Cabinet has approved the publication of the much-anticipated Revised Electricity Pricing Policy for public comment, amid growing affordability concerns following years of above-inflation tariff hikes.

The statement released after the July 29 Cabinet meeting indicates that the proposed revision moves to update the 2008 Electricity Pricing Policy in a way that reflects developments in the electricity supply industry, including ongoing market reforms arising from the unbundling of Eskom and the implementation of the Electricity Regulation Amendment Act of 2024.

“The policy strengthens the regulatory framework governing electricity prices, tariffs, and charges, and provides tariff transparency through the unbundling of tariffs across generation, transmission, distribution and retail activities, thus consolidating regulatory arrangements for electricity pricing across the various pricing interfaces between generators, traders, the National Transmission Company South Africa, and distributors,” the statement reads.

The policy also supports the introduction of cost-reflective tariffs while protecting vulnerable users and strategic economic sectors, but without naming those sectors.

It also reportedly establishes the framework through which these interfaces will be enabled and regulated by the National Energy Regulator of South Africa (Nersa), which has already approved discounted tariffs for two ferrochrome companies and is considering negotiated pricing agreements (NPAs) for other ferroalloy producers, as well as other sectors.

On July 30, the Energy Regulator, Nersa’s highest decision-making body, met to approve Eskom’s application for a two-year NPA for the Manganese Metal Company, while ArcelorMittal South Africa expressed optimism at the release of its interim results that it, too, would be finalising an NPA with Eskom in the not-too-distant future.

MARKET TRANSFORMATION

Meanwhile, Cabinet also approved the publication of a Draft Electricity Sector Market Transformation Position Paper for public comment.

The paper, the statement reads, will provide a framework to guide South Africa’s transition from a predominantly State-controlled electricity system to a more competitive electricity market, in line with the Electricity Regulation Amendment Act, 2024, and the Energy Action Plan.

Proposed reforms, the statement adds, seek to improve energy security and reliability by reducing reliance on a single electricity supplier and enabling greater participation in electricity generation and trading.

“The reforms are also aimed at attracting investment in electricity generation, transmission and distribution infrastructure, supporting job creation and economic growth, and reducing electricity costs over the long term.”

Electricity and Energy Minister Dr Kgosientsho Ramokgopa has been flagging the importance of both documents for some time and is expected to provide a briefing on their contents on his return from an investment promotion mission to China in early August.