Introducing competition in the energy sector will keep electricity prices down, according to the Democratic Alliance.
DA leader Mmusi Maimane on Monday announced plans at a briefing to address "Eskom's monopoly" in the energy sector, through the introduction of a private member's bill known as the Independent System and Market Operator (ISMO) Bill.
The bill, which was first introduced by the minister of energy in 2012 and later withdrawn in 2014, was reworked by the DA.
The bill sought to address Eskom's "conflict of interest" as both a generator and distributor of electricity in SA. "The bill would have levelled the playing field and eliminated Eskom’s overriding conflict of interest to the benefit of all South Africans," the DA said in a legal summary of the bill.
The bill enables the creation of an independent structure (ISMO) – as a state-owned company responsible for system operation and the purchase of electricity from electricity generators.
"ISMO will effectively serve as an electricity wholesaler, selling electricity to distributors and large customers at a wholesale tariff… ISMO will be independent of activities related to electricity generation to ensure equal treatment of all generators," the summary reads.
This means Eskom would only function as a generator and not be responsible for transmission or distribution.
According to the DA, the bill supports competition in the sector and empowers metros – with a track record of good governance in finances and management – to enter into direct agreements with electricity generators without going through the ISMO as a middleman.
The functions of the ISMO will be to buy electricity from generators, including Independent Power Producers. Its operating cost will be factored into the wholesale tariff which is subject to the energy regulator's approval. The ISMO is also responsible for ensuring new electricity produced by generators is incorporated into the national electricity grid, and when required will assist in planning requested by the minister of energy.
Finance Minister Tito Mboweni told Members of Parliament last week that Eskom's board is expected to present a long-term turnaround strategy in November 2018.
In its medium-term budget policy statement, Treasury highlighted that Eskom is one of the state-owned companies which poses a fiscal risk. The power utility has a R350bn government guarantee, of which it has used R255bn. Eskom managed to secure 73% of its R72bn funding requirements for 2018/19.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER