ENERGY INTENSIVE USERS GROUP SOUTH AFRICA

EIUG Request to make a Presentation on : The Viability of the Establishment of a National RED

The Energy Intensive Users Group of South Africa (EIUG ) request permission to make a presentation on the Viability of the Establishment of a National RED at the Public Hearing on 21 June 2006 at Parliament in Cape Town. The presentation will be delivered by the EIUG Chairperson Mr Ian Morison. Attached to this letter is the presentation that will be made at the Public Hearing.

The following provides more information in relation to the points given in the presentation slides.

SLIDE TWO - Membership of the EIUG

As this is the second opportunity afforded to the EIUG to make a presentation to the Parliamentary Committee on Minerals and Energy only a very brief description of membership of the organisation is given for the benefit of those who are not aware of this voluntary end user organisation.

SLIDE THREE - EIUG Position on REDs

The EIUG participated in all the DME commissioned Price Waterhouse Coopers stakeholder workshops on the Electricity Distribution Industry Restructuring Project. The EIUG were also invited to participate in discussion with the Ministers Reference Group on the Review of the Electricity Distribution Industry Revised Blueprint Report published on 7 February 2001.

The EIUG has, irrespective of the geographical structure of the REDs, retained its position on the following principles to be adopted for all REDs that they:

· Be financially viable and sustainable.

· Provide excellent service and reliable quality of supply.

· Undertake electrification roll-out.

· Be professionally managed

· Implement pricing equity.

· Be regulated by the NERSA

· Be public not municipal entities.

SLIDE FOUR - EIUG Submission on National RED

The EIUG appreciates that the restructuring of the Electricity Distribution Industry has already begun with the establishment of the first MetroRED and that other MetroREDs will be established during the course of the year. The problems encountered which have delayed the original envisaged six REDs have yet to be resolved. It is therefore understood that to proceed with the restructuring, which need was previously clearly defined, it has been proposed to establish a national distributor to be known as the National RED. Against this background the EIUG offer the following statements:

· EIUG supported the six REDs model.

· The question is which model is most suited to South Africa's challenges now? .

· If national priorities now favour the National RED model then the EIUG would support this and work hard to make it succeed.

· Government must commit to a model and complete distribution restructuring.

· Transition must be urgent and non-voluntary (through legislation).

We look forward to the opportunity to address the Parliamentary Committee on Minerals and Energy and to be able to respond to questions raised following our presentation.

Attachment: The EIUG Presentation.

Yours sincere
Arnot Hepburn: EIUG Secretariat

Attachment: The EIUG Presentation

EIUG

ENERGY INTENSIVE USERS GROUP SOUTH AFRICA

Viability of the Establishment of a National RED

A presentation to the Parliamentary Committee on Minerals and Energy 21 June 2006

By Ian Morison EIUG Chairperson

EIUG

VIABILITY Of EST ABLISHINC A NATlONAL RED

Membership of the EIUG

· Voluntary Association of Large Industrial Electrical Energy Users.

· Membership open to end users who operate sites consuming in excess of 100GWh/a.

· Mainly involved in mining, minerals beneficiation and heavy industry.

· Members consume 40% of electricity sold in South Africa.

EIUG Position on REDs

EWG position remains that all REDs must:

· Be financially viable and sustainable

· Provide excellent service and reliable quality of supply

· Undertake electrification roll-out

· Be professionally managed

· Implement pricing equity

· Be regulated by the NERSA

· Be public not municipal entities

EIUG Submission on National RED

· EIUG supported the six REDs model.

· The question is which model is most suited to South Africa's challenges now?

· If national priorities now favour the National RED model then the EIUG would support this and will work hard to make it succeed.

· Government must commit to a model and complete distribution restructuring,

· Transition must be urgent and non-voluntary (through legislation).

The EIUG expresses it's appreciation for being able to make an input to Decision Making on the Restructuring of the EDI.