Wind IPPs object to Nersa closed door investigation

Eleven months after receiving complaint, Nersa digs in heels.

The South Africa Wind Energy Association (SAWEA) has strongly objected to a decision by energy regulator Nersa to hold an investigation later this week into SAWEA’s dispute with Eskom behind closed doors.

SAWEA in October last year laid a complaint with Nersa against Eskom for Eskom’s failure to sign power purchase agreements with independent power producers (IPPs) that were selected as preferred bidders in the Department of Energy’s Renewable Energy Independent Power Producer Procurement (REIPPP) programme.

The matter has dragged on with dates that were set for the signing coming and going while Eskom flatly refused to sign.

On September 1, energy minister Mmamaloko Kubayi announced that Eskom would sign power purchase agreements with IPPs in the REIPPP bid rounds 3.5 and 4, but at a maximum tariff of 77/kWh.

This is more than the 62c/kWh, but still requires the renegotiation of terms already agreed upon with the Department of Energy as part of the procurement process.

SAWEA, in its complaint, describes the legal framework of the REIPPP and continues: “Taken together this framework empowers the minister to procure new capacity and energy from independent power producers (IPPs) and to instruct Eskom to enter into the resulting power purchase agreements (PPAs) as the buyer. As far as we are aware the legal framework does not grant Eskom any discretion in this regard.”

SAWEA asked Nersa to find that Eskom is contravening its license conditions and to impose a fine of 10% of Eskom’s annual turnover per day, from the day Eskom receives the notice of contravention – until the agreements are signed.

SAWEA later furnished Nersa with a legal opinion from Advocate David Unterhalter SC that it obtained earlier this year and which supports its position.

Moneyweb in May reported that Nersa’s electricity sub-committee found,  following a preliminary investigation, that there were grounds for a formal investigation. It recently set the date for the investigation that will take place on Thursday September 14.

Both Eskom and SAWEA will be allowed to make representations on the day, but it will be held behind closed doors.

SAWEA’s legal representatives, law firm Webber Wentzel in a letter to Nersa dated August 28 strongly objected to the public being excluded from the investigation proceedings. It stated: “The issue with which Nersa will be required to deal are matters of extreme public significance which have already been aired in numerous public forums, including Parliament. The public is fully entitled to have access to the proceedings in order to be fully appraised of the issues under consideration. In this regard we have little doubt that members of the media will wish to attend the proceedings and report thereon.”

On August 31 Nersa responded, saying: “Given the nature of the dispute and the relationship the parties may have going forward, it is our view that the interest of the parties would be better served by keeping the investigation closed to the public.”

Webber Wentzel earlier requested a copy of Nersa’s provisional report that informed the decision to proceed with a formal enquiry and a copy of the representations Eskom made to Nersa during the preliminary investigation.

Nersa however refused to provide its preliminary report, claiming it’s an opinion aimed at assisting the electricity sub-committee to decide how to proceed with the complaint.

Webber Wentzel conceded that, but still insists on being provided with Eskom’s submission prior to the hearing, even if confidential information is blacked out. “It is completely inconceivable, and contrary to the rules of natural justice (including application of the audi alteram partem principle) for SAWEA as the complainant to be required to present its argument without reference to the argument put up by the respondent (Eskom),” Webber Wentzel stated.

Nersa however dug in its heels and on September 7 in a letter informed Webber Wentzel that it would have to raise further objections about the closed nature of the hearing with the chairperson on the day, who will also hear Eskom’s argument and make a ruling.

The regulator also persists with its refusal to provide Eskom’s submissions during the preliminary investigation to SAWEA. It states that the information was provided in confidence and both parties should make fresh submissions for the formal inquiry.

“As this process is an investigation, there will be no exchange of submissions between the parties,” Nersa stated.

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Meanwhile, Eskom’s own NEW plants like Medupi and Kusile will produce power at double the price that they want to pay to Independent Power Producers.

Well considering wind and solar don’t provide a load half the time and cannot provide on demand during peak times, it follows that competitive pricing is expected. But Eskom is becoming the de facto supplier for most of Southern Africa so they’ll be obliged eventually to expand renewables.

That,s not the point; the issue is eskom,s reneging on earlier negotiated agreements and leavy a whole job-potential sector in the lurch to entrench its monopoly.
Wonder if IPPs can’t approach Compcom?

Actually I don’t think they (Eskom) want to pay anything to independent power producers. When they closed the very old very inefficient Hazelwood coal fired power station in Australia, it was producing at about R0.30 per kWh (AUD30 per MWh). I cannot believe that the marginal cost of a kWh from Medupi can be in the order of R1.54 per kWH unless this revenue is being funnelled into the cadres pockets which in itself is believable, but does not contribute to the debate.

In communist Russia the farmers fed bread to their pigs because it was cheaper than wheat. The communist regime subsidized bread to mask their inefficiency at producing wheat. Locally the socialist regime inflates the price of electricity to the point where it kills the economy in order to pay off the cronies and cadres.

The ANC gives away free electricity to their voters in order to mask the inefficiencies at Eskom. The effect on the economy is devastating. Eskom is a black hole in the middle of the economy, swallowing every taxpayer and job opportunity in it’s path.

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