• INTRODUCTION
• NATIONAL CONTEXT
• INTERNATIONAL EXPERIENCE
• RATIONALE FOR REGULATION
• KEYCONCERNS OF NER
• CONTEXT OF NER POSITION
• PURPOSE
• NERSA EESTABLISHMENT
• RECOMMENDATIONS

In order to provide the context for the proposed amendments an overview is provided of the following aspects:

• Current government policy;
• National and international context;
• Rationale for regulation

INTRODUCTION(Cont..)

• The Energy Regulator must exercise its responsibility and perform its functions in a harmonious manner.

• The role of the Regulator and the role of the Minister must be clearly defined to enhance economic regulation.

- The Energy Regulator is an economic regulator. Economic regulation of services requires information regarding efficient expenditure, service quality and the required revenues to deliver services.

NATIONAL CONTEXT

- Clear separation of roles and responsibilities: its primary role as a policy making and regulatory entity

• Main goal socio-economic development of all people.

• Governance of the energy sector will be improved

• distribution industry will be restructured into regional electricity distributors(REDs)

- Electricity tariffs to become increasingly cost-reflective at all levels

NATIONAL CONTEXT (Cont..)

• National Electricity Regulator will determine minimum standards for electricity supply to households, industrial, mining and commercial consumers

• Establishing the powers and functions of the National Electricity Regulatory through clear legislative mandate and by strengthening its capacity to achieve its mandate .

Energy Policy Implementation

• The Electricity Distribution Industry Blueprint was accepted as the framework for the implementation of Region Electricity Distributors in 2001. The first RED was licensed to operate in July 2005.

• Targets have been set for renewable electricity (RE) generation. In order to achieve these targets a framework for the licensing of RE generation and providing access to distribution networks is required

INTERNATIONAL EXPERIENCE

- Have unbundled the electricity supply chain

- Most countries on the continent are moving towards independent regulation

- Government sets policy & regulator has technical and modeling capacity to regulate

- Clarity of roles

- Independence and Accountability

- Regulatory Transparency

RATIONALE FOR REGULATION

The primary objectives of three-fold:

- To ensure that the regulated entity carries out its business in an efficient and effective manner;

- To ensure that the regulated entity does not exercise undue discrimination among its classes of customers in the prices it charges;

- To ensure that the regulated entity achieves financial results akin to those which would be achieved in a competitive environment.

RATIONALE FOR REGULATION

- Meeting social objectives such as electrification or energy policy initiatives

• Encouraging efficient use of electricity (e.g load management or energy conservation);

• Ensuring public safety;

• Encouraging competition in energy supply to the extent considered appropriate (e.g. providing least cost electricity supply)

CONTEXT OF NER POSITION

• Meeting energy requirements of the poor

• Enhancing efficiency and competitiveness of the SA economy by proving low-cost high quality energy inputs to industry

• Achievement of environmental sustainability on short and long term usage resources

PURPOSE OF SUBMISSION

• The role of the Minister vs that of the Regulator is clarified;

• There's alignment between energy legislation;

• Enhancing certain provisions of the Bill;

• Addressing good practice in drafting legislation.

NERSA ESTABLISHMENT

• National Energy Regulator Act 2004 (Act No 40 2005 )-15 September

• Minister of Finance lists NERSA in terms of PFMA as Scheduled 3A Public Entity –13 September 2005
• Minister to determine the date of delisting of NER, possibly 31 March 2006

• Effective date of the appointment of Regulator Members –1 October 2005

• The following Acts will come into operation on 1 November 2005

• Gas Act 2001 (Act No 48 of 2001)

• Petroleum Pipelines Act, 2003 (Act No 60 of 2

• Gas Regulator Levies Act, 2002 (Act No 75 of

• Petroleum Pipelines Levies Act, 2004 (Act No 28 of 2004)

• NERSA will regulating piped-gas and petroleum industries from today

• NER will continue regulating electricity industry until a date to be determined by the Minister, possibly 31March 2006 –Electricity Act, 1987 (Act No 41 of 1987) will be replaced by the Electricity Regulation Act, once passed .

• Electricity Regulation Levies may follow later

RECOMMENDATION

• Extensive comments have been compiled per section.

• The recommendations consist of the aspect of the Bill being commented in the following columns:

• Extract from the Bill;
• Comments; and
• Recommendations.