The Chamber of Mines of South Africa is a voluntary membership, private sector mining employer organisation founded in 1889. Its membership comprises mining finance companies, mining companies and associations of mining enterprises.

The Chamber represents 90 % of the South African Mining industry by value.

During 2004 the mining industry’s direct contribution to the gross domestic product amounted to R55 billion or 6,2 %. During that year the industry employed about 417 000 persons. When taking into account forward and backward linkages and the induced effect, the total contribution of the mining industry to the gross domestic product amounted to R143 billion or 16% with employment for 1 273 800 persons

The mining industry is, therefore, still a vital and vibrant part of the South African economy.

There are approximately 1200 mining electricity customers in South Africa. Of these 1180 purchase electricity directly from Eskom, while 20 are supplied by municipalities.

The direct consumption of electricity by mining operations amounts to 33 625 GWh of electricity a year, or 17,6 % of the electricity sold in South Africa.

Some 92% of electricity generated in South Africa comes from coal fired power

stations. Electricity generation consumes more than 110 million t of coal annually.

Electricity is a major energy carrier in the mining industry. It is used to power production and transport equipment and is also used for safety critical applications such as ventilation, cooling, water pumping and personnel hoisting.

Most large mines supply electricity for domestic use to hostels accommodating migrant workers and houses in mine villages. In addition some mines provide electricity to other consumers on their properties, such as schools, clinics and traders.

South Africa has long been without the appropriate legislative framework necessary for the guidance and governance of the electricity supply industry. The Chamber of Mines therefore, welcomes the Bill as the resultant Act will, together with the National Energy Regulator Act, the envisaged Energy Act and the envisaged Electricity Distribution Industry Restructuring Act, form a major component of the legislative framework.

Both the 1998 White Paper on Energy Policy and the 2001 Electricity Distribution Industry Blueprint Report envisaged the restructuring of the electricity distribution industry into a number of independent regional electricity distributors that would undertake all electricity distribution. The reason for the restructuring was the perceived poor performance in domestic electrification and the management of some distribution undertakings and the abuse of electricity as a tax instrument.

The Chamber of Mines supported the positions articulated by the 1998 White Paper and the Blueprint Report.

The Bill is, however, silent on the long awaited restructuring of the electricity distribution industry

The 1998 White Paper on Energy Policy committed Government to the development of policies and criteria that could allow some industrial customers a choice of supplier. The Blueprint Report accordingly envisaged that customers with an annual electricity consumption exceeding 100GWh per year at a single site be allowed a choice of supplier. The Bill does not address this issue.

It is crucial that legislation implements policy. When policies are no longer appropriate, alternate policies should be developed in the accepted manner with stakeholder consultation as set out in the White Paper on Energy Policy.

The uncertainty created by the deviation from the official policy positions outlined in 1998 White Paper and the Blueprint Report is detrimental to investment decision making and consequently retards economic development.

The Chamber of Mines, therefore, expresses its grave concern that the objects stated in the Bill will not be met if it was to be enacted in its current form.

The Bill defines distribution as the conveyance of electricity through a distribution power system, i.e. a power system that operates at or below 132kV. In terms of clause 8 (1) of the Bill no person may operate a distribution facility without a license issued by the Regulator.

Mines convey electricity from receiving substations to various points of use through systems that operate at voltages below 132kV. In terms of the definitions and Clause 8 (1) they will require licenses from the Regulator to do so.

The licensing of distribution for own use will impose an undue administrative burden on the consumers as well as on the Regulator without adding any value for either party.

It is accordingly recommended that Schedule 2 of the Bill be amended by the addition of the following clause:

"any conveyance of electricity for private use at or below 132 kV"

As outlined in 1.3 above many mines provide electricity to domestic consumers residing in hostels and houses and other consumers such as schools, clinics and traders on mine property. In some cases the electricity is provided free of charge and in others only the cost of supply is recovered from the consumer.

The distribution systems involved are integral parts of the mine systems and are not interconnected with the systems of other distributors. The consumers involved are, therefore, dependant on the mine for their electricity supply.

The licensing of these systems, or the involvement therein of other distributors, will not add any value to the supply of electricity.

It is accordingly recommended that Schedule 2 of the Bill be amended further by the addition of the following clause:

"Any person that provides electricity for free to a consumer or sells less than 50 GWh of electricity per annum to customers, provided that the conditions relating to the supply of electricity to such customers and the tariffs charged are not less favourable than the conditions of supply and tariffs that would have been applicable if they were directly supplied with electricity by the licensee who supplies the person supplying them with electricity"


2.4	Customer rights

The Bill is silent on the rights of customers. Given that one of the objects of the Bill is to "ensure that the interests and needs of present and future electricity customers are safeguarded and met, having regard to the governance, efficiency, effectiveness and long-term sustainability of the electricity supply industry within the broader context of economic energy regulation in the Republic" this a serious omission.

It is recommended that the Bill be amended to provide for the Minister of Minerals and Energy to make regulations setting out the rights of customers.

2.5	Disputes

The provisions of the Bill dealing with the mediation of disputes are ambiguous.
In terms of clause 4 (b) (i) the Regulator may mediate disputes between generators, transmitters, distributors and municipalities.
In terms of clause 42 (1) the Regulator must, at the request of the parties to a dispute, act as mediator or settle disputes between licensees, or between a licensee or registered person and its customer, or between any person generating, transmitting, distributing, trading or providing reticulation services and its customer.
The two clauses appear to be contradictory.
It is recommended that mediation in disputes be made a function of the Regulator.

Clause 25 (1) (a) grants a licensee the right to do anything over, in or along roads or streets and associated infrastructure as may be necessary to carry out its licensed activities.

Since streets and roads are not defined this may be taken to include private streets and roads.

Clause 25 (4) suggests, by providing that the term street includes any square or enclosed public place, that the right referred to is intended to apply only to public streets and roads.

It is recommended that the intention of this clause be clarified by amending it to apply to public roads and streets.

In terms of clause 4 (a) (i) the Regulator must issue licences while clause 14 (4) states that the Regulator is not obliged to issue a licence.

It is recommended that this contradiction be rectified by amending clause 4 to read:

"The function of the Regulator is to issue licences for –"

Clause 15 (1) (v) provides that the Regulator may make any license subject to conditions relating to the categories of customers that are contestable, and the conditions relating to such contestability. The terms "contestable" and "contestability" are, however not defined.

It is recommended that the following definition for the term "contestable customer" be included in Chapter 1: "Industrial customers consuming more than 100GWh per annum at a site, or contiguous sites "

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