfolio Committee 31 October 2005 by Arnot Hepburn EIUG Secretariat

2. ELECTRICITY REGULATION BILL PRESENTATION Membership of the EIUG • Voluntary Association of Large Industrial Energy Users termed Contestable Customers. • Mainly involved in mining, minerals beneficiation and heavy industry manufacture. • Members utilise 40% of electricity sold in South Africa. • Members contribute R1,6 billion per annum to electrification and rural supplies through tariffs. • Will provide a large stake in future investment to support Governments growth strategy.

3. ELECTRICITY REGULATION BILL PRESENTATION RED’s – the EIUG Position EIUG strongly supports the EDI Blueprint End State Model of: • Financially viable and technically competent Regional Distributors. • Distributing to all customers in franchised areas. • Contestable Customers allowed choice of supplier. • Rationalised and transparent tariffs across the country. Furthermore: • NERSA need to regulate the entire electricity industry.

4. ELECTRICITY REGULATION BILL PRESENTATION Going Forward – The EIUG Perspective • An EDI Restructuring Bill must be passed to entrench the Blueprint End State Model. The purpose of the Electricity Regulation Bill to put in place a framework for: • regulating all electricity suppliers in the future. • for regulating municipal reticulation suppliers in the transition period.

5. ELECTRICITY REGULATION BILL PRESENTATION Bill Issues that Require Clarification • Choice of supplier by Contestable Customers to be entrenched for growth and also essential for long term business investment decisions. • Licensing requirements of re-sellers of electricity.

6. ELECTRICITY REGULATION BILL PRESENTATION EIUG Observations and Recommendations The EIUG believes that: • regulation is required before implementing structure. • the Electricity Regulation Bill and the EDI Restructuring Bill are complimentary. • the successful implementation of the RED’s model will bring stability to the distribution industry, support growth and socio-economic development. • also many municipalities will be strengthened. EIUG remains committed to supporting the Government in implementing ESI Restructuring.

7. ELECTRICITY REGULATION BILL PRESENTATION Requests for Specific Alterations to The Bill • Page 4 – add a definition for Contestable Customer • Page 4 Line 38 – amend to read – transmission power system means a power system that operates at or above132kV.

8. ELECTRICITY REGULATION BILL PRESENTATION Conclusion In conlusion the EIUG considers the following three elements to be crucial for the successful and sustainable restructuring of the electricity supply industry: • Regulatory Legislation is enacted before any restructuring. • Regulatory Legislation enacted ensures the desired end state of six independent Regional Electricity Distributors. • NERSA regulates all licenses and approves tariffs for all electricity consumers.

9. ELECTRICITY REGULATION BILL PRESENTATION The EIUG expresses it’s appreciation for being allowed to make an input to Decision Making that has a direct impact on the whole economy. Thank You for Your Attention