The Energy Regulation and Markets Review - Stikeman Elliott

South Africa
The Regulatory Agreement also specifies price caps for specific customer categories
including resellers purchasing annual gas quantities below the prescribed level; 45 greenfield
customers purchasing above 3 million gigajoules per annum; brown-field customers
purchasing in the range of between 2 to 8 million gigajoules per annum; however, the
price cap only applies to additional quantities in excess of the purchase quantities as of
the date of the Regulatory Agreement and from the expiry of the prescribed grace period.
iv Security and technology restrictions
Eskom’s generation, transmission and distribution facilities are classified as ‘national key
points’ under the National Key Points Act. 46 The Act empowers the Minister of Police 47 to
declare any asset or area to be a national key point where such asset or area is so important
that its loss, damage, disruption or immobilisation may prejudice the state or public
interests. The South African Police Service is authorised to provide security regulatory
services in respect of identified national key points, which includes the evaluation of
declared national key points to ensure compliance with security standards. 48
Theft of transmission and distribution assets, such as cables and transmission
tower components, is an ongoing problem resulting in significant financial losses and
electricity outages. 49 However, increased physical security and new security technologies
at Eskom’s substations have seen a significant decline in copper theft losses (as much as 45
per cent). 50 Eskom has also embarked on community engagement campaigns to address
this issue. Eskom’s Network and Energy Crime Committee in collaboration with other
affected state-owned companies and the South African Police Service have collaborated
to combat conductor theft. 51
The National Energy Act 52 addresses, inter alia, security of energy supply. Section
17 empowers the Minister of Energy to direct any state-owned entity to acquire, monitor,
maintain and manage national strategic energy feedstock and carriers in accordance with
published security strategies and policies. These strategies and policies must include
details of the minimum level of energy carrier or energy feedstock for the production of
an energy carrier; the conditions under which the strategic energy feedstocks and carriers
may be built, and withdrawals that may be made from such feedstocks and carriers;
45 As of the date of the Regulatory Agreement, Sasol’s customer base only included one reseller.
46 Act 102 of 1980.
47 The minister in charge of the administration of the National Key Point Act, pursuant to Proc 1
in GN21 in GG 26164 of 26 March 2004.
48 South African Police Service, www.saps.gov.za/default.htm.
49 In 2011, Eskom Transmission suffered losses of 2.9 million rand due to conductor theft and
5.3 million rand due to theft of steel tower members (pylon theft), http://financialresults.
co.za/2011/eskom_ar2011/index.php at p. 171.
50 As compared with losses in the 2009/10 financial year; see the Eskom Annual Report 2011,
http://financialresults.co.za/2011/eskom_ar2011/index.php at p. 171.
51 This combined effort resulted in the recovery of materials valued at 4.7 million rand in 2011,
http://financialresults.co.za/2011/eskom_ar2011/index.php at p. 211.
52 Act 34 of 2008.
251