Home Business NERSA Greenlights Eskom’s Transfer of IPP Agreements to National Transmission Company

NERSA Greenlights Eskom’s Transfer of IPP Agreements to National Transmission Company

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The National Energy Regulator of South Africa (NERSA) has consented to Eskom’s monumental shift in the electricity sector, transferring powers and duties linked to Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) to the National Transmission Company South Africa (NTCSA), the transmission branch of the Escom behemoth.

This groundbreaking resolution comes months after Eskom’s formal plea to NERSA dated 21 December 2023, seeking approval to pass on its responsibilities under section 34 of the Electricity Regulation Act to the NTCSA. This step is seen as intrinsic to Eskom’s ongoing segmentation, a directive clearly set out in the ‘Roadmap for Eskom in a reformed electricity supply industry’ fashioned by the Department of Public Enterprises three years ago.

“The transition of the Buyer role for section 34 IPPs from Eskom to the NTCSA is a critical component of this process,” stated NERSA, elucidating on the strategic importance of the move.

Escalating its function in the country’s power sector, the NTCSA has now been anointed as the main buyer within the electricity market, suggesting a realignment of roles in the quest for more efficient energy distribution and procurement.

“In addition to this landmark decision, the Energy Regulator further sanctioned the issuance of a cost recovery letter to the NTCSA for section 34 IPP projects, and the amendment of the IPP’s generation licences to designate the NTCSA as the buyer in terms of section 16(1)(d) of the Electricity Regulation Act, replacing Eskom Holdings in this role. The NTCSA’s trading licence will be amended accordingly,” pronounced NERSA, confirming the legal and operational adjustments accompanying this development.

Simultaneously, NERSA has committed to a more transparent process concerning its decision-making. It has dictated that subcommittee deliberations, especially within the high-stakes realms of the Electricity Subcommittee and Petroleum Pipelines Subcommittee, will no longer shroud their recommendations in secrecy before official endorsements are made.

“This decision of the Energy Regulator is in keeping with section 8(9) of the National Energy Regulator Act, which mandates that all Energy Regulator meetings must be open to the public, with the exception being when discussing information that would require the Energy Regulator to refuse access under the Promotion of Access to Information Act,” the regulator clarified.

As such, the wall of silence that previously enshrouded critical knock-on information, until the final verdicts were articulated to the involved entities like Eskom and Transnet, has been disassembled.

“Moving forward, unless a resolution is passed to withhold information due to legal constraints, all subcommittees will fully disclose the intended recommendations to the Energy Regulator,” NERSA added

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