Eskom, South Africa’s state-owned power utility, is pushing for changes to the current rules approved by the National Energy Regulator of South Africa (Nersa). These rules prohibit two or more licensees from supplying electricity in the same area, which Eskom believes is outdated.
Eskom presented its position during a virtual public hearing held by Nersa. The hearing focused on applications for trading, import, and export licenses. Eskom stated that if Nersa approves these trading licenses, license holders would be able to sell electricity to existing Eskom customers. This would create a scenario where multiple suppliers operate in the same area, something the current rules do not allow.
The utility highlighted the need for regulatory changes to keep up with industry advancements. Eskom emphasized its commitment to reform and supporting an orderly transition based on established rules. They believe a competitive and dynamic electricity market can ensure energy security, access, affordability, foster growth, and deliver long-term benefits for South Africa.
Eskom also raised concerns about some applicants for trading licenses. These applicants indicated they would supply only large power users, excluding residential or small business customers. Eskom criticized this as “cherry-picking” customers. The current rules and tariff decisions involve cross-subsidies, where certain customer groups help subsidize others. Removing large power users from this subsidy base could increase financial pressure on the remaining customers.
Eskom is awaiting the outcome of Nersa’s consultation process and has committed to keeping stakeholders and the media informed about any developments. They believe that adapting the regulatory framework is crucial for accommodating new market dynamics and ensuring a fair distribution of costs and benefits among all customers.
Eskom’s push for regulatory change is driven by its vision of a more competitive and efficient electricity market. The utility sees the current rules as a barrier to this vision. By allowing multiple suppliers to operate in the same area, Eskom believes it can create a more vibrant and competitive market. This, in turn, can lead to better services and lower prices for consumers.
The public hearing was an important platform for Eskom to voice its concerns and proposals. They used the opportunity to explain the potential benefits of allowing multiple suppliers in the same area. Eskom argued that such a change would not only promote competition but also encourage innovation and investment in the electricity sector.
Eskom also addressed concerns about the potential impact on cross-subsidies. They acknowledged that large power users play a crucial role in subsidizing other customer groups. However, they argued that a more competitive market could lead to greater efficiencies and cost savings. These benefits could offset any potential loss of cross-subsidy contributions.
