Energy Regulator Bill

Presentation toNCOP Select Committee

byDepartment of Minerals and Energy

16 September 2004

National Energy Regulator BillContents of Presentation

BackgroundRelationship Between

National Energy Regulator Bill and Electricity Act Gas Act Petroleum Pipelines Act

Structure of BillSection by Section DescriptionProposed Schedule for establishmentStakeholder Comments & PPC Changes

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 DecisionDecember 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

Why?

Concern over proliferation of state entitiesSynergies and efficienciesCompeting energy carriers need even treatment e.g. gas and electricityCost savings Staff shared Regulators shared

Shortage of regulatory skills

Submission to Parliament

February 2004: Submitted to Parliament

Re-Submitted after General Election

Zulu Translation Currently being Updated

THE PRESENT SITUATION

Electricity Act Gas Act Petroleum

Pipelines Act

THE PRESENT SITUATION

Electricity Act Gas Act Petroleum

Pipelines Act

National Electricity Regulator

Gas Regulator

Petroleum Pipelines Authority

THE CONCEPT

Electricity Act Gas Act Petroleum

Pipelines Act

NationalEnergy

Regulator

THE CONCEPT 2

Electricity Act Gas Act Petroleum

Pipelines Act

NationalEnergy

Regulator

Administers

Energy Regulator Bill

MattersPertaining

toLicenses

etc

RegulatorEstablishment

National Energy Regulator

MattersPertaining

ToLicenses

etc

RegulatorEstablishment

MattersPertaining

To Licensesetc

AuthorityEstablishment

Electricity ActNo 41 of 1987

Gas ActNo 48 of 2001

Petroleum Pipelines ActNo 60 of 2003

Structure of Bill

Chapter I: Definitions and ObjectChapter 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

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.”

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

Composition§5 Composition: Three full time & five part time regulators

Energy Regulator Functional Structure

T e ch n ica l S p ec ia lis ts

L eg a l

F in an ce

H R

C h ie f E xe cu tive O ffice r

E N E R G Y R E G U L A T O RIm p lem e nt P o lic y/R e g u la tio ns

3 F u ll t im e + 5 p art-t im e R e gu la to rs

M IN IS T E R M IN E R A L S & E N E R G YP re sc rib e P o licy/R e gu la tio ns

A p p o in ts R e g u la to rs

Composition

Of the three full-time 1 electricity 1 gas 1 petroleum pipelines

Term of office 4 yearsRemuneration set by Ministers of Minerals and Energy and Finance

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

Meetings & Duties

§8 Meetings of Regulator Frequency, times and places Quorum: majority or 4, whichever is greater Attendance Records

§9 Duties Justifiable & transparent Independency

Decisions

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

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

Funds

§12 Funds Appropriated by Parliament Levies under other Legislation:

Gas Regulator Levies Act Electricity Act Petroleum Pipelines money Bill

License fees Charges

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

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

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.

Stakeholder Comments & PPC changes

1) Comments2) Observations3) Governance issues4) Minor improvements

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

GovernanceCONCERN RESPONSE

CEO/No. of full time regulators

CEO votes. 4 full time + 5 part time = 9

Appointment Minister

Gender “broadly representative including gender and race”

Designation CEO+gas, electricity & pipelines, “primarily responsible”

3 full time not reporting to CEO

To Regulator, not to CEO

Governance contd.

CONCERN RESPONSE

Day to day management CEO responsibility

Resources (personnel and/or other for full-time members)

CEO recommendsRegulator determines from time to time

Quorum 4 or half whichever is greater

Chair not present Deputy Appointed – non-execChair appoints non-exec, if deputy not available

Governance contd.CONCERN RESPONSE

Quorum for extended sessions? (e.g. hearings, tribunal)

Appoint sub committees, delegate duties and functions BUT • Provisions of Act apply (transparency, guidance)• Accountability remains with Regulator

Dual review/appeal routes

Review by High Court, repeal Section 21 of Electricity Act

Governance contd.CONCERN RESPONSE

Eligibility part-timers: Preclude public servants?

Minister appoints board

Continuity/Term of office

•Elec Act – no period•ICASA - Chair 5 yrs, councillors 4 yrs•Competition Tribunal members – 5 years.Proposal: 4 yrs part time, 5 yrs full time

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

Offence involving dishonesty Sentence of imprisonment without the option of a fine

for any other offence served Removed if Ditto

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”

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

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

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

Further improvements (6)

• Access to 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

Energy Regulator Implementation Plan

Apr May Jun Jly Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Energy Regulator Bill / Parliament

Promulgation Energy Regulator Bill Risk: Parliament may not pass Bill

Energy Regulator Act Into Force

Advertise Regulator Posts

Interviews Posts & Approval

Appointment and Training

Regulator Training NORAD

Regulator: Gas & Pet Pipeline Fns Gas/PP

Current Electricity Regulator

Regulator: Add Electricity Function

2004 2005

END