The Energy Regulation and Markets Review - Stikeman Elliott

South Africa
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participation within the ISMO-controlled single buyer market or regulated single
buyer market;
the centralised control, by way of the requirement for the prior approval of the
Minister of Energy, over the development of any commercial generation capacity
for participation outside the regulated single buyer market and resulting potential
‘chilling effect’ on bilateral supply arrangements;
the restructuring of NERSA from a nine-member board structure to a structure
comprising one Commissioner supported by three Deputy Commissioners, each
responsible for electricity, piped gas and petroleum pipelines;
the establishment of an Appeals Board to hear appeals from the decisions of
NERSA in respect of licensing and registration matters; and
the effective transfer of certain NERSA powers to the Minister of Energy,
including most notably the power to regulate the operation, use and maintenance
of transmission and distribution power systems.
Key anticipated events for the year ending December 2012 are the close out of the
Department of Energy’s procurement programme for IPP Peaking Power Generation in
South Africa (this comprises two diesel-fired open-cycle gas turbines for peak load power
generation totalling approximately 1GW) and the close out of phases one and two of the
Department of Energy’s RE-IPP Procurement Programme. In addition, it is anticipated
that the Department of Energy will launch at least two additional IPP procurement
programmes, one for small-scale renewable energy generators (between 1GW and 5GW)
and another for coal-fired base load generation capacity in the second half of 2012.
VII
CONCLUSIONS and OUTLOOK
South Africa’s abundant energy resources – and in particular fossil fuels such as coal, gas
and liquid fuels – continue to play a central role in the industrial and social development
of the country, with government policy moving towards encouraging a significant uptake
of renewable fuel sources. Although the regulatory framework is in place to encourage
private party participation in the upstream and downstream energy sectors, the state
currently plays a dominant role in the case of the electricity sector and is set to continue
to control market access through its policy preference for managed liberalisation of the
electricity sector. It remains to be seen whether proposed amendments to the energy
regulatory framework, and in particular the proposed amendments to the electricity
supply industry, will facilitate other key policy objectives for improved efficiencies in
energy supply and security of supply.
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