NERSA. National Energy Regulator of South Africa

Transcription

1 NERSA National Energy Regulator of South Africa 1

2 Making Regulation Work 2

3 AGENDA Regulatory Framework From Law to Grid Code From Experience Concluding Remarks 3

4 Understanding Regulation as an Activity All regulators do fundamentally the same things:- Licence Set Licence Conditions Set or approve tariffs Monitor compliance Enforce compliance Complaints and dispute resolution The Methodologies used are nearly the same and well understood in literature. The difference is in the Objectives 4

5 Understanding Regulation as an Activity Every Regulator must have Objectives to achieve and Principles by which they operate 5

6 Elemental parts: The Regulatory Cycle in South Africa Make In South Africa this is predominantly in the Sphere of National Government via Acts and Regulations Operate administering and enforcing regulation which is predominantly in the realm of the Regulator via Licences, Licence conditions, Grid Code, Tariffs & Rules Review assessing regulation and making any adjustments required. 6

7 LEGISLATIVE HIERARCHY IMPACTING NERSA LAW POLICY REGULATIONS, ENERGY PLANS & PROCUREMENT PARLIAMENT/ GOVERNMENT DEPARTMENT OF ENERGY Licence Conditions, Grid Code and Rules NERSA GOVERNANCE 7

8 Understanding Regulation as an Activity In the case of NERSA the Objectives are found in the Act 8

9 Objects of the ERA To achieve efficient, effective, sustainable & orderly development of the ESI in SA. To safeguard & meet the interests & requirements of present and future electricity customers & end users. To facilitate investments & universal access to electricity. To promote the use of diverse energy sources, energy efficiency, competitiveness & customer choice. To facilitate a fair balance between the interests of customers, licensees, investors & the public. 9

10 Understanding Regulation as an Activity In the case of NERSA the Principles were adopted from international best practice 10

11 Regulatory Principles Regulatory principles guide the Regulator s conduct and service delivery: Rule of Law: Law applies to everybody and provides a clear framework for everyone to operate. Review and appeal by high court Transparency: Reason for decisions and consultative processes; Neutrality: Neutral to all market players without favouring one or other groups (non-discrimination) Consistency: Explained decisions enabling stakeholders to take informed decisions no surprises; predictability Independence: Independence from stakeholders and politicians; within legal framework and published Government policy Accountability: Internal accountability Regulator takes responsibility for actions and decisions. In addition, NERSA binds itself to carry out its business efficiently, economically and effectively, as required by legislation. 11

12 Regulatory Process ER meetings are open to the public subject to PAIA; Decisions of the Energy Regulator must be: In writing, consistent with the Constitution and all applicable laws; In the public interest; Within the powers of the Energy Regulator as set out in the NERSA Act and the industry Acts. Taken within a procedurally fair process in which affected persons have the opportunity to submit their views and present facts and evidence; Based upon reasons, facts and evidence (summarised and recorded) Explained clearly as to its factual and legal basis and reasons therefore 12

13 Regulatory Process Decisions and reasons must be available to the public in terms of the PAIA Act; Persons affected by a decision of the ER may bring it under review by the High Court (provisions of PAJA) Decisions of the ER sitting as a Tribunal may be appealed to the High Court. 13

14 From Law to Grid Code 14

15 Licensing and Compliance Monitoring The Electricity Regulation Act requires that anyone who is involved in Generation, Transmission, Distribution, Import/Exports and Trading of electricity should be licensed by NERSA With each and every licence granted NERSA imposes licence conditions which should be complied with. Licence Conditions include adherence to the Grid Code After a licence has been issued NERSA has to monitor for compliance 15

16 The Grid Code The Regulators response to this mandate has been as follows:- 1) Established a Grid Code and Published it 2) Made compliance with the Grid Code a licence condition 3) Set up a mechanism for managing the Grid Code in compliance with the Act 4) This mechanism is the establishment of a Grid Code Advisory Committee (GCAC) which is made up of representatives from industry stakeholders 5) The GCAC makes recommendations to the Energy Regulator for approval 6) Under the GCAC are various Industry Expert Teams (IET) which handle the technical aspects and make recommendations to the GCAC 7) The GCAC membership is by appointment of the represented organisation but IET meetings are more open and wider participation is the normal practice. Here equipment manufacturers and consultants often participate in topics that are of interest to them. 16

17 The Grid Code Governance The Eskom Transmission Licence carries the condition that Transmission must set up a Grid Code Secretariat under the System Operator The Secretariat performs the following functions amongst others: Ensures procedures are developed and published for the review of proposed amendments and exemptions by the GCAC Prepare amendment and exemption proposals for submission to the NERSA following review by the GCAC Manage Grid Code documentation Inform participants of the progress with applications for amendment or exemption Co-ordinate the activities of the GCAC Keep and circulate minutes of meetings and documentation of proceedings of the GCAC Function as a formal communication channel for the GCAC 17

18 Governance Process: Approval Process Draft proposal Submit to secretariat GCAC initiates review process Industry Expert Team assesses proposal GCAC reviews proposal GCAC recommends to NERSA Board GC Secretariat informs submitter/gcac NERSA informs GC secretariat N NERSA approves submission? Secretariat updates Grid Code NERSA informs GC secretariat Y 18 Source: Grid Code Secretariat

19 REGULATION OF RENEWABLE ENERGY GENERATORS Before the Renewable Energy Procurement program there was only a Transmission Code and a Distribution Code These were based upon an Eskom and Municipality system only and generation was assumed to be a synchronous rotating machine in terms of grid code requirements Just before the procurement program a Renewable Energy Grid Code was established (based upon an invertor based technology) which covered all renewable energy generators It was realized that there was a need to actually verify compliance and the Secretariat set up a multi-stakeholder team consisting of members from NERSA and different Network Service Providers. The Renewable Energy Technical Evaluation Committee s (RETEC) job was to go to the different sites and verify compliance before they were able to achieve Commercial Operation. This they did by witnessing the tests as the IPP demonstrated compliance 19

20 From Experience 20

21 What has become apparent with the advent of IPPs The establishment of a Grid Code is absolutely essential to protect the integrity of the system The Grid Code is actually front and center in effective regulation It needs to be fair, even handed and predicable The establishment of a body to verify compliance is also essential It is the tool which makes real regulation happen It puts the regulation of the industry and its integrity on a firm foundation 21

22 What has become apparent with the advent of IPPs 2 Do not under estimate the impact of IPPs and non state utilities They bring a different dynamic as commercial entities Make sure that legal advisors have gone through the code and its processes. Stick to legal processes and procedures You will have your day in court (Do everything with this in mind) 22

23 What has become apparent with the advent of IPPs 3 Some of the requirements were initially set too strictly and had to be relaxed and aligned with current international practice The Power quality requirements proved to be a herculean task to get agreement on There is a need to deal with each technology on its own as a stand alone contributor to the Grid. 23

24 What has become apparent with the advent of IPPs 4 The approach of having the Industry Expert Team Meetings open to those who wanted to participate proved to be very valuable Regulatory staff participation in these meetings is essential The Grid Code process is robust enough to handle the inclusion of IPPs into the process and they add value and bring a different approach due to their commercial imperatives 24

25 Concluding Remarks 25

26 Conclusion In conclusion a proposal for you to consider:- The Grid Code is probably the most important document that a Regulator will publish. Therefore invest time, effort and manpower in making it the best and most comprehensive document that you can. Then establish who is responsible to verify compliance for each component and make sure that their role is established and legal and then train them. (Special skills required) Sometimes this logically falls to the licensee and should be placed there. 26

27 THANK YOU Website: Tel: Fax: Kulawula House 526 Madiba Street Arcadia