- South Africa’s president, Cyril Ramaphosa, has signed the Electricity Regulation Amendment Act into law to create a competitive electricity market.
- The new legislation mandates the establishment of an independent Transmission System Operator and introduces severe penalties for damaging electricity infrastructure.
South Africa’s President Cyril Ramaphosa has signed the Electricity Regulation Amendment Act into law, ushering in significant reforms to the country’s electricity sector. According to the presidency, the new legislation aims to foster a competitive electricity market, enhance investment, and bolster infrastructure protection.
The amendment revises the Electricity Regulation Act 2006 to address current sector challenges and open avenues for increased competition and lower energy costs. Key provisions include the establishment of an independent Transmission System Operator (TSO) within five years, with the National Transmission Company of South Africa serving as the interim TSO.
Vincent Magwenya, a spokesperson for the Presidency, explained that the act introduces an open market platform allowing for competitive buying and selling of electricity at both wholesale and retail levels. It also mandates the development of a Market Code to regulate this competitive environment and outlines the approval process for the code.
The act clarifies the principles for setting or approving electricity prices, charges, and tariffs. It mandates that the National Energy Regulator of South Africa (Nersa) must ensure that efficient licensees recover their total costs and earn a reasonable return. The regulator can also incentivise technical and economic efficiency improvements while considering factors such as supply security and renewable energy promotion.
To ensure fair competition, the act stipulates that the system operator must not discriminate between electricity generators or customers except for justifiable reasons approved by the regulator. Access to the transmission and distribution systems must be objective, transparent, and non-discriminatory.
Johann Els, Chief Economist at Old Mutual Group, welcomed the reforms, noting that increased competition would reduce prices and inflation. He highlighted that shifting away from a monopoly controlled by Eskom and Transnet would lower energy costs and foster private sector participation in the electricity market.
The changes align with South Africa’s broader Energy Action Plan and Eskom Roadmap, which aim to modernise the electricity system, end load shedding, and ensure long-term energy security. The reform is also expected to stimulate demand for new skills and technologies, potentially reducing unemployment through increased industrial activity.
Additionally, the new law strengthens protections for public infrastructure, imposing fines of up to R1 million or five years in prison for damaging or destroying critical electricity infrastructure. This measure is part of a broader effort to combat crime and safeguard essential services.