Electricity Regulation Amendment Bill: adoption; Energy Sector Education & Training Authority Annual Report

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Mineral Resources and Energy

08 November 2006
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Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
8 November 2006
ELECTRICITY REGULATION AMENDMENT BILL: ADOPTION; ENERGY SECTOR EDUCATION AND TRAINING AUTHORITY 2006 ANNUAL REPORT: BRIEFING

Chairperson: Mr E Mthethwa (ANC)

Documents handed out:
Unofficial proposed amendments to the Electricity Regulation Amendment Bill [B20-2006]
Annual Report of Energy Sector Education and Training Authority [available later at www.eseta.org.za]
Presentation of the Annual Report and financial statements of the ESETA

SUMMARY
The Committee adopted proposed amendments to the Electricity Regulation Amendment Bill.

The Energy Sector Education and Training Authority presented their 2006 annual report and financial statements. The Chair commented that the picture they portrayed was not a favourable one. The Committee agreed and suggested that improved systems be put in place to assist the Authority address their weaknesses and challenges.

MINUTES

Adoption of Electricity Regulation Amendment Bill
The Chair welcomed Members of the Committee and reminded them about the changes to the clause dealing with Norms and Standards (Section 47 paragraph 6 (b)) that were changed the previous day.

Ms N Magubane (Deputy Director-General: Electricity and Nuclear, Department of Minerals and Energy (DME)) stated that the powers of the Regulator and the Minister of Minerals and Energy were being streamlined.

Mr O Aphane (Chief Director: Electricity) stated that he would indicate the changes that had been made since 7 November. He mentioned that there would be still be consequential changes because Section 31 had been removed. The Regulator would set the norms and standards and in Section 47 the Minister was given the power to write regulations. Section 31 of the Act would be omitted completely and therefore the consequential changes would involve renumbering.

The Chair enquired what it would mean generally if Section 31 were deleted. He also asked about the powers of the Regulator and whether the custodian of the policy was still the Minister.

Mr Aphane stated that the Minister is the overall custodian and that the Regulator would set the norms and standards. This would be clarified as there is a contradiction between the roles of the Regulator and the Minister with regard to norms and standards.

The Chair questioned where in the Act the responsibilities of the Minister were outlined.

Mr Aphane stated that in terms of Section 47 of the principal Act, the Minister would draft the regulations and the Regulator would further define them.

Adv S Nogxina (Director-General) stated that the Minister would have the power to establish the overall policy. The Regulator would have the power to refine the regulations and their application.

The Chair stated that the Committee did not have the power to change the bylaws of local government and that it was covered in a different sphere. He also commented that the changes in numbering would be accepted.

Mr Aphane stated that the renumbering of the Act needed to be addressed and that the Executive Authority of Municipalities was addressed in Section 28 (1). He stated that paragraph (E) also refers to Norms and Standards and it would be deleted as it confused the tariff setting process. Paragraph (H) covers the provision of services but is redundant and would be deleted.

The Chair questioned the future impact on rates and service providers.

Adv Nogxina stated that the Act set a solid foundation for the End State Model and Section 30 provided for an external service provider in the future.

The Chair put the motion of desirability on the Bill to the Committee. It was agreed.

Mr Aphane listed the main amendments proposed by the Department. The definition of “reticulation” would read: “reticulation means trading or distribution of electricity and includes services associated therewith”.

Section 4 of the principal Act would be amended by the substitution in subparagraph (a)(i) for item (aa) of the following: “(aa) the operation of generation, transmission [and], distribution or reticulation facilities;”.

Section 8 of the principal Act would be amended by the substitution for paragraph (a) of subsection (1) of the following paragraphs:
“(a) operate any generation, transmission [or], distribution or reticulation facility;”.

Section 19 of the principal Act would be amended by the substitution for subsection (4) of the following subsection:
“(4) If the tribunal finds that the allegation contemplated in subsection (3) is correct it may impose a penalty of 10 per cent of the annual turnover of the licensee or R2000 000,00 (whichever is the higher amount) per day commencing on the day of receipt of the notice contemplated in subsection (2).”

In clause 4, omit “(2) Each municipality must exercise its executive authority and perform its duty by” and substitute with “(1) If a municipality provides a reticulation service, either through the use of a service provider referred to in section 29, or by itself, that municipality must ensure that it provides this service by:-“

Section 31 would be amended by omitting “Minister must, acting in consultation with the Regulator” and substituting it with “Regulator must, after consultation with the Minister”.

The long title of the principal Act would be changed to:
“To establish a national Regulatory framework for the electricity supply industry; to make the National Energy Regulator of South Africa the custodian and enforcer of the national electricity regulatory framework; to provide for licences and registration as the manner in which generation, transmission, distribution, reticulation, trading and the import and export of electricity are regulated; to regulate the reticulation of electricity by municipalities; and to provide for matters connected therewith.”

The Chair stated that consensus had been reached and the Bill would be debated in the National Assembly on 9 November.

Energy Sector Education and Training Authority (ESETA) 2006 Annual Report presentation

Mr B Ngwenya (Chief Executive Officer) indicated the current scope of coverage related to the energy and water sectors. He discussed the sector profile with regards to employers and which employers contributed most of the SETA’s income. An organogram of the organisation was presented as the water chamber had recently been amalgamated with ESETA.

The audited financial results were discussed. It became clear that the mandatory grant accrual was not supported by adequate documentation. Corrective action had already been taken with the implementation of a new information capturing system.

Emphasis was placed on certain challenges that had been faced. Inadequate monitoring of compliance, treasury regulations, translation of relevant documents and supply chain management were listed. Corrective action had been taken. Performance information relating to objectives set could not be verified and therefore the ESETA was in the process of implementing a Management Information System to ensure accurate information is verified and captured on a monthly basis.

Other key challenges were discussed including the overlapping of SIC codes with the Local Government SETA (LGSETA), human resources constraints, capacity constraints and government department support. DME support was also discussed including the levy contribution to the SETA.

Discussion
The Chair remarked that the picture that the SETA presented was not a favourable one.

Mr J Combrinck (ANC) enquired as to what had happened to the previous CEO of ESETA. The absence of appropriate systems was a major concern. Who decided on performance bonuses, and did the Auditor General audit this aspect? He also queried the high legal fees paid by the ESETA.

Ms N Mathibela (ANC) why board members did not attend all board meetings. The SETA complained about underfunding, but would show a surplus next year.

Ms B Tinto (ANC) commented that there was R8 million not accounted for.

Ms M Seadino (ANC) suggested better co-ordination between the provincial offices and questioned why most board members were white men. She questioned the criteria used to appoint board members.

The Chair commented that the majority of board members did not attend board meetings.

Mr Ngwenya replied that the previous CEO had resigned and was now in the private sector. He mentioned that the staff did not adequately use the systems in place. Efficiency was needed in this area. With regard to the board members, they were nominated by member organisations.

Ms T Kente (Chief Financial Officer) commented that systems needed to be improved and that better co-ordination was being between the provincial offices on this issue.

The Chair commented that there were still many outstanding tasks at the ESETA and that funding had to be accounted for before any more could be provided.

The meeting was adjourned.


 

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