A Western Cape government submission on draft amendments to electricity regulations aimed at allowing cities and towns to establish or buy their own power generation questions the lack of clarity provided in the rules on how provision will be made for municipalities to procure electricity from independent power producers.

Mineral Resources and Energy Minister Gwede Mantashe published the draft amendments on May 5 and provided for a 30-day comment period.

Finance and Economic Opportunities Minister David Maynier, who submitted the comments on behalf of the province in the first week of June, says the regulations did not provide the certainty needed to rapidly and significantly increase generation capacity outside of Eskom by municipalities.

“While we support the intent of these regulations, the proposed amendments and lead times to the development of new generation capacity, don’t go far enough to address the electricity crisis that South Africa may soon again be facing,” Maynier cautions in a statement.

“Allowing new generation capacity to come online as soon as possible is critical to an energy secure future,” he adds, noting that the recovery in demand as the country eased it Covid-19 lockdown restrictions would, again, place pressure on Eskom’s ability to provide adequate electricity.

Besides the province’s misgivings over how provision would be made for municipalities to procure electricity, the submission argues that the requirement to apply directly to the Minister to establish new generation capacity may create further delays and erode the independence of the regulator.

In addition, the proposed regulations may be in conflict with other legislation and create a regulatory barrier to implementation, which will further slowdown the process.

Maynier said the provincial government strongly supported a policy and regulatory environment in which municipalities that have a sound financial standing, and the capacity and technical expertise to acquire new generation capacity, were supported and enabled to do so.

“Centralised electricity structures and Eskom’s dominance on electricity generation and supply in South Africa limits what a provincial or local government can do when confronted with load-shedding.”

In a separate submission, the City of Cape Town, which is also governed by the Democratic Alliance, has also welcomed the acknowledgement in the draft regulations that municipalities have a role to play in new generation development.

The city asserts, however, that the draft rules raise more questions than answers and have also fallen short of providing the clarity it has been seeking on the matter through court action initiated against the National Energy Regulator of South Africa (Nersa) and the Minister.

The case was heard by the North Gauteng High Court on May 11 and 12, with the city asking for an order declaring that it does not need a Ministerial determination as per Section 34 of the Electricity Regulation Act to procure its own power, alternatively that the section is unconstitutional.

Nersa and the Ministry of Energy have taken the position that a municipality requires a determination in terms of this section before transacting to generate or procure renewable energy.

Maynier says the province strongly supports a policy and regulatory environment in which municipalities that have a sound financial standing, and the capacity and technical expertise to acquire new generation capacity, are supported and enabled to do so.

“This will also allow for greater diversity, increased energy resilience and increased investment in energy infrastructure (specifically renewable energy) that will contribute towards a more sustainable and reliable energy supply in the country.”