The Energy Regulation and Markets Review - Stikeman Elliott

South Africa
depreciated. In the case of new connections to transmission and distribution systems,
customer charges are divided between the costs for the supply of dedicated connection
assets and the costs of any upstream augmentation and strengthening works required to
connect new customers. Generally, the customer must bear the costs of dedicated assets
(connection charge) whereas the costs of upstream works are recovered through use of
system charges that are spread across the load customer base (use of system charges).
Eskom Transmission is currently authorised by NERSA to levy a transmission
use-of-system charge on its customers (‘TUOS charge’). TUOS charges are broadly
designed to enable Eskom Transmission to recover the costs of providing, operating and
maintaining the shared components of the transmission system from its general customer
base on the basis of a 50:50 allocation of Eskom’s regulated transmission asset base
allowance between generation customers and load customers. TUOS charges include:
a an annual ‘network charge’ determined by reference to the installed capacity of
the units comprising the generation facility and their location or the maximum
notifiable demand in the case of a load customer; generators located in certain
regions may have negative network charges due to the benefit of adding generation
in these regions and as new generation capacity in these regions is added the
network charges may change;
b a monthly ‘losses charge’ reflecting the relative amount of transmission losses
associated with the specific position of the customer’s generation facility or
electrical installation on the transmission system; and
c a monthly ‘reliability services charge’, which is determined by reference to the
total flow of electricity into and out of the transmission system and the cost to the
system operator of procuring ancillary services for the reliability of the integrated
transmission system.
In addition, an ‘administration and customer services charge’ is being developed for
Eskom Transmission’s customers. The components of the existing TUOS charges are
currently under review by NERSA.
Natural gas
Under the Gas Act, NERSA in its capacity as the Gas Regulator must regulate prices
and may impose licence conditions within a framework of requirements approving
maximum prices for distributors and reticulators where there is inadequate competition
as contemplated in the Competition Act. NERSA must comply with any regulations
made by the Minister of Energy regarding price regulation procedures and principles.
Under its Regulatory Agreement, Sasol’s average gas price to its external customers
is subject to a price cap calculated by reference to a European benchmark price that is
derived from the 12-month rolling average of six European countries’ gas prices weighted
according to Sasol’s market volume profile. If the Sasol volume-weighted average gas price
charged to its external customers exceeds the average European benchmark price in any
year, Sasol is obliged to refund the over-recovery to those customers on an equitable basis.
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