The National Assembly recently passed the Electricity Regulation Amendment (ERA) Bill. This brings about much needed change and a focused approach for generation, distribution, and transmission of electricity.
The Bill once enacted will transform the way electricity is managed and priced while encouraging greater private sector participation and competition.
The Bill introduces competitive electricity trading into the country through an open market platform.
On the transmission end:
- The Transmission Systems Operator (TSO) will be established as a state-owned organisation that is the wheeler and dealer of electricity.
- The TSO will have multiple responsibilities as a transmitter, market operator, system operator and central purchasing agency.
- As a transmitter they will be responsible for ensuring the transmission network is maintained, expanded, upgraded and that third parties have access.
- As the market operator, the TSO will establish the trading platform for the power market and develop its rules and code.
- The TSO will also be the system operator, responsible for real-time operation of the national transmission power system, ensuring power flows smoothly and efficiently and supply and demand is balanced.
- As the central purchasing agency, the TSO will buy electricity and capacity and then sell energy to distribution licensees. They will also ensure energy from legacy Power Purchase Agreements are traded, managing supply and demand.
- The TSO must be established within 5 years, but until then the duties, powers and functions of the TSO have been assigned to the National Transmission Company of South Africa (NTCSA).
- Third parties will be able to access the transmission and distribution system in accordance with published tariffs. These tariffs will apply to ‘eligible customers’ but the definition of who is eligible is yet to be determined.
There will accordingly four distinction functions of the TSO:
- Transmission ownership;
- System operations;
- Market operations (trading);
- A central purchasing agency.
Currently these functions are vested in the National Transmission Company – within five years this entity will be converted into a completely separate state-owned company, the Transmission System Operator.
The change in regulations demonstrates an international / best-practice approach towards decentralising the electricity system with a move towards an open and competitive electricity market. This will drive private sector engagement and public sector initiatives.
The Bill was passed through the National Assembly on 14 March 2024, and is now with the Select Committee before it goes to the National Council of Provinces is enacted as law.
These changes will impact how players in the energy industry operate in the future. Our energy experts can help you understand what the changes mean to your business and how you can prepare to take advantage of them or minimise their impact. For a complimentary 30 minute appointment, get in touch.