President Cyril Ramaphosa has officially signed the Electricity Regulation Amendment Act into law, with an important announcement regarding its full implementation.
While the Act will officially come into operation on January 1, 2025, two key sections—related to the definitions of “reticulation” and “distribution power systems”—will be postponed for further review. These sections will be implemented at a later date, which will be announced through a presidential proclamation in the Government Gazette.
Implementation Delayed for Specific Sections
The Electricity Regulation Amendment Act, which was adopted by the National Assembly in March 2024, marks a significant change in South Africa’s energy sector.
The Act introduces key reforms aimed at improving the country’s energy transition and creating a fairer competitive environment between Eskom and independent power producers. However, two provisions regarding the definitions of “reticulation” and “distribution power systems” have been excluded from the initial implementation.
In his statement, President Ramaphosa confirmed that the Bela Act, which deals with school governance in education, also had some provisions deferred for further discussions, particularly regarding Afrikaans-speaking communities. The same approach has been taken with the two disputed sections of the Electricity Act, leaving them for further consideration.
Key Features of the Electricity Regulation Amendment Act
The newly signed law aims to overhaul the electricity landscape in South Africa by providing a platform for competitive wholesale and retail buying and selling of electricity. This move is seen as a crucial part of the country’s energy transition, helping to ensure a more competitive market for electricity generation and distribution.
One of the key objectives of the Act is to create a level playing field for all electricity producers, including Eskom and independent producers. The Act establishes a new regulatory framework that will empower the National Energy Regulator of South Africa (NERSA) to oversee the market operation and introduce licensing for market activities.
Market Operation and Licensing
The Electricity Regulation Amendment Act also introduces market operation as a new activity eligible for licensing by NERSA. This is expected to provide more opportunities for competitive market participation and ensure the promotion of renewable energy and diversity of supply.
In one of his recent statements, President Ramaphosa emphasized that NERSA would consider factors like security of supply, diversity of supply, and the promotion of renewable energy when making decisions.
Changes to Tariffs and System Operations
Another important aspect of the Act is its approach to electricity tariffs. The Act differentiates between tariffs that NERSA must set or approve—such as network charges—and those subject to direct supply agreements or determined by a competitive market.
To ensure fairness and competition, the Act mandates that the system operator must treat all electricity generators and customers equally when managing system dispatch or balancing, except in cases where objective, justifiable reasons are approved by the Regulator.
Provisions for Competitive Electricity Market
| Key Features | Details |
|---|---|
| Market Operation | Introduces market operation as a new activity to be licensed by NERSA. |
| Tariffs | Distinguishes between network charges and those arising from direct agreements or competitive markets. |
| Regulator Oversight | NERSA will oversee market operation and ensure fairness in system operation. |
| Renewable Energy Focus | The Act encourages the promotion of renewable energy and diversity in electricity supply. |
FAQ
1. When will the Electricity Regulation Amendment Act come into effect?
The Act will officially come into operation on January 1, 2025, with the exception of two sections concerning the definitions of reticulation and distribution power systems, which will be deferred to a later date.
2. What is the purpose of the Electricity Regulation Amendment Act?
The Act aims to create a competitive electricity market in South Africa, promoting fairness between Eskom and independent power producers, and facilitating the country’s energy transition to include more renewable energy sources.
3. What are the postponed sections of the Act?
The two sections that have been postponed are the definitions of “reticulation” and “distribution power systems”. These will be implemented later through a presidential proclamation.
4. How will tariffs be managed under the new Act?
The Act distinguishes between network charges that need approval from the National Energy Regulator of South Africa (NERSA) and those set through direct supply agreements or resulting from competitive markets.
5. What role does NERSA play in the new electricity system?
NERSA will have oversight of the market operation and ensure that there is no discrimination between electricity generators or customers, except in objectively justifiable cases. It will also oversee tariff regulation and promote renewable energy within the system.
