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Wrong forum, right questions

1st February 2013

By: Terence Creamer
Creamer Media Editor

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As has become the norm with National Energy Regulator of South Africa (Nersa) public hearings into Eskom prices, policy rather than regulatory considerations tend to dominate proceedings.

Very few presenters actually address matters over which Nersa has any direct authority.

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Even fewer offer guidance that the regulator can use when adjudicating the application and determining the tariff – a process based on a formula that seeks to arrive at an “allowable- revenue” figure that is fair to consumers, but does not place undue financial stress on the utility.

As frustrating as this may be for the Nersa panel, I believe most participants are raising the right questions at the wrong forum. From a national-interest perspective, these weighty policy issues have to be aired somewhere and the presenters are merely using the only platform available to them.

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The questions range from the appropriateness of the current electricity pricing policy and the legislation supporting the policy through to whether or not Eskom should be expected to pay a dividend.

They include thoughtful questions about the appropriateness of the current generation mix, as well as proposals on what the future mix should look like.

Quite correctly, questions are posed about whether or not Eskom is meant to be the main vehicle through which new capacity should be added beyond the completion of the Kusile coal-fired power station.

Others would like to know whether affordability or climate considerations should be the main determinant shaping the future of the electricity supply industry.

Potential developers want to know whether private-to-private bilateral electricity supply deals will pass legal and regulatory muster. What is the role of energy efficiency? Is there room for distributed power solutions and how will investors in such systems receive a return?

Is it appropriate for South Africa to persist with a single-buyer model, whereby a Ministerial determination is required before any new large-scale capacity can be safely developed? Should South Africa be pursuing a more competitive arrangement instead, or are the security-of-supply risks simply too high?

These and many other policy questions are being raised on each and every day of the hearings. Sadly, they are being posed to a panel powerless to provide answers.

Surely, it is time for the Department of Energy, which has the policy authority, to undertake a similar roadshow so that its officials can be exposed to the thoughts citizens have on these matters. They could be in for a happy surprise as they learn that many South Africans have put much time, effort, research and thought into their present-ations.

Such an engagement should take place ahead of the drafting of the next version of the Integrated Resource Plan (IRP) and it should be conducted without delay, as the current IRP is worryingly out of date.

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