1 Presented by: Thembani Bukula Balancing Stakeholders’ Interests 1 WFER May 2015 Istanbul

Introduction Regional Electricity Regulators Association of Southern Africa –12 years old –10 Member countries –Focus on harmonization and regional integration of the electricity infrastructure Large parts of the energy infrastructure owned by the State –Limited de-regulation of the energy industry For economic growth, significant investments are required –More than 60% of the population without access to electricity –60 000MW additional required by 2030 Investments lead by the existing state owned entities –Relatively weak balance sheets to carry the required investments –Inadequate capabilities to undertake the required investments alone WFER May 2015 Istanbul 2

Regional Electricity Price path WFER May 2015 Istanbul 3 Relatively Equal weighting and claims Limited infrastructure investment in the 90’s Inflation or below inflation price increases Relatively equal claims and insignificant relative saliency

4 Balancing Stakeholders’ Interests WFER May 2015 Istanbul Utilities Consumers Shareholder

South African Electricity Price path WFER May 2015 Istanbul 5 Unequal weights and claims Relatively equal weights and claims

6 Balancing Stakeholders’ Interests WFER May 2015 Istanbul Shareholder i.e. Government Investors Utilities Customers Competitors Environmental Groups Low income Consumers

Role of the Regulators Make decisions that balance stakeholders’ interest across a series of decisions over time rather than decision-by-decision –Compensate stakeholders on future decisions –Provide appropriate “cushions” for certain customer categories in certain cases –Swinging pendulum on risk sharing and taking Explain decisions taken clearly –Provide reasons for the decision –Explain areas where the discretion was applied –Indicate anticipated future direction (e.g. Future price path) Providing regulatory certainty –Decisions based on sound economic principles –Transparent processes –Consistency across the series of decisions WFER May 2015 Istanbul 7

THANK YOU 8WFER May 2015 Istanbul