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MINERALS AND ENERGY PORTFOLIO COMMITTEE
17 August 2004
ENERGY REGULATOR BILL: DEPARTMENT RESPONSE TO PUBLIC HEARINGS
Chairperson: Mr N Mthethwa (ANC)
Documents handed out:
Department response to hearing submissions
Energy Regulator Bill (B9-2004)
Proposed Amendments to the Bill
The Committee was briefed by the Department of Minerals and Energy (DME) on its responses to public submissions on the Energy Regulator Bill [B9-2004]. The Department welcomed the public input and recommended that certain submissions be accommodated in the Bill. These included making the Chief Executive Officer of the Energy Regulator (ER) a full-time regulator; increasing the number of full-time regulators to four; deleting the provision of appeal to the Minister against the Energy Regulator's decisions, and changing the short title of the Bill to the National Energy Regulator Bill. The Committee will formally consider the Department's recommendations at its next meeting on 18 August.
Department of Minerals and Energy presentation
Dr Rod Crompton, Department Deputy Director-General: Hydrocarbons and Energy Planning, conducted the briefing, accompanied by Mr N Gumede, Chief Director: Hydrocarbons. In response to the submissions made during public hearings on 12 August, Dr Crompton stated that the Department agreed that the CEO of the Energy Regulator (ER) should be a full-time regulator with voting rights. The number of full-time regulators should therefore be increased to four. However, the other three full-time regulators would not "report" to the CEO as such, but would report to the Energy Regulator Board. The CEO would deal with the day-to-day management, but the Regulator would determine what resources were put at his or her disposal after receiving the CEO's recommendations.
The Department agreed that Section 21 of the Electricity Act on appeals to the Minister should be repealed, leaving only High Court review possible. On the question of the independence of the part-time regulators and the eligibility of civil servants to serve on the Regulator Board, Crompton said that the Minister ensured that all appointees were independent. In addition, considerable regulatory expertise existed within the Department, but not in the country as a whole. Civil servants should therefore be eligible for appointment as part-time regulators. The Department also recommended that full-time regulators hold office for five years and part-time regulators for four years.
Other recommended changes to the Bill included: changing its short title to "National Energy Regulator Bill"; retaining "unsound mind" as the courts were familiar with the term; making persons convicted of a criminal offence after 27 April 2004 and sentenced to twelve months' imprisonment without the option of a fine ineligible for appointment to the Board; clarifying that imposed fines did not accrue to the Board but were transferred to the National Revenue Fund; specifying that the Act would commence "at a date determined by the Minister on or after 1 June 2005"; enabling the ER to make rules to notify the public of its meetings and hearings; stipulating that stakeholders should present their views to the ER "at their own expense" except if Parliament were to appropriate funds for the reverse; that money appropriated by Parliament should be allocated to the Board's three accounts in proportion to costs "unless otherwise determined by Parliament"; retaining the provision that money received from an industry would be allocated to that industry's account; inserting that the Board's Annual Report had to contain summaries of network and tariff structures; and that any existing decisions of the National Electricity Regulator would remain in force and be carried over to the Board upon its establishment.
Mr A Harding (ID) commented that the Department had not accommodated his concern that the poor would not be able to attend meetings of the Regulator. The phrase "at their own expense" should thus be deleted to enable the poor to attend and make representations. Mr N Gumede of the Department agreed but requested that Members take a political decision as the proposed deletion would mean that "big business" would be able to drag Regulator proceedings out, as it had no cost implications for them.
Dr Crompton added that the phrase's deletion could be interpreted to mean that the Regulator would have to bear the cost of stakeholders making representations and he expected this to lead to civil litigation.
Mr H Schmidt (DA) wanted further clarity on the reasons for establishing the Regulator. The Bill did not make any provision for disputing the merits of the Regulator's decisions as High Court review only dealt with the fairness of procedures used in arriving at a decision. In his view, an appeals process would deal with the merits of a case also.
Mr Gumede responded that Cabinet had become alarmed at the growing number of state agencies and had therefore decided to establish the single energy regulator. This would cut costs and would create more efficiency.
Dr Crompton said that an appeals process would suit only the "rich". The Regulator would have the most open of decision-making processes among all regulatory bodies. All of its meetings would have to be conducted in public and it would have to provide written reasons for its decisions.
Mr Ngcobo (ANC) wanted to know if the Bill should specify health and safety guidelines for the Regulator. Dr Crompton pointed out that it was the position of the State Law Adviser that this was not necessary as the Occupational Health and Safety Act, among others, dealt with this aspect in detail.
Professor I Mohammed (ANC) asked, in light of the fact that the National Nuclear Regulator (NNR) was not being amalgamated into the Regulator, if regulation of nuclear power generation would fall under the Regulator's jurisdiction. Dr Crompton confirmed this and pointed out that nuclear power stations would have to obtain electricity generation licenses from the Regulator. Safety regulation of nuclear facilities would remain the responsibility of the National Nuclear Regulator.
Mr Schmidt enquired how many appeals against the National Electricity Regulator's decisions had been lodged with the Minister. Dr Crompton responded that the issue was irrelevant, as the electricity industry would fundamentally change over the course of the next few years. Therefore, no comparison was possible. Continuous and potentially frivolous appeals would unnecessarily tie up the Minister in court hearings.
Mr Schmidt also wanted to know if the composition of the five part-time regulators could not be split between organised business, organised labour, and other stakeholders. Dr Crompton thought the idea had merit and promised to revert to the Committee.
Mr Schmidt further questioned the feasibility of inserting the date of 27 April 1994 into the clause dealing with criminal convictions as this was a "sensitive" date. Dr Crompton stated that a proscription period of ten years might be a more workable option and that he would consult the State Law Adviser.
The Committee will meet on Wednesday, 18 August, to start its formal deliberations on the Bill. The Department will formally table proposed amendments at that meeting.
The meeting was adjourned.
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