Briefing notes regarding Organised local Government in Kwazulu Natal

SOUTH AFRICAN LOCAL GOVERNMENT ASSOCIATION

PORTFOLIO COMMITTEE ON MINERALS AND ENERGY

PUBLIC HEARINGS ON THE

ELECTRICITY REGULATION BILL [B 29-2005 Reintroduced]

31 OCTOBER 2005

INTRODUCTION

The South African Local Government Association welcomes the bill; however, we are concerned about the viability of the bill in light of the uncertainties regarding the Electricity Distribution Industry Restructuring (EDIR) process and the long-awaited EDIR Bill. It is SALGA’s firm but considered view that the process of implementing the EDI restructuring and the overhauling of electricity legislation need to be aligned to ensure smooth transition. The bill will have major implications for the way Regional Electricity Distributors (REDs) will be regulated and the process of the establishment of REDs have to date not been concluded. The regulatory framework defined and proposed in the Electricity Regulation Bill is generally inconsistent with the current legal and regulatory framework and it cannot be confirmed at this stage if this bill will be aligned to the long-awaited EDIR Bill, which will be realized soon.

The main objects of the bill, in its reintroduced form, have been identified as:-

To ascertain the role of the National Energy Regulator in respect of the electricity industry;

To provide a specific legal framework for the generation, transmission and distribution of electricity;

The establishment of privately owned electricity generators; and

To provide for procedures and penalties to deal with non-compliance with the norms and standards.

LEGISLATIVE PROCESS

It is common knowledge that the original Electricity Regulation Bill (B29-2005) was published, for public comment, in the Government Gazette as a section 75 bill and as such introduced into the parliamentary legislative process. Further common knowledge is that the bill contained both section 75 and section 76 provisions.

Without consulting with stakeholders, as was initially done by the Department of Minerals and Energy (DME) during the conceptual and drafting phase of the bill, the bill was withdrawn by the DME and reintroduced into the parliamentary process, still as a section 75 bill, but having specifically withdrawn the provisions that are section 76 related. This was done after invitation by the Portfolio Committee on Minerals and Energy for public comments and hearings on the bill.

SALGA is of the firm view that, besides the bill being pre-mature; it would be very difficult to process the bill, in its current form, without the withdrawn provisions and we fail to understand the rationale behind the introduction of the bill in this form, other than considering the bill in its entirety through the section 76 process.

CONTENTS OF THE BILL

It should be emphasised that the provisions that were withdrawn by the DME specifically relates to "reticulation" and the role of municipalities in the electricity industry. The bill as is currently tabled before the Portfolio Committee, without the section 76 provisions, does not materially impact on local government and therefore SALGA does not have comprehensive comments on the bill. It is foreseen that once the provisions that relate to reticulation and the role of municipalities in the electricity industry are introduced during the proposed section 76 process, SALGA will make substantive comments.

CONCLUSION AND RECOMMENDATIONS

In the light of the above and pursuant to taking the process forward it is strongly recommended that the further processing of this Electricity Regulation Bill be continued until the EDIR Bill has been introduced into parliament and agreement is reached on the number of Regional Electricity Distributors (REDs) to be created. This would enable stakeholders to address issues of concern currently reflected in the Electricity Regulation Bill whilst also resolving certain challenges with regard to the restructuring process. The timing of this bill is not right and the sequence of events leading to this bill should allow the EDIR Bill to come first. It is difficult and challenging to try and regulate the industry which in itself is undergoing major overhauling, whilst it is not clear what the industry will look like when the restructuring is complete.

Should the Portfolio Committee however deem it appropriate to go ahead with the processing of the bill, in its current form, SALGA submits the following comments and proposed amendments:-

Any deliberations or hearings on the bill should focus on the bill as before the Portfolio Committee now, without the "reticulation/municipality" provisions.

Clause 7 of the bill makes provision for Chapter III not to apply to reticulation. As the definition of reticulation has been withdrawn from the bill, clause 7 should also be deleted or withdrawn in its entirety, and must be dealt with when the section 76 provisions are introduced.

"Schedule II" referred to in clause 8(2) should be amended to read "Schedule 2".

Section 22 of the bill does not empower the supplier to take steps to force the consumer, who negatively impacts on the quality of supply, to take corrective action. Provision must be made in the bill to empower the supplier to cut the supply to such a customer.