The Next Phase of Electricity Regulation in South Africa


The South African electricity supply industry is based on the traditional vertically integrated utility model, with generation and transmission largely dominated by Eskom. The distribution industry customers are currently split at a ratio of approximately 60:40 between the localised municipalities and Eskom.

Electricity demand has grown at a faster rate over the last few years, resulting in increased usage of an ageing infrastructure. The generation reserve margins are being depleted whilst the maintenance levels, costs and intervals are increasing sharply. Customers expect high power quality and reliable supplies. The multi-year price determination (MYPD) that will be concluded by mid-February 2006 will continue to govern the pricing and tariffs for a period of three years.

The restructuring of By Thembani Bukula the distribution industry into regional electricity distributors (REDs) will facilitate price equality as well as the financial health of the industry. In view of the age of the network, the reliability of supply, the utilisation levels of the infrastructure and the production and/or capacity cost, the energy regulator must now focus on the co-ordination of resources and energy planning as the next phase of regulation.

The electricity supply industry needs to put in place replacement and refurbishment programmes that will have an infrastructure age spread and utilisation levels that mitigate the supply risks whilst improving power quality. The regulator will need to have oversight over the plans of the different entities in the supply chain, to ensure continuity of supply and minimum disturbance to customers during the refurbishment or replacement period.

An important factor in the generation, transmission and distribution of electricity is the number of supply contingencies and the availability of these alternatives in times of need. There is a need to establish different contingency levels for the “The process of formulating metering codes is already underway.” Different levels of the network that will mitigate the risks. For example, an additional, identical generator transformer to the existing configuration (where possible and practicable) would immediately halve the load and utilisation level of the existing transformer, thereby increasing its life expectancy. The main transmission network requires re-evaluation in view of the changes in industrial developments and increased energy density in the coastal areas, where there is little or no generating capacity.

One of the most critical aspects of regulation is collection of information from the regulated entities. The energy regulator plans to further increase its effectiveness by focusing on the installation, positioning and functioning of energy data acquisition equipment or systems and meters. This will minimise the differences in data quantities from source to source, and move towards a single version of the truth. The process of formulating metering codes for the distribution industry is already underway. The objectives of the metering code are:

• To ensure compliance with minimum requirements for tariff metering and energy trading metering installations.
• To define responsibilities for metering installations.
• To ensure that appropriate procedures are followed by the distributor of electricity (referred to as ‘licensee’ by NRS057 and in this code) and its metering service provider regarding the maintenance, validation, collection, processing and verification of metering data.

This code is applicable to:
• Metering installations used for the measurement of active and (where relevant) reactive energy.
• The design of the metering installation.
• The provision, installation, commissioning and maintenance of metering equipment.
• The minimum requirements of equipment used in the process of electricity metering.
• Testing procedures for metering installations.
• The collection and verification of metering data.
• Storage requirements for metering data.
• Standards for the competencies of participants.

The new and enhanced role of the energy regulator will ensure order and efficiency in the operations and capital investment plans of the electricity supply industry whilst maintaining the ability of the industry to produce high power quality at the lowest cost. The finalisation of the MYPD will in turn provide the predictability and stability that most industries require from their energy supplier, given that energy forms one of their major primary costs.