Energy Regulator Bill: briefing

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Mineral Resources and Energy

03 August 2004
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Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
3 August 2004
ENERGY REGULATOR BILL: BRIEFING

Chairperson:
Mr E Mthethwa (ANC)

Documents handed out:
Department of Minerals and Energy briefing on Bill
Energy Regulator Bill [B9-2004]

SUMMARY
The Committee was briefed by the Department of Minerals and Energy (DME) on the Energy Regulator Bill (B9-2004). The Bill establishes a single National Energy Regulator for the gas, electricity and petroleum pipeline sectors. In essence, it is an amalgamation of existing statutes that created the National Electricity Regulator, the Gas Regulator and the Petroleum Pipelines Regulatory Authority. The new regulatory body would commence its duties on 1 April 2005 in respect of gas and pipelines and 1 June 2005 in respect of electricity.

Members were satisfied at the creation of the single energy regulatory body as they had been advocating it for some time. However, serious concerns were expressed about the ability of the poor to access and influence the new body's processes and rulings. The Committee felt that legal provision should be made for participation by poor communities.

MINUTES
The Department was represented by Dr R Crompton, Deputy Director-General on Hydrocarbons and Energy Planning; Mr N Gumede, Chief Director on Hydrocarbons; Mr O Alphane, Chief Director on Electricity; Dr T Surridge, Director on Coal and Gas; and Mr D Mahuma, Director on Electricity Policy

The DME briefing was conducted by Dr Rod Crompton, Deputy Director-General: Hydrocarbons. He outlined the background to the Bill, the relationship between this Bill and the Electricity, Gas and Petroleum Pipelines Acts, the structure of the Bill and gave a description of each section (see briefing document).


Discussion
Mr S Louw (ANC) asked whether foreign consultants would be used to train the eight NER regulators after their appointment and whether the NER would make use of foreign consultants to carry out its regulatory functions. Dr Crompton responded that a Norwegian donor body, NORAD, would be funding the training. As yet the body had not set limits on how or where the funding could be spent. If foreign consultants or training at foreign institutions were required, Crompton said, this would be done.

Mr Kekana (ANC) asked for a further explanation of the need to keep three sets of accounts within the NER. He also wanted to know what mechanisms were to be put in place to deal with potential conflicts of interest among the regulators. Dr Crompton said that the Department had thought it equitable that the different sectors within the NER needed to pay for itself and that cross-subsidisation had to be avoided at all costs. He added that regulators would be required to declare any conflicts of interest to the Minister and that they would then be requested to recuse themselves from any processes or decisions that may involve their interests.

The Chairperson wanted more clarity on the disqualification of regulators that had criminal records. He commented that it would be unfair, for instance, if a person with a record of unpaid traffic fines would be disqualified from serving as a regulator. Dr Crompton responded that only persons who were convicted for "crimes involving dishonesty" would be disqualified and that the chairperson's example would not be a case of disqualification.

Professor I Mohammed (ANC) wanted to know why the National Nuclear Regulator (NNR) had not also been amalgamated into the NER. He also asked whether the bill had been subject to public input and consultation. Crompton said the NNR had not been included because it dealt primarily with safety regulation, while the other regulators dealt with economic regulation. He pointed out that exhaustive public consultation had taken place during the finalisation of the Gas Act, the Electricity Act and the Petroleum Pipelines Regulatory Act. As the ERB was just a "cut and paste" exercise of amalgamating the relevant sections from these acts, it was felt at government level that further consultation would not be required.

Mr T Harding (ID) argued that the cost of making representations to the NER would effectively prohibit poor communities from having a say in the NER's rulings. This would also apply in the case of these rulings being taken under review to the High Court. Dr Crompton pointed out that the NER's meetings would be open to the public and that the costs would be very low as the only requirement would be to actually go to the meeting. He indicated that nothing prevented the NER from having hearings or meetings around the country to accommodate communities that could not afford the cost of travelling. The Chairperson interjected that he would like to see this latter aspect written into the Bill and not left to the discretion of the NER, while Mr Harding argued that the DME was showing "insensitivity" to the poor.

Ms Cindi (ANC) added that a mechanism had to be found to allow poor communities to take the NER's rulings to the High Court without the prohibitive associated costs. She also wanted to know what the gender composition of the eight regulators would be.

Dr Crompton said that the DME was not insensitive to the rich / poor dichotomy in South Africa, but was unsure how to address this in a regulatory environment. He added that state-funded legal aid might be an option, but that these were options the legislature had to explore. Crompton also pointed out that the regulators had to reflect the broad composition of the population and that the Minister would have to follow this legal requirement when making the appointments.


Mr Harding inquired about the measurements to be used to determine commercially-sensitive information that would allow the NER to close certain meetings to the public. Dr Crompton said that this would be dealt with in regulations as it was not possible to create a legal recipe for confidentiality for future instances.

Mr Kekana commented that he would like to see the Ministry of Minerals and Energy foot the bill for participation by poor communities in the NER's meetings, but that the trade unions, non-governmental organisations and community-based organisations could assist in this respect.

The Chairperson summarised by thanking the DME for the briefing and pointed out that the participation of the community would be at the centre of the Bill as would be their access to the NER's processes and meetings. He reminded Members that the committee would hold public hearings on the Bill on 11 and 12 August.

The meeting was adjourned.

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