News
AMENDMENTS PROPOSED
FOR ELECTRICITY REGULATION ACT
By Mzukisi Kota , partner ; Jason van der Poel , partner ; Tina Terblanche , senior associate & Aviva Hoekstra , associate at Webber Wentzel
Proposed amendments to the Electricity Regulation Act will amend the licensing exemption and registration requirements for generating , trading , transmitting , and distributing electricity .
At the beginning of September , the Minister of Mineral Resources and Energy published proposed amendments to Schedule 2 of the Electricity Regulation Act , 2006 ( ERA ) for public comment ( Government Notice 2459 in Government Gazette 46850 ) ( the Schedule 2 Notice ). The Schedule 2 Notice would , once effective , amend the current licensing exemption and registration requirements for trading , generation , transmission and distribution of electricity in terms of the ERA .
In his speech in July of this year , the President announced that the licensing threshold for embedded generation would be removed imminently to encourage increased private investment in electricity generation . This much anticipated removal of the 100 MW threshold is the headline change proposed in the Schedule 2 Notice .
In addition to fixing some drafting issues and deleting definitions that are already contained in the ERA , the Schedule 2 Notice also proposes the following noteworthy amendments :
Asia Chang | Unsplash
On balance , it seems to us that the better interpretation is that these facilities will , on the language of the Schedule 2 Notice , remain exempt from both licensing and registration requirements . This is because , in terms of section 9 ( 1 ) of ERA , the Minister must specifically determine which activities are subject to registration , and this could not simply be done by default . Accordingly , silence on whether a particular activity is subject to registration would mean that such activity is not subject to registration .
Many building designs are already incorporating alternative energy solutions .
1 . Activities exempt from licencing : The activities listed in paragraph 2 of Schedule 2 were exempt from licensing and registration with the National Energy Regulator of South Africa ( NERSA ) under ERA . In brief , the activities listed in this paragraph are , the operation of : ( i ) a generation facility for back-up electricity ; ( ii ) a generation facility that does not have a point of connection ; and ( iii ) a generation facility with a capacity of 100 KW or less ( and has a point of connection ).
The Schedule 2 Notice indicates that these activities will continue to be exempt from licensing , but it deletes the current language which provides that these activities are also exempt from registration with NERSA . This deletion , which has not been given any context , makes it unclear whether it is intended that these activities should remain exempt from both licensing and registration or whether they will , on the coming into effect of the proposed amendments , be required to be registered with NERSA . If the intention were to subject the activities listed in paragraph 2 to the NERSA registration requirement , this could have the potentially unintended impact of requiring rooftop solar facilities and large generators for back-up power to be registered with NERSA .
2 . Activities exempt from licensing , but which must comply with the Code and must be registered with the Regulator The exemptions listed in paragraph 3.1 of Schedule 2 were previously limited to the operation of generation facilities with a capacity of no more than 100MW . Under the Schedule 2 Notice , this 100MW restriction has been removed and paragraph 3.1 instead applies to generation facilities " of unrestricted capacity ". The intended effect of this amendment appears to be that all socalled " embedded generation " facilities , irrespective of capacity , would be exempted from the licensing requirement . However , the proposed amendment does not simply state this .
It , instead , uses the odd phrase " unrestricted capacity " to indicate which facilities are exempt . This phrasing could be justifiably criticised for ambiguity , as it could be read as meaning that the only facilities that are exempt are those which do not have any limits on their capacity . Despite the less-thanoptimal choice of phrase , a sensible interpretation is that the amendment is intended to simply mean that " any generation
Continued on page 5
www . refrigerationandaircon . co . za RACA Journal I November 2022 3