Chairperson, honourable Members of the Committee, ladies and gentlemen, allow me to introduce my Department’s response to issues emanating from the public hearings on the Electricity Regulation Bill. First let me clarify that the Electricity Regulation Bill seeks to empower the National Electricity Regulator and its successor, National Energy Regulator of South Africa (NERSA) to efficiently and effective regulate this industry.

This Bill seeks to regulate the total electricity value chain, namely, generation, transmission, distribution and trading of electricity.

During the presentation of this Bill in Parliament, it became clear that the issues that pertain to the reticulation of electricity will need to be dealt with in terms of Section 76 of the Constitution. Section 76 of the Constitution refers to bills affecting Provinces and Municipalities wherein the NCOP passes bills for assent by the President. The Bill was therefore withdrawn to allow the issues that relate to electricity reticulation to be removed , while the issues that relate to the Section 75 of the Constitution are being considered and deliberated on in this session.

It has come to my attention Chairperson that the submissions received seem to be dealing with issues that will be covered in the Section 76 of the Constitution. These issues relate to the electricity reticulation, which falls under municipal jurisdiction. While Section 76 issues remain crucial and equally demand our immediate attention and action, let me assure you that it is my intention to present to you these issues and the Electricity Distribution Industry Restructuring Bill as soon as possible.

Chairperson, let me also reiterate that this Bill deals with the electricity industry regulation issues and not the Electricity Distribution Industry restructuring as often reported in the print and electronic media. That is a subject of a different Bill.

Chairperson, Ladies and Gentlemen, it is a well known fact that South Africa enjoys the cheapest electricity prices in the world, at the wholesale level. However, domestic tariffs in most cases do not reflect these low prices for a number of reasons.

We seek to, among others to redress the imbalances of the past, and if we are to realise the universal access to electricity , indeed this should be our departing point

In addition, the White Paper on Energy Policy of 1998, identifies a number of weaknesses within the Electricity Act, which need to be addressed, namely:

• Powers of the National Electricity Regulator to regulate the industry (including municipalities);
• Harmonising the legislation with the Constitutional framework. For example, the Electricity Act puts the onus on the alleged perpetrator to prove their innocence rather than presuming innocence until proven guilty;
• Facilitation of the introduction of the IPP’s and renewable energy in the electricity industry;
• Facilitation of open access to electricity networks, especially for the IPP’s and renewable energy based generators;
• Clarifying the powers and functions between the Minister and the Regulator; and
• Harmonising the Electricity Regulation Bill with the provisions of the Energy Regulator Act.

Chairman, Ladies and Gentlemen, let me reiterate the objectives of this Bill.

• achieve the efficient, effective, sustainable and orderly development and operation of electricity supply infrastructure in South Africa;
• ensure that the interests and needs of present and future electricity customers and consumers 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;

• facilitate investment in the electricity supply industry;

• facilitate universal access to electricity;
• promote the use of diverse energy sources and energy efficiency;
• promote competitiveness and customer choice; and
• facilitate a fair balance between the interests of customers, consumers, licensees, investors in the electricity supply industry and the public.

Chairman, Ladies and Gentlemen, now I would like to respond on the substantive issues that have been raised in these public hearings.

In terms of the governance framework, I will remain the custodian of government policy and its monitoring.

The sections in the Bill that have indicated otherwise, which are of administrative nature will be amended accordingly to clarify my role in relation thereto. The intention is for the Regulator to be responsible for those administrative functions, which will include overseeing adherence to regulations.

Generally I will draft the regulations and the Regulator will be responsible for the execution of such regulations, drafting of rules and procedures pursuant to such regulations. In addition, the Regulator will draft directives as provided for under the regulations.

The Bill provides for non – discriminatory access to the electricity networks.

This is to ensure participation of Independent Power Producers (IPPs), including renewable energy producers.

Government’s strategy to create jobs includes the facilitation of Foreign Direct Investment (FDI) and BEE’s. The introduction of IPP’s has been identified as an opportunity that is line with that strategy within the electricity sector

Moreover, Eskom is not in a position to fund the growing power requirements for the next 20 years, which is approximately R240 billion, on their own. It is therefore become imperative and inevitable that the Public Private Partnerships be considered.

The competition contemplated in the Bill refers to the bidding process of the IPP’s for the new generation capacity, and not to the competition as in the electricity market, where participants will be competing for consumers.

In order to address the current quality of supply problems of the magnitude that has recently been experienced in Johannesburg and Tshwane, the Bill empowers me to formulate regulations relating to the norms and standards regarding the following:

• The level of investment in infrastructure relating to new assets (electrification) creation and the rehabilitation of the existing infrastructure;
• The level of maintenance expenditure;
• Quality of supply;
• Other key performance indicators; and
• Penalties.

I thank you.