Electricity Regulation Bill: adoption

Meeting report

SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS
15 February 2006
ELECTRICITY REGULATION BILL: ADOPTION

Chairperson: Ms N Ntwanambi (ANC Western Cape)

Relevant document
Electricity Regulation Bill [B29-2005 (Reintroduced)] as of 13 October 2005
Committee Report on Bill [available shortly at Committee Reports]

SUMMARY
The Department was asked to provide the Committee with a brief snapshot of the objects of the Bill, for the benefits of Members who had not been present at the full briefing on the previous day. Members sought clarity on the regulations that would deal with energy reticulation by municipalities, and how that would affect the Regional Electricity Distributors. The State Law Advisor pointed out a few technical amendments which would have to be effected, which meant that the Bill would have to be referred back to the National Assembly.

The Committee adopted the Bill, with amendments.

MINUTES
Introduction by Chairperson
The Chair apologised for being late, and explained that traffic was very heavy this morning. She requested the Department to provide a snapshot of the main objects of the Bill, without repeating the full briefing it had provided on the previous day. This would benefit those Members who had not been present at the previous day’s meeting. The Committee would then proceed to its formal deliberations on the Bill

Briefing by Department of Minerals and Energy
Ms Nelisiwe Magubane (Deputy Director-General: Electricity) stated that the Bill was a culmination of a three different pieces of legislation from the energy sector, which was due to the growing needs in the sector which needed legal regulation, such as the introduction of the gas pipelines from Mozambique. The Bill sought to weave together the three pieces of legislation namely the Gas Act, the Petroleum Pipelines Act and the Electricity Act.

She stated that she had been asked at the previous day’s meeting why the Bill was needed. The problem was that the Electricity Act was not in line with the Constitution, as it contained several clauses that needed to be revised. The clauses included those that dealt with the expropriation of land. The Bill was also needed to fast-track the restructuring of the electricity industry, and to clarify some of the definitions regarding dual-regulation. It was also needed to ensure alignment with the National Regulator Act, which established the energy regulator that governed the entire energy sector.

The Bill did not accommodate the regulation of electricity reticulation, because it fell under the jurisdiction of local government. Electricity reticulation must be clarified between the municipality concerned and the regulator, via the Municipal Systems Act. The matter would be dealt with as soon as the deliberations on Bill were completed.

She stated that the Bill empowered the regulator to issue licences for various activities, and allowed the issue of penalties for non-compliance with licence conditions. It created an environment in which the regulator could mediate to resolve disputes, provided it was invited to do so. It was also empowered to register unlicensed generators.

The Bill empowered the Minister to exempt any of the activities from holding licences, based on the advice of the regulator. It also empowered the Minister to determine other activities that would have to be licensed and registered. The Bill ensured transparency in terms of licence applications and procedures, as most licences and holders would now be published in most newspapers.

She stated in conclusion that the Bill would repeal the Electricity Act, and would amend some of the schedules to the Kwazulu-Natal Joint Services Act.

Discussion
The Chair asked whether the State Law Advisor had any comments.

Adv Otto Kellner (State Law Advisor) informed the Committee that he had noticed a few technical errors in the Bill. Firstly, there had been a typographical error in Clause 19(6), as it must refer to "subsection 4" and not "subsection 2". Secondly, Clause 49 must be amended to reflect "2006" and not "2005", because the Act would come into operation this year. Thirdly, the item in the Schedule to the Bill that dealt with the National Energy Regulator Act contained references to "the Electricity Regulator Act 2005" which must also be changed to 2006. He stated that this meant that there would unfortunately have to be amendments from the NCOP, which would then have to be referred back to the National Assembly.

Ms Magubane noted that an amendment also needed to be effected to paragraph (b) in the same portion in the Schedule referred to by Adv Kellner, as the "Electricity Act" was not spelt correctly.

The Chair agreed.

Mr Z Kolweni (ANC North-West) sought clarity on Ms Magubane’s statement that regulations would have to be passed to deal with the reticulation by municipalities, and how it would affect the existence of the Regional Electricity Distributors (REDs)..

Ms Magubane responded that the Bill was meant to regulate the entire electricity industry, that is the manufacturing, transportation and distribution of electricity. It was in the last phase that both Eskom and the municipalities were involved, and this was the area of energy reticulation. The Constitution stipulated that the municipality had a regulatory function with regard to energy reticulation. However, government recognised that the electricity regulator also had jurisdiction over energy reticulation. The Bill thus sought to separate those functions by identifying those functions that would regulated by municipalities via the service level agreements they would enter into, as well as those functions that would be regulated by the regulator through the licence conditions.

The Department was currently investigating the restructuring of the electricity industry to ensure that municipalities were able to regulate the distribution of electricity to end users within the municipality. The Bill was thus aimed at creating clarity as well as ensuring that the municipality itself was able to regulate the RED.

Mr Kolweni asked whether the Bill standardised municipal electricity tariffs.

Ms Magubane replied that the regulator had a say on those tariffs, but the issue would have to be negotiated properly when the energy reticulation matter was discussed.

The Chair sought clarity on the asterisks that appeared after certain definitions in Chapter 1.

Adv Kellner responded that the asterisks indicated the places where the Section 76 Bill would fill in the blanks. That Bill will be submitted to the Committee shortly.

The Chair stated that the Committee would now move on to its formal deliberations on the Bill.

Motion of Desirability
The Chair read the Motion of Desirability, to which the Committee agreed.

Clauses 1 to 5
The Chair noted that the Committee agreed to those clauses as they currently stood in the Bill.

Clause 6
A representative from the South African Local Government Association (SALGA) noted that the heading was confusing.

Ms Magubane proposed that it read "end user forums".

The Chair noted that the Committee agreed to the clause, as amended.

Clauses 7 to 18
The Chair noted that the Committee agreed to those clauses as they currently stood in the Bill.

Clause 19
The Chair noted that the Committee agreed to the clause, as amended by Adv Kellner’s proposal.

Clauses 20 to 48
The Chair noted that the Committee agreed to those clauses as they currently stood in the Bill.

Clause 49
The Chair noted that the Committee agreed to the clause, as amended by Adv Kellner’s proposal

Schedule
The Chair noted that the Committee agreed to the Schedule, as amended by Adv Kellner’s proposal

The Chair noted that the Committee had adopted the Bill.

Committee Report on the Bill
The Chair read through the Committee Report on the Bill, to which Members agreed.

The meeting was adjourned