The impact of Nersa’s regulatory failures on SA’s energy crisis

ACCORDING to Statistics South Africa, household income and expenditure are fundamental components of a country’s economic landscape, influencing everything from consumer behaviour and savings rates to economic growth and stability.

- CORRIE KRUGER

On average, the estimated household consumption expenditure per household in South Africa was R143 691.

Households spent most of their income on housing, water, electricity, gas, and other fuels (34,7%), followed by food and nonalcoholic beverages (16,3%), transport (15,3%), and insurance and financial services (9,3%).

An application for a market operator (MO) license was made to the National Energy Regulator of South Africa (Nersa) in terms of the Electricity Regulation Act, 2006 (Act no 4 of 2006) as amended. This licence will enable the MO to operate the systems that facilitate the trading of electricity or other energy commodities within a national energy market. The South African Wholesale Electricity Market (SAWEM) is a key component of the country’s energy reform strategy, designed to introduce competition, transparency, and efficiency into the electricity sector.

Nersa has regulatory authority over the competitive electricity market, including the SAWEM, in terms of section 3 of the Act.

Nersa shall ensure that the Market Operator provides a transparent, nondiscriminatory trading platform and provide oversight over the trading platform and the application of this Market Code.

Recently, the Democratic Alliance questioned Nersa's expertise to determine the electricity price after the announcement of their R54 billion blunder. The error will cost consumers when tariffs increase by more than 8% per year for the next two financial years, instead of the 5% originally agreed on.