Business

Nersa ‘dragging its feet’ on emergency power supply

2020-03-24 21:00

With South Africa still battling to ward off load shedding even as it confronts the Covid-19 coronavirus, the National Energy Regulator of SA (Nersa) appears to be dragging its feet when it comes to procuring emergency power.

This is according to some of South Africa’s leading energy experts.

Nersa waited almost a month before kicking off a public participation process last week in relation to ministerial determinations aimed at stabilising electricity provision.

Energy Minister Gwede Mantashe handed these proposed determinations to Nersa on February 21.

In South Africa’s highly regulated electricity industry, legislation requires a determination by the minister of mineral resources and energy before additional power acquisitions can be effected.

The determination must comply with the country’s long-term plan for electricity provision, the integrated resource plan (IRP) – and Nersa must concur.

The IRP was finalised in October, after months of delays.

It took Mantashe more months before he referred the draft determination to Nersa for its consideration.

Professor Anton Eberhard, an energy policy specialist associated with the University of Cape Town’s business school, and the former chairperson of President Cyril Ramaphosa’s Eskom task team, said that not only had Nersa taken a month before it published the discussion documents for public comment, but the questions it wanted answers to were also bizarre.

Eberhard posted on Twitter: “Of most concern is the complete lack of urgency by Nersa. They’ve sat on the ministerial determination for a month. Now they’ve issued an unnecessarily complicated consultation document and require comments only by May 7 2020. It will be months before power is actually procured.”

According to the documents that Nersa has now published, it received the ministerial determinations from Mantashe on February 21.

The proposed determination provides for the acquisition of 2 000 megawatts of emergency power to supplement the current shortage.

It can come in the form of different kinds of generation technology and must be put into operation between 2019 and 2022.

The other determination makes provision for 6 800MW of wind and photovoltaic solar power, which must be put into operation between 2022 and 2024.

South Africa’s programme for the acquisition of renewable energy from independent energy providers is internationally acclaimed and has attracted investments worth more than R200 billion, with a substantial portion of that coming from overseas investors.

However, the programme ground to a halt after Eskom refused to sign 27 additional acquisition contracts that were negotiated by the department of energy.

Mantashe ensured that the agreements were eventually signed, but government appears to have gotten cold feet and no further electricity acquisitions have been made.

One of the questions that Nersa is asking is whether electricity generation from coal should form part of this round of acquisitions. According to Eberhard, this is puzzling because no coal-fired power station can be brought online within the relevant time frames.

Chris Yelland, an energy expert and consultant for Intellidex, agreed with Eberhard’s comments.

In order to speed up the process, Nersa will not follow the normal process of public participation for the determination dealing with the 2 000 megawatts of emergency power provision.

The public can make written submissions until April 14.

According to Nersa, processing the comments and finalising the process will still take another 25 working days, which would bring the entire duration of the “shortened” process to three months.

Regarding the 6 800MW proposal, Nersa will follow its ordinary process, which takes about six months.

Written comments must be submitted by May 7, at which point Nersa will announce a date for a public hearing.

The process will likely only be finalised in August.

According to Megan Adderley and Melissa Hendrickse, specialists in energy regulation from law firm Webber Wentzel, the law requires that interested parties have sufficient notice and a reasonable opportunity to comment.

It is imperative that Nersa expedites the public participation process to urgently deal with South Africa’s current energy supply deficit and the ever-present threat of load shedding

In an emergency situation, such as the one at hand, these requirements can be relaxed or even dispensed with, they said.

An extended public participation process will delay the true purpose of the two determinations: to bring much-needed certainty in relation to power provision, said Adderley and Hendrickse.

In addition, government can also accelerate the acquisition process by using emergency measures.

“It is imperative that Nersa expedites the public participation process to urgently deal with South Africa’s current energy supply deficit and the ever-present threat of load shedding,” the two women said.

“The laws governing the public-participation process are in its favour.”


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March 29 2020