Electricity Regulation Act, 2006 (Act No. 4 of 2006)

Rules

Grid Capacity Allocation Rules

2. Legal Mandate
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2.1 The National Energy Regulator of South Africa (NERSA) is a regulatory authority established as a juristic person in terms of section 3 of the National Energy Regulator Act, 2004 (Act No. 40 of 2004) (‘NERA’).

 

2.2 NERSA’s mandate is to regulate the electricity, piped-gas and petroleum pipeline industries in terms of the Electricity Regulation Act, 2006 (Act No. 4 of 2006), Gas Act, 2001 (Act No. 48 of 2001) and Petroleum Pipelines Act, 2003 (Act No. 60 of 2003).

 

2.3 Section 2A of the Electricity Regulation Act, 2006 (Act No.4 of 2006), as amended (‘the Act’) confirms that the Act is applicable to the generation, transmission, distribution, reticulation, system operation, trading, and import and export of electricity activities, and to persons undertaking such activities.

 

2.4 In terms of section 3 of the Act, the Energy Regulator (‘the ER’) is the custodian and enforcer of the regulatory framework provided for in the Act and has regulatory authority over persons undertaking activities that are subject to the Act. Therefore, the ER is entrusted with ensuring that the objectives of the Act are achieved.

 

2.5 The ER is obliged, in terms of section 4(a)(iv) of the Act, to issue rules designed to implement the national government’s electricity policy framework, the integrated resource plan and this Act.

 

2.6 Section 35(1) of the Act empowers the ER to make rules, guidelines, directives and codes of conduct and practice after consultation with licensees, municipalities that reticulate electricity and such other interested persons as may be necessary.

 

2.7 Section 35(3) of the Act further provides that, without derogating from the general nature of the empowerment, the ER makes rules that relate to ‘(c) the security, operation, use and maintenance of transmission and distribution power systems’ and ‘(k) any other ancillary or administrative matter for which it is necessary to make rules for the proper implementation of this Act’.

 

2.8 Policy position 5 of the Electricity Pricing Policy (EPP) of 2008 details the circumstances under which access must be provided to all users, which aligns with the provisions of section 21 of the Act, which requires transmission and distribution licensee to provide non-discriminatory access to its transmission or distribution power system to third parties.

 

2.9In the development of delegated or subordinate legislation, the following interactive factors play a role in enabling the legality of such subordinate legislation:
(a) The extent to which the discretion of the delegated authority is structured and guided by the enabling legislation.
(b) The public importance and constitutional significance of the measures.
(c) The shortness of the period to develop such subordinate legislation.
(d) The extent to which the subject matter necessitates the use of forms for rapid intervention, which could otherwise be slow and inhibit other processes.

 

2.10 The justification for having the rule-making powers vested in administrative bodies, such as NERSA, is based on numerous practical considerations, including the following:
(a) The technical nature of financial regulation and the degree to which specialist knowledge is needed for effective rule-making.
(b) The importance of the time factor in addressing matters where rapid intervention is critical.
(c) Issues on which regulations are made are often of a non-political, administrative/technical nature.
(d) Best practices in other jurisdictions indicate that rule-making powers are vested in administrative authorities/bodies rather than in political office-bearers.
(e) Rules are subject to the ultra vires rule, which means that they may be struck down by a court if not authorised in the enabling Act.

 

2.11 To meet the legality requirement, the ER has ensured that the appropriate powers have been exercised to ascertain jurisdictional fact and satisfy the stakeholder consultation legal requirements.

 

2.12 These rules are developed to ensure uniformity in the consideration of applications, relevant factors and the lapsing of such right to access that has been given.