New electricity pricing policy worthless without proper enforcement – AfriForum
The updated Electricity Pricing Policy (EPP) will be worth little more than the paper it is written on if the National Energy Regulator of South Africa (Nersa) continues to fail to properly enforce electricity legislation and licence conditions. AfriForum says that the Minister of Electricity and Energy should use the publication of the updated EPP as an opportunity not only to announce a new policy, but also to address the serious shortcomings in the regulation of South Africa’s electricity industry.
AfriForum has already had to approach the courts to compel compliance with the existing regulatory framework. This included legal action relating to Nersa’s approval of municipal electricity tariffs without the required cost-of-supply studies. These studies are essential to ensure that municipal electricity tariffs are based on the actual cost of providing electricity and are not simply used as an additional source of revenue for municipalities.
“A regulatory framework is only as effective as the regulator responsible for enforcing it. The Minister therefore cannot focus only on changing electricity policy while ignoring Nersa’s performance. Nersa must ensure that municipalities and other electricity licensees comply with legislation, licence conditions and regulatory requirements. Where they fail to do so, there must be consequences,” says Morné Mostert, Manager for Local Government Affairs at AfriForum.
For too long, municipalities have been allowed to disregard regulatory requirements while consumers are expected to continue paying increasingly expensive electricity tariffs. It is time for proper consequence management. Licensees that repeatedly fail to comply with the regulatory framework should face enforcement action. Where a municipality or another licensee has demonstrated that it is incapable of fulfilling its obligations, its licence cannot simply be treated as an entitlement that exists indefinitely.
“The message should be simple: comply with the regulatory framework and provide the service required by your licence. If you cannot do so, someone who can should be allowed to take over that responsibility,” says Mostert.
AfriForum will study the updated EPP in detail once it is published on Friday. The real test, however, will not be what the Minister promises on paper, but whether government and Nersa are finally prepared to enforce the rules that already exist.
