South Africa’s NERSA Greenlights Eskom Power Transfer

In a significant development for South Africa’s energy sector, the National Energy Regulator of South Africa (NERSA) has granted approval to Eskom’s application for the transfer of its powers and duties concerning section 34 Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) to the National Transmission Company South Africa (NTCSA).

The NTCSA, as Eskom’s transmission arm, will now undertake responsibilities previously held by Eskom, marking a crucial stride in the power utility’s ongoing unbundling process. This move aligns with the objectives outlined in the ‘Roadmap for Eskom in a reformed electricity supply industry’ published by the Department of Public Enterprises in 2019.

According to NERSA, Eskom’s application submitted in December 2023 played a pivotal role in advancing its unbundling agenda. “The transition of the Buyer role for section 34 IPPs from Eskom to the NTCSA is a critical component of this process,” stated NERSA in a recent statement.

Furthermore, NERSA designated the NTCSA as a buyer in the electricity market. This designation accompanies additional approvals, including the issuance of a cost recovery letter to the NTCSA for section 34 IPP projects and the amendment of IPPs’ generation licenses to designate the NTCSA as the buyer, replacing Eskom Holdings in this capacity. Correspondingly, adjustments will be made to the NTCSA’s trading license.

In parallel, NERSA has announced significant changes in its decision-making processes, particularly regarding high-profile matters handled by its subcommittees, such as the Electricity Subcommittee and the Petroleum Pipelines Subcommittee.

The regulatory body resolved to enhance transparency by ensuring that all subcommittee decisions, particularly concerning tariff/revenue recommendations, are fully disclosed. This decision reflects NERSA’s commitment to operating within the framework of the National Energy Regulator Act, which mandates openness in its proceedings, with exceptions made only for information protected under the Promotion of Access to Information Act.

Prior to this decision, certain information would be withheld from the public until final decisions were communicated to affected parties. NERSA’s latest directive aims to address this by providing greater transparency and accountability in regulatory proceedings, especially those involving entities like Eskom and Transnet.

Looking ahead, NERSA emphasized that, barring legal constraints, all subcommittees will fully disclose their intended recommendations to the Energy Regulator, signaling a progressive shift towards more transparent governance in the energy sector.

In summary, NERSA’s approval of Eskom’s powers transfer and its commitment to enhanced transparency represent significant milestones in South Africa’s energy landscape, underscoring the ongoing efforts to reform and improve the efficiency of the nation’s power sector.