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NERSA Presentation to Portfolio Committee on Energy

This presentation on NERSA's mandate and the impact of the ISMO Bill covers regulatory landscape, licensing regime changes, tariff determination, and observations for efficient energy regulation.

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NERSA Presentation to Portfolio Committee on Energy

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  1. NERSA Presentation to Portfolio Committee on Energy Presented by Mr Ronald Chauke 16 May 2012 11

  2. Content • NERSA Mandate • Legislative landscape • ISMO Bill impact on NERSA • Observations 22

  3. NERSA Mandate • NERSA is a statutory body established in terms of section 3 of the National Energy Regulator Act, Act No. 40 of 2004. • Its mandate is to regulate: • Electricity in terms of Electricity Regulation Act, 2006; • Piped gas industry in terms of Gas Act 2001; • Petroleum pipelines industry in terms of the Petroleum Pipelines Act, 2003. 33

  4. NERSA Mandate (cont...) • In terms of the Electricity Regulation Act (ERA), NERSA is mandated to: • License – Gx, Tx, Dx and trading; • Develop rules to implement government policy and energy laws; • Regulate prices and tariffs; and • Undertake compliance monitoring and enforcement. 44

  5. Legislative landscape • In terms of section 34 of the ERA, the Minister may determine the following: • Generation capacity required; • Buyer of electricity and seller of electricity; • Type of energy source to be used for electricity generation • Provide for private sector participation • The ISMO Bill provides that ISMO will be the buyer. This provides certainty to the generators. • However, section 34 of ERA needs to be amended in order to align properly with section 4(3) of the ISMO Bill concerning Ministerial determination of the electricity. 55

  6. Impact of ISMO on NERSA • Licensing regime • Dispatch is not provided for as a licence activity in terms of ERA • ISMO Bill broadens NERSA’s licensing scope • This will require additional expertise, appropriate licence conditions and the Rules • Eskom’s current transmission licence needs to be amended in order to separate system operator part 66

  7. ii. Tariff regime • Tariff will be determine per business operation e.g. Generation, Transmission, Distribution. iii. Compliance monitoring and enforcement • ISMO Bill will broaden NERSA’s compliance activities to ensure • Fair, equitable and efficient dispatch • compliance with licensing requirements • Efficient handling of disputes 77

  8. Observations • i. Transitional Provisions • Non licensed activity namely, dispatch creates a regulatory gap as ERA does not provide for it. • Until ERA is amended, dispatch would have to be licensed as a trading activity. It is therefore proposed that a provision be made in the transitional arrangement. 88

  9. Thank you!!! 99

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