South African Wind Energy Association (SAWEA) and its legal counsel have welcomed clarity on National Regulator (NERSA) process, while strongly objecting to Eskom’s lack of engagement.
SAWEA declared a power procurement dispute in October 2016, requesting NERSA to undertake an investigation into Eskom’s continued unwillingness to fulfill its mandate as purchaser of power duly procured by the Department of Energy.
In March 2017, the National Regulator responded to this complaint by launching a formal investigation into Eskom’s conduct. A hearing for both parties to make submissions was scheduled 14 September 2017. SAWEA understands that a hearing of this nature has not been undertaken by NERSA before.
Unfortunately, the hearing began on two disappointing notes: Firstly, Eskom arrived with a plea for postponement, citing ‘Communications challenges’ that had prevented the national Utility from adequately preparing its submissions, both written and verbal, despite several correspondences between NERSA and the parties, clearly indicating the time frames to be adhered to. Secondly, NERSA had declared the hearing closed to the public, and would not allow members of the media who had arrived, to join the hearing.
Legal objection
SAWEA and its legal counsel objected strongly to both these points, arguing that in the first case Eskom had had a total of 11 months to take the necessary steps to engage with this matter responsibly, and that in the second case, refusing to open the hearing to the public would be inconsistent with constitutional principles of openness, transparency and fairness, as well as NERSA’s own legislation. SAWEA remains deeply concerned by Eskom’s two-year attempt to impose unilateral conditions of a tariff cap AFTER bids were awarded. The likely developmental losses associated with this ongoing unconstitutional approach are compounded by the Utility’s evident lack of engagement with the NERSA process.
The national utility
South Africa’s utility scale renewable power programme’s potential to contribute to the country’s developmental agenda has been eroded significantly by the ongoing delay. The Industry has proven its ability to provide affordable power on budget and on time, its capacity to create jobs and stimulate rural economic growth. It has attracted over R200 billion of investment value within just four years of policy certainty. As the delay continues, the SA renewable power industry is facing manufacturing investment and construction growth decline, along with associated job losses along the full value chain e.g. the SA steel industry which has benefited significantly from Wind tower manufacturing orders.
In policy, the national Utility is no longer mandated to act as policy-maker. SAWEA recognizes that that there are some very deep tensions between the duty of the Minister of Energy to fashion a new power sector with a democratic mandate to plan for security of supply, and the historical role of Eskom as national Utility that had also been tasked with a planning mandate during the Apartheid era. The severe Industry consequences of these tensions are no doubt an effect of that legislative shift, which Eskom is clearly still working to understand.
The NERSA hearing that was meant to take place on September 14th, 11 months after SAWEA’s complaint was first submitted, has now been postponed by two weeks. SAWEA will be relying on the Electricity Regulator to provide much needed guidance on policy leadership and accountability.
