Finance and Economic Opportunities MEC David Maynier said the Amended Exemption did not provide further clarity on the potential role of municipalities as a reseller. Photographer: Armand Hough/African News Agency(ANA)
Finance and Economic Opportunities MEC David Maynier said the Amended Exemption did not provide further clarity on the potential role of municipalities as a reseller. Photographer: Armand Hough/African News Agency(ANA)

Western Cape raises concerns over DMRE’s new amendment to energy regulations

By Kristin Engel Time of article published Aug 25, 2021

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Cape Town - After the Department of Mineral Resources and Energy (DMRE) received concerns from industry commentators relating to the recent gazetting of amendments to Schedule 2 of the Electricity Regulation Act (ERA), energy minister Gwede Mantashe published a new amendment to the licensing exemption and registration notice, the Amended Exemption.

While the initial amendments increased the licensing threshold for embedded generation projects from 1 MW to 100 MW without obtaining a licence, provincial Finance and Economic Opportunities MEC David Maynier noted that the new amendment now clarified that these were the actual amendments, and not just Mantashe’s intentions to amend Schedule 2.

However, Maynier said the Amended Exemption did not provide further clarity on the potential role of municipalities as a reseller, or ensure that the registration process was streamlined.

“Unfortunately, even these amendments appear to be poorly drafted and so don’t provide the further clarity needed for the successful implementation of our Western Cape’s Municipal Energy Resilience Initiative, which seeks to support municipalities to implement renewable energy projects in municipalities across the province so that municipalities, businesses and households can generate, procure and sell electrical energy,” said Maynier.

Webber Wentzel law firm partners Jason van der Poel, Alexandra Felekis and Mzukisi Kota said that while the Amended Exemption removed several issues raised in relation to the original exemption, there were new issues with the amended amendments for private power generation that needed to be addressed.

Webber Wentzel said a few of these issues were that the language used in parts of the initial amendment that made provisions for the trade of electricity by resellers, appeared to have been omitted from the Amended Exemption in error, which made the reseller provisions difficult to interpret.

“In respect of the Trading Licence Exemption, "reseller" is defined as a person who purchases electricity from a trading entity to sell it to a customer, but “trading entity” is not defined. It is not clear which sellers of electricity would qualify as trading entities,” said Webber Wentzel.

The partners said the licensing exemption would only have real import for the electricity sector once Mantashe addressed all the identified omissions, and the registration requirements were issued by the National Energy Regulator of South Africa.

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