DA challenges utility Eskom’s monopoly
The Democratic Alliance (DA) announced yesterday it will revive legislation to break Eskom’s monopoly on the generation and transmission of electricity by introducing a private member’s Bill.
The DA’s proposed Independent System and Market Operator (Ismo) Bill will provide for the establishment of an Ismo owned by government that will buy electricity from power generators, including Eskom.
“The operator will function as a wholesaler of electricity that sells electricity to distributors and customers at a wholesale tariff,” the DA said.
“Ismo will function independently to electricity generation businesses to ensure fairness between generators, encouraging competition and innovation.”
This will revive a Bill first introduced by the minister of energy – Dipuo Peters – in 2012 and then withdrawn in 2014.
Eskom spokesperson Khulu Phasiwe said in response to the DA’s plans the concept of an Ismo was government policy and Eskom supported it.
Eskom was working on a new corporate plan that will look at several options for the future of the utility, including the impact the removal of the transmission function would have on Eskom, Phasiwe said.
He said all stakeholders including the department of energy would have to be consulted about the restructuring of electricity supply and chart a way forward with regard to existing power purchase agreements.
A crucial element of the DA proposal is to empower metropolitan municipalities to buy electricity directly from power producers, without going through the Ismo or any other middle person.
Meridian Economics’ Dr Grove Steyn says there are three elements to the Ismo.
The first is the ownership and management of the transmission network. He says the original Ismo Bill did not provide for the unbundling of these assets from Eskom. The second is the market operator that buys electricity from various generators and sells to distributors and consumers.
Typically, the buyers contract in advance for their power requirement per time slot – be it for every hour or half-hour of the day.
At a certain point, the bidding closes and the system operator, which represents the third element, schedules their different suppliers according to predetermined rules or priorities, much as they do currently.