The Department of Energy want YOU not know what electricity tariffs will be, and will refuse YOU the right to make public input into tariff prices. The Minister of Energy will be able to set electricity tariffs, bypassing regulators. Bills will be shortly sent to Parliament in this regard (see below). Friday the 17th of Feb. 2012 is the last day for the public to comment on this undemocratic regulation. You can download the Bill still open for public comment here: Electricity Regulation Second Amendment Bill

Send an DoE a email denouncing this legislation: Mr. Matthew Bantsijang, epar@energy.gov.za

Our Comments on the First of the Two Bills:

The National Energy Regulator Amendment Bill cannot be divorced from the Electricity Regulation Second Amendment Bill [comments on this bill open until 17/02/2012], and these comments should be seen in that context. To sum up the position of Earthlife Africa Jhb on these bills: The National Energy Regulator Amendment Bill and the Electricity Regulation Second Amendment Bill should be entirely withdrawn by the Department of Energy.

These two Bills are most likely unconstitutional and one could reasonably expect a serious legal challenge, which would not be in the best interests of the country. The primary reason is that these amendments will seriously undermine the democratic structure of this country: A country is not just a democracy if it holds elections, the institutions of the country must be democratic. This is a vital part of what Thomas Jefferson meant when he called for eternal vigilance.

In essence, both Bills can be seen, in their overall effect, of placing huge decision-making power in hands of the Minister of Energy. The energy system in South Africa is in serious danger of being ruled by fiat. These two bills will eviscerate the National Energy Regulator of South Africa and transfer that regulatory power to the Minister: This is contrary to the construction and implementation of democratic institutions and the check and balances that were part and parcel of our 1994 liberation.

These two Bills go entirely in the wrong direction in regards to energy regulation; one of the consistent problems with NERSA, in the view of Earthlife Africa Jhb and supporting organisations, has been its prime mandate of assessing tariffs on the basis of positive rates of return for generators and distributors (i.e. holders of licence), and that it has been forced to ignore social, economic, and environmental issues as articulated in national legislation and the Constitution. Its mandate needs to be expanded to these areas, and its independence needs to be deepened, rather than operating as an outstretched arm of the Department of Energy. Further, the culture of secrecy for secrecy’s sake has grown within NERSA like a cancer and this Bill will only make that cancer grow.

An independent and impartial National Energy Regulator is a critical part of the checks and balances that define modern representative democracies such as South Africa. As energy is at the base of the economy, decisions about energy pricing, generation, distribution, and licensing are vital; get these wrong and the impacts are felt throughout the entire country. Further, the public has a right to able to participate in these democratic decisions, and this requires free access to all information before the Regulator. This Bill with further prevent access to information and the public’s input into the decision-making process; especially regarding the withholding of “commercially sensitive information”, which is code in the energy sector for tariffs and especially tariff agreements between large multinationals and state owned enterprises such as Eskom.

The degree in which the public will be removed from the decision-making process is staggering. Not only does this Bill remove the pre-existing condition that the Regulator places the rules concerning the holding of its meetings and the results of those meetings in the public domain, the Bill removes the right of the public to attend those meeting and make inputs. This is a disgraceful retraction of a right that many South Africans, from all walks of life, have exercised in the past, most notably but not limited to MYPD 1 & MYPD 2 (electricity price increases) and REFIT hearings.

Our democracy is only as good as the people and the institutions that it creates. This Bill was put out for public comment on the 8th of December 2011, days before South Africa’s annual holiday season, and in the midst of COP17. No wonder why, threats to democracy are usually not heralded in the full glare of the public, but in the dead of the proverbial night.

Download entire comments and a list of supporting organisations: Earthlife NERSA Amendment Bill comments

Our Comments on the Second Bill (the really evil one) can be downloaded here: Earthlife Final Comments Electricity Regulation Second Ammendment Bill

Summary:

The Bill proposes sweeping powers and discretion in matters relating to the procurement and licensing of new energy plants, and the transmission and sale of energy.  Whereas in the past the sole provider of electricity in South Africa to the public was Eskom and it was regulated by the National Energy Regulator, (“the Regulator”) in consultation with the Minister, the Bill creates the framework for the provision of electricity by providers outside of Eskom with almost exclusive power to regulate in the hands of the Minister, proposing to remove most of the important oversight powers of the Regulator to ensure fair, equitable, transparent, competitive and cost effective procurement of energy in accordance with sections 195 and 217 of the Constitution.

The Bill has no system of checks and balances which would ensure compliance with  these requirements of the Constitution, and in fact non compliance with them is promoted by the Bill. The powers conferred on the Minister are highly discretionary, and there are wide provisions for secrecy/non disclosure of information that will reduce the accountability required for large scale procurement.

Provisions relating to licensing and the setting of tariffs unreasonably fetter the discretion of the State in the administration of energy, compromising its ability to ensure that the most cost effective option is chosen, contrary to the requirements for procurement set out in section 195 and 217 of the Constitution.

Without checks and balances, the Bill paves the way for less transparency and accountability in energy procurement, which in the coming decades will involve massive expenditure of public funds. The potential for corruption, fruitless and wasteful expenditure, maladministration and unnecessary and costly litigation against the State will be enhanced if the Bill if it is passed into law in its current form.