Overview of the Electricity Regulation Bill

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Overview of the Electricity Regulation Bill
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Content

• Overview of the National Energy Regulator Act (in
  brief)
• Electricity Regulation Bill
• Definitions
• Functions of the regulator
• Regulatory principles
• Licences and registration
• Contravention of a licence and order by court
• Reticulation services
• Non-compliance by municipalities
• Resolution of disputes
• Enquiries and investigations
• general provisions
• Exemptions

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Energy Regulator Act

• The purpose of the Act is to
• establish a single energy regulator to regulate,
  electricity, gas and petroleum pipelines, and
• Repeal sections of above Acts that provide for
  establishment of different separate energy
  regulators e.g. electricity regulator.
• Constitution of the energy regulator
• 4 full time and 5 part time regulators
  appointed by Minister
• Minister may determine their remuneration and
  allowances with the concurrence of the Minister
  of Finance

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Other establishment issues

• Disqualification and requirements regarding
  appointment of the energy regulators
• Vacation of office and termination of appointment
• Meetings of the Energy Regulator
• Duties of the Energy Regulator

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Other establishment issues

• Decisions of the Energy Regulator must be in line
  with the Electricity Act, Gas Act and Petroleum
  Pipelines Act
• Personnel of the Energy Regulator
• Funds of the Energy Regulator

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Electricity Regulation Bill
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Electricity Regulation BillDefinitions

• Reticulation means trading by a municipality
  and the distribution of electricity by a
  municipality to the community within its area of
  jurisdiction
• Community means domestic, commercial and light
  industrial customers

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Definitions

• Commercial and light industrial customers means
  manufacturing, mining or agricultural customers
  who purchase less than 5 GWh at a contiguous site
  
• exclude water pumping schemes and traction
  substations
• other customers as may be determined by the
  Minister

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Functions of the RegulatorChapter 2 section 4

• The regulator is empowered to
• issue licences relating to transmission,
  generation, distribution, import and export and
  trading in electricity
• impose penalties for non-compliance
• act as a mediator on settlement of disputes and
• register generators in the ESI.

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Licences and registrationChapter 3 section 7 to
10

• The bill outlines activities to be carried under
  licence such as import or export, trading,
  generation, transmission and distribution
  functions.
• Section 9 of the bill gives the Minister power to
  exempt any of the activities from holding a
  licence under the advise of the regulator.
• The bill provides for payment of licence and
  registration fees by applicants
• The regulator can determine activity that
  requires a license and registration.

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Licences and registration (cont.) Chapter 3
section 11 to 18

• The regulator is empowered to deal with
  transparency of licence applications and
  procedures. An applicant for a licence is
  required to make a notice of application in a
  newspaper.
• The regulator will approve tariffs for
  generation, transmission and distribution
  excluding reticulation customers.
• Section 15 of the bill outlines licence
  conditions relating to generation, transmission
  and distribution

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Licences and registration (cont.)

• The regulator is empowered to
• suspend, remove certain conditions or amend
  licence conditions (section 17)
• revoke a licence on application if the licensed
  activity is no longer needed (section 18)

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Contravention of licence and order by court
Chapter 3 section 19 and 27

• The regulator sitting as a tribunal may impose a
  penalty not exceeding R2m per day if failed to
  adhere to the licence conditions (section 19(4))
  or revoke a licence through an application to the
  High Court.
• The high court may grant or refuse the
  application.
• The bill provides for licensees to bear
  consequences of negligent actions on their part,
  which result in damage or injury to third parties.

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Reticulation services- Chapter 4Powers and
duties of municipalities Part 1 and 2 of the
Bill (section 28 to 31)

• The Bill recognises that electricity reticulation
  is a municipal competence by allowing
  municipalities to set tariffs.
• Only municipalities have the right to reticulate
  electricity, licences issued under the
  Electricity Act of 1987 shall expire as soon as
  this Bill comes into operation.
• The regulator responsible for providing national
  norms and standards for reticulation services
  e.g. the tariff setting framework

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Key performance indicatorssection 32 to 36

• The Minister may prescribe key performance
  indicators for municipalities.
• The regulator will monitor the performance and
  compliance of municipalities.
• Every municipality has an obligation to provide
  information to the regulator as provided in this
  Act.

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Compliance non-compliance by municipalities
section 37 to 40

• The regulator must in writing request the
  municipality to comply within a specified period.
• The regulator must inform the Minister and the
  MEC of any request for compliance.
• If municipality fails to comply as requested,
  Minister may request the Minister of Provincial
  and Local Government to make or revoke an
  authorisation made in term of section 84 of the
  Municipal Structures Act
• The Bill also provides for intervention by the
  relevant MEC

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Resolution of disputes (Chapter5)

• The regulator can be requested by the parties to
  be a mediator in settling disputes.
• The regulator shall not be obliged to settle
  disputes but if requested to do so, its decision
  shall be binding on any party concerned
• The regulator may appoint suitable person(s) to
  mediate in settling disputes on its behalf.

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Resolution of disputes (cont)

• The Minister shall prescribe the procedure to be
  followed in mediation and the settlement of
  disputes and fees to be paid in terms of section
  42 (3)

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Enquiries and investigations (Chapter 6)

• The regulator shall on receipt of complaint
  related to electricity supply appoint a person to
  make enquiries and report to the regulator,
  section 44.
• After receipt of the report, the regulator may
  institute a formal investigation. The regulator
  may refer the outcome of the investigation to the
  Attorney-General of the area for his or her
  consideration.

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General provisions (Chapter 7)

• Any agreement in contravention of this Act or
  constitution may be declared to be unenforceable
  between the parties by a court of law.
• The regulator may after consultation with
  affected parties, make guidelines, codes of
  conduct and practice or make rules by notice in
  the gazette relating to the licensee and the
  customers.

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General provisions (cont.)

• In section 45, the Minister may by notice in the
  Gazette, make regulations regarding licences,
  registrations, the form and the manner of
  applying for licences, the publishing of
  advertisements by licensee and etc.
• Before promulgating regulations contemplated
  above, the Minister must consult with the
  regulator and invite public comments on such
  regulations.
• The Minister is also empowered to procure
  Independent Power Producers.

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General provisions

• Repeal of laws and savings
• NER contemplated in section 2 of the Electricity
  Act 1987, is repealed.
• Licences issued by the NER in terms of the
  provision of Electricity Act shall continue in
  force as if they were issued in terms of the
  provisions of this Act.
• This Bill repeals and replaces the Electricity Act

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Schedule 2 exempted from obligation to apply for
and hold a licence

• Any generation plant built for demonstration only
  is exempted from holding a licence.
• Any generation plant constructed and operated for
  own use.
• Non-grid connected supply of electricity except
  for commercial use

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Schedule 1 Repeal and Amendment of laws

• The bill repeal the following Acts
•  whole Electricity Act, 1987 (Act No. 41 of 1987)
  except section 5B
• amendment of schedule 3 of Kwa Zulu and Natal
  Joint Services Act, 1990 (Act No. 84 of 1990)