Submissions on the Electricity Regulations amendment Bill [B20 – 2006]

1. Submissions on the Electricity Regulations amendment Bill [B20 – 2006]

2. Presentation Index • Introduction • Background • Findings & arguments • Summary • Recommendations

3. Introduction Presentation to be facilitated by Mr Ossie Olivier, Solidarity Organiser in Gauteng and Mr Mark Devenish, Solidarity Organiser in North West.

4. Background • In examining the proposed amendments in the Bill, Solidarity measured its alignment with the objectives of the EDI restructuring, which we believe is valid for the Industry in general. • During this process the following questions came to light: Do the amendments - • Promote consolidation of the industry? • Will it ensure quality of supply? • Will the industry be standardised? • What about electrification needs? • Will there be equity in the tariffs? • How will the industry be regulated? • Are the frameworks adequate?

5. Findings & arguments Consolidation – Is not promoted, since authority will be shared by the Regulator and the Minister. Many small town municipalities are unable to keep qualified staff when they cannot offer careers – A consolidated Industry would be able to asign staff were they are required. Quality of supply – Since municipalities will not be regulated, they will cross-subsidise other services with electricity funding. In the event of failure, the proposed remedial process is long-winded and meanwhile the customer will suffer the casualties. Standard tariffs – Giving executive powers to the municipalities will eventually result in 280 different tariffs. Not only will this defeat the objectives of the EDI Restructuring objectives, but it is entirely contrary to the principles of consolidation and integration of the industry. Many municipalities do not have the skills or competence to understand the economic impact in setting tariffs.

6. Findings & arguments - Continue Standardisation – Given that the municipalities will be able to enter into Service Level Agreements, it will result in different agreements, standards and practises being applied. Electrification – Municipalities will not be able to fund these objectives due to cross-subsidisation of other services. The Industry requires a national plan to ensure availability of bulk infrastructure. On estimation 30% of household is still without electricity. Regulation – The function of the regulator is to protect the industry. By given certain powers to the Minister power will effectively be taken away from the Regulator. To ensure low equitable tariffs requires economies of scale that we believe is not availble in the small municipalities and obtaining such will result in further financial burden. Frameworks – Setting of policies within a national framework cannot be controlled and monitored, because the Minister does not have such resources.

7. The proposed amendments do not support the overall objectives of the EDI Restructuring process. The proposed amendments do not address non-adherence Duplication of powers between Regulator and Minister No equity on tariffs Quality of Supply Summary

8. A National Framework for tariffs to counteract additional cost of supply to rural customers and even urban customers far from powerstations. Full regulation to ensure effective standerdisation and allocation of surpluses. The definition of reticulation to be formatted to a specific voltage, e.g. 0 to 11 000 volts = Reticulation 11 000 to 132 000 volts = Distribution Extend the power of the Regulator to oversee compliance by municipalities and to ensure that tariffs are appropriate and not distorted by other local financial needs. Develop a process to deal with non-compliance and include this in the Bill. Recommendation

9. Thank you for the oppertunity.