Energy Regulator Bill

1. Energy Regulator Bill Presentation to NCOP Select Committee by Department of Minerals and Energy 16 September 2004

2. National Energy Regulator BillContents of Presentation • Background • Relationship Between • National Energy Regulator Bill and • Electricity Act • Gas Act • Petroleum Pipelines Act • Structure of Bill • Section by Section Description • Proposed Schedule for establishment • Stakeholder Comments & PPC Changes

3. Main Events • April 2002: Cabinet Approved a Multi-Sector Regulator • Electricity • Gas • Petroleum Pipelines • DME Undertook Study to Ascertain How Best to Give Effect to Cabinet’s Decision • December 2003 • Cabinet Approved Energy Regulator Bill be Submitted Directly to Parliament for Consideration • Not sent for public comment as merely an amalgamation of other Acts

4. Why? • Concern over proliferation of state entities • Synergies and efficiencies • Competing energy carriers need even treatment e.g. gas and electricity • Cost savings • Staff shared • Regulators shared • Shortage of regulatory skills

5. Submission to Parliament • February 2004: Submitted to Parliament • Re-Submitted after General Election • Zulu Translation Currently being Updated

6. THE PRESENT SITUATION Electricity Act Petroleum Pipelines Act Gas Act

7. THE PRESENT SITUATION National Electricity Regulator Gas Regulator Petroleum Pipelines Authority Electricity Act Petroleum Pipelines Act Gas Act

8. THE CONCEPT National Energy Regulator Electricity Act Petroleum Pipelines Act Gas Act

9. THE CONCEPT 2 National Energy Regulator Administers Electricity Act Petroleum Pipelines Act Gas Act

10. Energy Regulator Bill National Energy Regulator Electricity Act No 41 of 1987 Gas Act No 48 of 2001 Petroleum Pipelines Act No 60 of 2003 Regulator Establishment Regulator Establishment Authority Establishment Matters Pertaining to Licenses etc Matters Pertaining To Licenses etc Matters Pertaining To Licenses etc

11. Structure of Bill • Chapter I: Definitions and Object • Chapter II: National Energy Regulator • Establishment & Functions • Composition & Vacation of Office • Meetings & Duties • Decisions • Personnel • Funds, Accounting & Reporting • Chapter III: General Provisions • Repeal of Sections of Electricity, Gas & Petroleum Pipelines Acts • Transition Measures • Schedule

12. Definitions and Object • Definitions • As per existing Acts • Object of Act • “The object of this Act is to establish a National Energy Regulator for the regulation of the electricity, piped gas and petroleum pipelines industries.”

13. Establishment & Functions • §3 Establishment: • Energy Regulator established as juristic person • §4 Functions: • Undertake the functions of Gas Regulator & Petroleum Pipelines Regulatory Authority from 1 April 2005 • Undertake the functions of National Electricity Regulator from 1 June 2005

14. Composition • §5 Composition: • Three full time & five part time regulators

15. Composition • Of the three full-time • 1 electricity • 1 gas • 1 petroleum pipelines • Term of office 4 years • Remuneration set by Ministers of Minerals and Energy and Finance

16. Regulators: Requirements &Vacation of Office • §6 Membership Requirements: • Requirements • SA citizen • Collectively representative • Impartial objective • Terminate conflicts of interest • Disqualifications • Insolvent • Convictions • Appointment process • Gazette call for nominations • §7 Vacation of Office • Compulsory; unsound mind, misses > 2 meetings • Resignation

17. Meetings & Duties • §8 Meetings of Regulator • Frequency, times and places • Quorum: majority or 4, whichever is greater • Attendance • Records • §9 Duties • Justifiable & transparent • Independency

18. Decisions • §10 Decisions: • In writing • In public interest • Within powers • Reasons given • Public (except when confidential) • Review by High Court

19. Personnel • §11 Personnel: • Regulator appoints CEO • CEO appoints employees • Minister may instruct use of personnel from another regulator or licensing authority • Personnel actions to be professional

20. Funds • §12 Funds • Appropriated by Parliament • Levies under other Legislation: • Gas Regulator Levies Act • Electricity Act • Petroleum Pipelines money Bill • License fees • Charges

21. Accounting & Reporting • §13 Accounting: • Public Finance Management Act • Separation of Accounts • Costs shared in proportion to costs incurred • Auditing by Auditor General • §14 Reporting: • PFMA applies • Include: • Licenses • Regulations and Directives • Strategies & commercial developments • Safety, Health & Environment

22. Repeals & Transitional Measures • §15 Repeals: • Refer to Schedule (corresponding sections of three acts) • §16 Transitional Provisions: • CEO of National Electricity Regulator is CEO of National Energy Regulator • Staff of National Electricity Regulator are staff of National Energy Regulator • Assets & Liabilities of National Electricity Regulator

23. Schedule • Repeals: • Repeals regulator/authority established by: • Electricity Act (No 41 of 1987) • Gas Act (No 48 of 2001) • Petroleum Pipelines Act (No 60 of 2003) • Amends: • Definitions of regulator/authority refer to the Energy Regulator established by the National Energy Regulator Bill in the following: • Electricity Act (No 41 of 1987) • Gas Act (No 48 of 2001) • Petroleum Pipelines Act (No 60 of 2003) • Gas Regulator Levies Act (No 75 of 2002) • “Gas Operator” to “National Energy Regulator” in the Gas Act.

24. Stakeholder Comments & PPC changes • Comments • Observations • Governance issues • Minor improvements

25. Observations • A regulator is not a company • The King Commission must not be slavishly applied • The NER is what we know - not necessarily an ideal model • Very few if any presenters have experience of gas or petroleum pipeline regulation

26. Governance

27. Governance contd.

28. Governance contd.

29. Governance contd.

30. Further improvements (1) • Energy Regulator becomes “National Energy Regulator” • “Other agreements” – deleted • “unsound mind” – courts in SA understands this term • Offences “dishonesty” – • Exempt “10 years” prior to appointment conviction • Offenceinvolving dishonesty • Sentenceof imprisonment without the option of a fine for any other offence served • Removed if Ditto

31. Further improvements (2) • What happens to fines? Section 213(1) of Constitution into National Revenue Fund • Specify safety responsibility? Not necessary • Commencement: “at a date determined by the Minister on or after 1 June 2005”

32. Further improvements (3) • Notifying public of meetings/agenda: Regulator must make rules • Act in interests of? “duty to balance the interests of all South Africans“ • Present views at “own expense” - Removed

33. Further improvements (4) • What other services? “in terms of this Act” • Allocation of money: • money appropriated by Parliament allocated to 3 accounts in proportion to costs unless otherwise determined by Parliament • Money received from an industry paid into that industry account

34. Further improvements (5) • Annual report requirements: • “access to network infrastructure or summaries thereof where appropriate; • tariffs or tariff structures set or approved or summaries thereof where appropriate”; • access to network infrastructure or summaries; • tariffs or tariff structures set or approved or summaries • NER decisions in force: carried over

35. Further improvements (6) • Accessto sensitive information protected in terms of Promotion of Access to Information Act, 2000 (Act No. 2 of 2000) • Sub-committees of Regulators established – Act applies to them • Judicial review of administrative actions • At the High Court • In accordance with Promotion of Administrative Justice Act, 2000 (Act No. 3 of 2000) • Appeals to High Court - decision of the Energy Regulator sitting as a tribunal

36. Energy Regulator Implementation Plan

37. END