Electricity Legislation: Government is trending in right direction


Solidarity is cautiously optimistic that the adoption of the Electricity Regulation Amendment Bill can be a positive step in the direction of free market principles within the electricity sector.

This bill was approved by the National Assembly on Thursday, and if it were to become a reality, it could mean that South Africans are given the space to walk away from load shedding.

According to Connie Mulder, head of the Solidarity Research Institute (SNI), there is hope that within the next decade consumers will be able to choose their electricity supplier as they can currently choose between mobile phone service providers.

“We are now seeing for the first time a structured movement by government away from perpetual government monopolies in the energy sector. This paves the way for the private and community sector to tackle our energy crisis.

“With this, the government is putting its toes in the water of free markets rather than state monopolies,” says Mulder.

Solidarity nevertheless realizes that this decision should have been taken years ago – a period in which the private sector, given the necessary space, could have already come up with a solution.

South Africa’s economy now bears the scars of this inertia with the reform of the energy sector.

According to Mulder, the delays have not only cost the country financially, but also in terms of lost opportunities for innovation and growth in this sector.

“It is indeed necessary to guard against haste with new entrants to the electricity market. The streamlining of processes and elimination of bureaucratic barriers will now be decisive.

“We currently lack electricity on the grid – regardless of who supplies it. To suffocate potential contributors now with bureaucratic red tape is going to cut short everything again,” emphasizes Mulder.

At the same time, he points out that the increase in generation capacity will place new demands on the transmission network.

“As we open the doors to more generators, the robustness and response quality of the transmission infrastructure will be tested. Proactive measures and future planning are therefore essential.

“Our transmission networks must be expanded and upgraded to ensure they are able to handle the increased load that a competitive market will bring.

“Here too, the private and community sector can be involved. The state’s inability to solve the crisis alone is by now common knowledge. The time has come for the government to allow the private and community sector to solve the energy crisis in its entirety for the people of South Africa,” says Mulder.

Solidarity nevertheless believes it is important to give entities such as Eskom and its coal plants the necessary protection as the new market-oriented framework comes into being.

“South Africa will not have an energy landscape without Eskom, so the transition from a monopoly to competitive market participants must be smooth and well planned. It is necessary to ensure that these plants can adapt efficiently to the new market realities.

“The legislation is a step in the right direction – but South Africans must remain vigilant. We need to make sure this tone in the water does not turn into a government with cold feet, but rather into a transformed and dynamic private electricity market that works.”