Mantashe opens door to municipal energy
Minister of mineral resources & energy Gwede Mantashe on Monday published draft amendments to electricity regulations that will open the way for municipalities to procure or produce their own energy.
Minister of mineral resources & energy Gwede Mantashe on Monday published draft amendments to electricity regulations that will open the way for municipalities to procure or produce their own energy.
The amendments are a step towards creating a competitive energy market and enabling municipalities to reduce their dependence on Eskom. They have been published for comment for the next 30 days.
The draft amendments to regulations under the Electricity Regulation Act state that “a municipality may apply to the minister to establish new generation capacity, in accordance with the Integrated Resource Plan (IRP)”. The IRP is the government’s long-term energy plan for the construction of generation capacity based on a mix of technologies.
The application must be accompanied by a feasibility study, demonstrate the sound financial standing of the municipality and be aligned to the municipality’s own integrated resource plan.
Under the Electricity Regulation Act, new generation capacity can only be built on the basis of a section 34 determination made by the minister.
“Because the minister is not going to issue a generic determination, municipalities will send their requests to the minister,” said energy deputy directorgeneral Jacob Mbele.
“The minister will then issue a determination that will make it possible for that municipality to be the buyer or generator of new capacity,” he said.
The City of Cape Town, which has lobbied since 2015 to procure renewable energy directly from independent power producers, said while regulations are “a step forward”, they “fell short of expectations”.
The city last year resorted to court action to argue that municipalities have the legal power to procure electricity generation capacity without a determination from the energy minister. Among the arguments are the constitutional obligations of local government to provide residents with services.
The court application was due to be heard next week and has been opposed by Mantashe. The draft regulations make clear the difference in approach between his department and the City of Cape Town.
Cape Town’s executive director for energy and climate, Kadri Nassiep, said on Tuesday that while the municipality will comment later in more detail, he will recommend that the city continues with its court action.
“It must be noted that the regulations require the municipality’s application to be in line with [a] section 34 determination and the IRP.
“We therefore recommend that the city continue with its court case as our contestation all along has been that we do not need a section 34 determination in line with our constitutional mandate,” Nassiep said.