Eskom has right to delay PPA signing

Nersa finds Eskom was right to delay the signing of agreements with 27 ‘green’ producers.

SA Wind Energy Association complaint to regulator still to be heard.

Following an investigation, the National Energy Regulator of South Africa (Nersa) has found that Eskom was within its rights to delay the signing of power purchase agreements (PPAs) with 27 renewable energy independent power producers (IPPs).

However, it found Eskom contravened conditions of its transmission licence by failing to provide budget quotes to the IPPs within a reasonable time.

The PPAs were eventually signed in April after a delay of two years that threatened to derail the very successful Renewable Energy Independent Power Producer Procurement Programme.

The findings will be the subject of a Nersa tribunal hearing, which could open the door to a recurrence in future bid rounds of the two-year delay that cost IPPs millions, says Brenda Martin, CEO of South African Wind Energy Association (SAWEA).

SAWEA laid its complaint against Eskom late in 2016, stating that Eskom acted unlawfully and contravened its licence conditions by unreasonably delaying the signing of PPAs with preferred bidders in the department of energy’s bid windows 3.5, 4 and the small projects round for renewable IPPs. Eskom also contravened the law and its licence conditions by failing to provide budget quotes to all the preferred bidders, SAWEA stated.

According to a Nersa report, Eskom did not refuse to sign the PPAs, but delayed it to engage the department of energy about the tariff at which it would have to buy the power. Eskom argued it had a fiduciary duty in terms of the Public Finance Management Act to ensure value for money and did not want to issue the budget quotes, as it would later bind the utility to prices issued months ago.

Nersa found in favour of Eskom, but found it did not stick to the prescribed timelines, contravening the provisions of the grid code and therefore its licence conditions.

Nersa invited SAWEA to make submissions and attend the tribunal hearing on May 24. Martin and two lawyers flew from Cape Town, only to be told that was “an administrative error” and SAWEA would have to apply formally to intervene. The hearing was postponed and the application has been submitted, but a new date has not been set.

While the matter seems moot after the signing of the 27 outstanding agreements in April, Martin says it is important to continue.

It’s important to continue to pursue the matter.