Independent System and Market Operator Bill [B9-2012]: public hearings

Meeting Summary

The Free Market Foundation indicated that comment on legislation and regulations relating to the supply of energy in South Africa would need to be made against the background of the environment that currently exists. But to be useful, the comment must also encompass the potential for government to create an alternative environment which would eliminate the ever present threats of disruption that hang over the country’s energy consumers. The Free Market Foundation comments on the Independent System and Market Operator Bill focused on the potential for the Bill to improve conditions for the supply of electricity in the country – not merely to improve conditions marginally but to bring about an optimal improvement in the supply of electricity in the shortest possible time. The name “Independent System and Market Operator” Bill did not correctly describe the content of the proposed legislation. The Bill did not create either a truly independent system or a market operator, if ownership and control of the transmission grid would not be transferred to ISMO

NEDLAC elaborated on the process that NEDLAC went through to get the outcome presented by a panel made up of representatives from the National Union of Mine Workers, National Union of Metal Workers, Business Unity South Africa and the Department of Trade and Industry. The different constituencies of NEDLAC agreed there needed to be a seamless transition between the status quo and when ISMO would come into effect so as not to disrupt security of supply. Before any transfer was made of the functions to ISMO, NEDLAC would like to see an assessment of the impact of such a transfer on the electricity tariff, on Eskom’s balance sheet, on jobs as well as a comprehensive engagement with workers. The reference to international best practice should be removed from the section as ISMO should coordinate with generation licensees to plan maintenance in accordance with the Grid Code. NEDLAC also agreed that appointment of staff and conditions of service as well as transfer of Eskom staff to ISMO should be in accordance with applicable labour laws. NEDLAC also called for revision of section 38 on offences and penalties to clarify that reference was to third parties and not employees.

Members raised questions about the solutions to the problems facing the country in terms of shortage of electricity and having only coal as a readily available fuel and the need for clean energy. Concerns about the environment were discussed with Members noting the reality of the country’s international obligations in terms of carbon constraints which could not be ignored and had to be considered in the context of the ISMO Bill.