Eskom explains the rationale for its position on the issuance of trading license

Thursday, 25 July 2024: On 18 July 2024, Eskom participated in a virtual public hearing held by the National Energy Regulator of South Africa (NERSA). The hearing discussed applications, for trading, import, and export licenses by various applicants.

Eskom expressed its position to the issuance of licenses to the applicants. This position stems from the current NERSA-approved rules for Licensable Distribution Areas of Supply, which prohibit two or more licensees supplying in the same area.

Prohibition by current rules

If NERSA approves the trading licenses applied for by the applicants, the trading license holders will be able to sell electricity to existing Eskom customers. This would result in multiple licensees supplying in the same area or customers within another licensee’s supply area, which is prohibited in the current rules.

Cherry picking of customers

Additionally, some of the applicants for a trading license have confirmed in their application that they will not supply residential or small business customers but rather only large power users and this is ‘cherry picking’ of customers.

The current rules and tariff decisions accommodate cross-subsidies for certain tariff categories. If a group of contributing customers is removed from this cross-subsidy base, it will exert further pressure on the remaining customers.

Large Power Users cherry picked by the license applicants are subsidy contributing customers.

Commitment to competition

It is crucial that regulatory changes keep pace with industry advancements, and Eskom remains committed to reform and supporting an orderly transition based on established rules.

Eskom advocates for a competitive and dynamic electricity market that ensures energy security, access, and affordability, fosters growth, and delivers long-term benefits for South Africa and sub-Saharan Africa.

Eskom awaits the outcome from NERSA’s consultation process and will keep its stakeholders and the media updated at the appropriate time.

ENDS