1

Nelson Mandela

Eskom

City of Cape Town

City of Cape Town – electricity department

EIUG

EDI Holdings

AMEU; Chamber of Mines

Definition of reticulation:

 

Nelson Mandela:

The definition takes away customers from the Municipality.  The Bill restricts the right of Municipalities it only allows them to set tariffs only to small customers.  The definition of reticulation is unconstitutional because it restricts municipalities from their constitutional right to reticulate electricity.

 

Eskom, The definition of electricity reticulation should be voltage based.  Reticulation must be defined as 380V.

 

City of Cape Town, defines reticulation as 132 kV and below, including all customers within the municipal jurisdiction.  The Municipal Structures Act defines reticulation and split the powers between the district and local government.  Bulk supply of electricity is allocated to districts for which the purposes of such supply, the transmission, distribution and where applicable the generation of electricity.

 

EIUG, Reticulation should be defined as retail to community customers below the 5GWhours or enter into a service delivery with the RED.  The RED must own the network.

 

City of Cape Town, there is no need to define reticulation because the Municipal Structure Act defines reticulation.

 

City of Cape Town – electricity department, reticulation must be defined so that it includes all trading and distribution within a municipality’s area of jurisdiction and the limit of 5GW must be removed. 

 

EDI Holdings - “reticulation” should mean trading of electricity as defined in the ER Act.

 

EDI Holdings, any definition of reticulation has risk of a constitutional challenge

 

Implication of the current definition of reticulation:

        the definition requires major restructuring of the assets

        assets ownership is not clarified in the definition of reticulation, consumers on the same network might be charged different tariffs

        economic regulation will not be properly implemented by the regulator

        municipalities will have conflicting interest of being the provider and a regulator for electricity reticulation.  Economic regulation by municipalities might be ineffective.

 

BUSA, The proposed definition of “reticulation” is unworkable as two suppliers have to work on the same electrical system.

 

AMEU, Definition of reticulation

- The definition separate customers

- it is not government intention to reduce the powers of the regulator in regulating the whole industry

 

Chamber of Mines, The definition of reticulation must include other service provider other than the municipality.

 

 

 

The definition will be changed  to mean “trading or distribution of electricity and it includes services associated therewith, and shall be licensed under the jurisdiction of the regulator”

2

SALGA, City of Cape Town

SALGA, Municipalities should be supported if they fail to perform, don’t take the service away.  The service delivery agreement must provide the municipality with some monitoring mechanisms.

 

The restructuring of the industry aims to assist municipalities

3

EIUG

 

Business Unity of South Africa (BUSA)

 

RED 1

Definition of “domestic end user”

 

EIUG, The Minister should not prescribe the customers qualifying to be reticulation customers through regulations.  This must be done through legislation only.

 

BUSA, The definition of “domestic end user” is undesirable and will lead to uncertainties – customer categories should not be at the discretion of the Minister

 

RED 1, the definition of community, domestic end-user must be clarified.

Accepted

4

CENTLEC

 

 

CENTLEC, The definition for “community, domestic end user and light industrial” must be aligned with the definition outlined in the MSA.

 

Deleted, due to change in definition of reticulation

5

Eskom

Eskom, The Bill must provide for transfer of servitude. 

Accepted; will be catered for under the EDI Restructuring Bill

6

RED 1

 

City of Cape Town – electricity department

RED 1, the municipality as a service authority must not be licensed but the service provider should be licensed and regulated by NERSA

 

Noted

7

Eskom

Eskom, Section 28(6): the right for a service provider to provide reticulation service lapses at the commencement of this Act.  A transitional mechanism must be included and remove the automatic lapsing regarding the provision of reticulation of services.

 

Transitional mechanism unnecessary as current license will continue in force and effect under ER Act.

 

Eskom

The Bill must provide for national cross subsidies

 

Cross subsidies will be covered in tariff framework and in license conditions

8

Eskom

 

 

 

The Bill provides for Service Delivery Agreement (SDA) between the Municipality and the Service Provider and the following is recommended:

o        The framework of the SDAs should be agreed upon between service providers and a collective organization representing all the municipalities, for example, the South African Local Government Association (SALGA). The framework agreed upon will then be used to conclude SDAs with municipalities.

o        That the SDA will be for a fixed period with an option for renewal

o        Tariffs must be predictable and be predicted in the SDA

o        SDA shall provide for procedure to be followed should one of the parties thereto wish to terminate the SDA

o        Municipalities should further be exempted from complying with section 78 of the Municipal Systems Act Procedure.

 

 

Key principles of the SDA will be prescribed by the Minister through regulations to ensure consistency cross municipalities. The license will reflect corresponding provisions in order to harmonize the SDA with the reticulation license

9

Eskom

The national norms and standards must be set by the Minister in consultation with the regulator

 

 

Noted; regulator will set norms and standards consistently with the license conditions

 

 

 

10

COSATU, NUM, NUMSA, SAMWU

The amendment Bill was never tabled at NEDLAC.

 

Section 78 of the MSA was never followed in this regard.  Labour and local communities were never consulted.

 

The Bill was tabled at NEDLAC as a mixed Bill.  Several meetings were held with NEDLAC.

11

City of Cape Town

 

COSATU, NUM, NUMSA, SAMWU

City of Cape Town, the Department of Minerals and Energy, Provincial and Local Government and National Treasury should redraft the Bill and submit it to the sitting of the Minerals and Energy, Finance and Local Government Parliamentary Committees for consideration.

 

City of Cape Town - electricity department, the Bill should be withdrawn and be amended accordingly

 

COSATU, NUM, NUMSA, SAMWU, the Bill should be withdrawn due to lack of consultation.

Certain provisions of the Bill will be revised to take into account concerns raised.

12

City of Cape Town

Local Government has a strong developmental role to play in the area over which it is given jurisdiction and the sources of funding come from various sources including electricity.  Tempering with the electricity will affect municipal budget and result in significant impact on delivery of social services.

The intention is to provide a sustainable and reliable quality of service to end-users by ensuring investment in the industry etc.

13

Prof Eberhard

The Electricity Regulation Amendment Bill will prevent NERSA from setting or approving electricity prices for the vast majority of electricity consumers in South Africa.  Instead, government will hand this power to municipalities acting under national norms and standards prescribed by the Minister of Minerals and Energy.

 

Municipalities will also be able to exercise authority over other service providers, such as Eskom, operating in their areas of jurisdiction

Noted. The licensing jurisdiction of NERSA will be extended to cover reticulation as well

14

Prof Eberhard

What is to be done?  

 

First, the proposed amendments should be withdrawn. The existing Electricity Regulation Act gives NERSA the power to regulate the entire electricity network, including Eskom and municipalities in line with section 155(7) of the constitution.

 

Second, Electricity Distribution Industry Restructuring legislation should be introduced that maps out a clear restructuring path that recognizes the rights of effective municipal electricity distributors to continue  - but provides for the transfer of failing electricity distributors to a National Electricity Distributor, led by Eskom

 

Noted

 

 

 

 

 

EDI Restructuring legislation will be introduced shortly

15

AMEU

NERSA should regulate a service provider not the service authority.  The municipality should adopt tariff policy regulated by the Minister.

Noted

16

Solidarity

The proposed amendment does not promote consolidation.  Smaller municipalities do not have capacity to conduct the electricity business

 

The Bill was drafted in anticipation of the RED being the service provider.

17

AMEU

Municipal surcharge must be collected from the distribution industry by the distribution agent.

Nobody is opposed to surcharges, however the manner in which they are collected raises some concerns.

18

AMEU

A municipality should allow subsidization between customer categories through the municipal tariff policy. The setting of tariffs should be left to economic regulation and should be set by the Service Provider and approved by the NERSA. This makes particular sense where the Service Provider services more than one municipality, or when seen in a national context.

 

The Bill provides for the regulator to develop a national framework for setting of tariff and to license the reticulation service.

19

COSATU, NUM, NUMSA, SAMWU

The definition of customer should be deleted because is similar definition with “domestic end user”

 

The word “person” should be replaced with the word public entity.

Agree

 

 

 

20

Nelson Mandela

Objects of the Bill

 

There is no explanation in the object of the Bill on why it is necessary to define reticulation.

 

 

 

Noted.

21

City of Cape Town

The City of Cape Town recommends that more work be undertaken on this Bill. The proposed way forward is that the objects of this Bill be clearly articulated to determine:

·         exactly what issues related to electricity service will be regulated;

·         whether both the Service Authority and the Service Provider are to be regulated;

·         the role of the Regulator in setting national service standards;

·         the purpose and extent of licensing ; and

·         the extent of compliance and synergy with other legislation, particularly local government legislation

Noted and clarified by providing for NERSA to licenses all reticulation services

22

NERSA, Eskom

EDI Holdings

Constitutional amendment

 

NERSA, First option 1: There is a need to amend the constitution to provide for regulation of the reticulation service effectively and there will be no need for the amendment Bill.

 

Eskom, Amending the constitution will solve the challenges associated with regulation of reticulation.

 

EDI Holdings, First option is to amend the constitution.

 

 

23

NERSA

 

City of Cape Town – electricity department;

 

EIUG

 

Chamber of Mines

 

EDI Holdings

Regulations

 

NERSA, Dual regulation is unworkable – the only workable option is for the NERSA to regulate the entire industry.

 

City of Cape Town – electricity department, the regulator must license the service provider and not the municipality.

 

EIUG, dual regulation is unworkable. NERSA should regulate the whole electricity industry.

 

Chamber of Mines, the regulator does not have powers to regulate reticulation service. 

 

EDI Holdings, economic regulation should be conducted centrally through the regulator.

 

 

 

 

The constitution already provides for a dual regulatory framework

24

Business Unity of South Africa, Chamber of Mines

Clause 28 (1) (j)

 

This clause refers to customers or domestic end users. Surely domestic end users should be categorized as customers?

 

Chamber of Mines, section 28 should include community involved in the governance of the electricity reticulation through the use of section 17 of the MSA

 

 

The word “customer” will be removed from the Bill.

 

 

Agree, a reference to the Systems Act will be made.

 

 

 

 

25

CENTLEC

CENTLEC, Section 28 (2)(j) content of reporting does not give  specific  time frames.

 

A clause will be included allowing the regulator to set time frames for reporting

26

Business Unity  South Africa, Chamber of Mines, RED 1 and Eskom

Section 28(6)

 

The right for a service provider to reticulate lapses at the commencement of this Act.  A transitional mechanism must be included, remove the automatic lapsing of the provision of the reticulation services by the current service provider.

 

Licensed, so no transitional mechanism.

27

NERSA,

 

Eskom,

 

Chamber of Mines

 

City of Cape Town –Electricity department

Section 31: Norms and standards

 

NERSA, Section 31, the regulator must prescribe the norms and standards not the Minister.

 

Eskom, Chamber of Mines, norms and standard must be done in consultation with the regulator.

 

Eskom, The Bill requires a framework for setting of tariffs by a municipality.  The tariff must be properly regulated to ensure consistency across the industry.  These norms and standards must be prescribed and be operationalized simultaneously with the Bill.

 

City of Cape Town- electricity department, Regulation through norms and standards is weak regulation

 

The norms and standards will be reflected in the licence conditions under NERSA jurisdiction

 

28

Business Unity  South Africa, NERSA

Section 32: key Performance Indicators

 

BUSA, Concern must be expressed at the proposal that key performance indicators can vary from municipality to municipality. Consistency is important for a number of reasons, not the least being that energy is a driver for development, and development will tend to go where the better service and quality is to be found. This would mean that those municipalities where the key performance indicators are less stringent than others may lose important investment in their area, the knock on effect being that poverty alleviation and job creation will become more challenging.

 

NERSA, the regulator should prescribe the key performance indicator not the Minister.

 

 

 

 

29

NERSA

Section 38 (2) – Request to comply

 

Should a municipality fail to comply with the legislation, the Regulator must request the municipality to do so. However, no provision is made to censure the municipality if it ignores the request. It is assumed that by informing the Minister or the relevant MEC of the municipality’s failure, the Regulator has taken corrective action.

 

NERSA, Section 38: Request to comply: This is extremely tedious and time consuming process which is based on section 139 of the Constitution. It is suggested the Constitution be amended to cater for regulation and intervention by the regulator

 

 

 

 

 

30

 

Section 40: Interventions

 

NERSA, In Section 40(3), add “ the regulator may request the relevant MEC to issue a directive within 21 days of receiving the request from the regulator to the municipality concerned.  Section 40(3) (d) should be deleted

 

Eskom, Not every contravention should result in intervention in terms of section 139 of the constitution.  NERSA should be in a position to enforce certain activities without invoking section 139 of the constitution.

 

CENTLEC, the request to comply should be directed to the service provider not to the service authority.

 

City of Cape Town- electricity department, Section 139 of constitution is not appropriate for the intervention

 

 

 

 

31

Nelson Mandela

Section 41: Emergencies

 

The only form of intervention at local government is through section 139 of the constitution. The emergency interventions provided for in the Bill are unconstitutional

 

32

Chamber of Mines

Amendment of schedule 2 of the ER Act

 

An amendment must be made in schedule 2 of the Act to include exemption of distribution for own use.

 

Distribution for own use will be addressed in the regulations emanating from the ER Act

 

ADDITIONS

 

 

 

 

Ring-fencing of distribution businesses

 

 

 

Service provider definition

 

 

 

Under 31(1)” The regulator, in consultation with the municipalities, must prescribe compulsory national norms and standards for reticulation services, which shall also be reflected in the electricity reticulation license conditions and may include…”

 

 

 

Under 31(3) replace Minister with regulator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DELETIONS

 

 

 

 

Delete definition of “community”

 

 

 

Delete definition of “domestic end-user”

 

 

 

Delete definition of “light industrial or commercial customer”

 

 

 

Delete “Powers…” and leave as “Duties of municipalities”

 

 

 

Delete 28(2)e

 

 

 

under 28(4)after the word services, delete “to domestic end-users”

 

 

 

Delete 28(6)

 

 

 

Under 29(2)f delete “minister” and replace with “regulator”

 

 

 

Under 29(7) after the words “relating to” delete “to ancillary or administrative”

 

 

 

Delete 31(2)

 

 

 

Delete 32 through 41

 

 

 

Delete “amendment of section 44of act 4 of 2006”

 

 

 

 

 

 

 

Rearrange the Minister/regulator roles in section 6