1. ANALYSING THE MEETING OF 21 FEBRUARY 2012
Profs.Nico Beute, Philip Lloyd & Ernst Uken
Energy Institute
Cape Peninsula University of Technology
PPC on Energy
July 2012
PPC on Energy July 2012

2. Recent history
In September 2009, the Committee met to consider the Constitution Seventeenth Amendment Bill
The Bill gave national government powers to intervene at local government level to achieve regional efficiencies and economies of scale
Cabinet’s plan was to restructure the EDI into six independent REDs by merging the distribution businesses of Eskom and local government
The REDs would be public entities and regulated in accordance with the Public Finance Management Act and the Electricity Regulation Act
PPC on Energy July 2012

3. Recent history II
The restructuring was to address well-recognised problems in the industry:
the highly fragmented structure of the industry
wide disparities in electricity tariffs
uneven spread of electrification across SA
Eskom and municipalities would transfer their electricity distribution, assets, liabilities and employees to REDs.
REDs would be new companies jointly owned by Eskom, national and local government
Shareholding would be in proportion to the value of the business transferred. .
PPC on Energy July 2012

4. It didn’t work! So now - - ? The meeting of 12 February showed:
The problems have not changed
EDI Holdings had done a good job with ADAM
ADAM had grown by about R2.5bn since 2008
ADAM+ was probably worth R35bn
What is needed to implement ADAM+ ?
Analysis suggested that all the necessary institutions were in place
They needed to act
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July 2012

5. Treasury/ FFC Source the funds needed for ADAM+
Resolve clash of reporting to both Treasury and NERSA
Suggest NERSA should administer funds as part of licensing
Suggest Treasury should resolve how equitable share should be adapted in light of ADAM+
PPC on Energy
July 2012

6. Department of Energy The Department is in an analysis mode
It is re-analysing ADAM
It lacks the resources to second-guess EDI Holdings
In 2010 Cabinet told it to address regulatory changes affecting municipalities
Nothing has yet emerged
It needs to get ADAM+ approved and rehabilitation under way
Now we need action, not analysis
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July 2012

7. NERSA
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July 2012

8. Thank you for the opportunity to share these thoughts
Any questions?
PPC on Energy July 2012