City responds to Minister of Mineral Resources and Energy’s call for urgent action, requests Section 34 determination to purchase energy from independent power producers (IPPs)

11 December 2019 

The City of Cape Town notes the media statement yesterday by the Department of Mineral Resources and Energy on immediate measures to ensure energy supply. If the Minister is serious about implementing immediate measures, he will agree to the City’s request to purchase energy from independent power producers. We need immediate action now and Minister Gwede Mantashe needs to show leadership and put the wellbeing of South Africans and our economy first.

Minister Mantashe has had sufficient time to consider short and medium term interventions and must now urgently engage with NERSA to implement them. One of the key interventions is to allow municipalities to procure up to 400 MW of renewable energy from IPPs in accordance with the New Generation Capacity Regulations in the Electricity Generation Act.

In 2015, the City of Cape Town wrote to then Minister of Energy, Tina Joemat-Pettersson, requesting a Section 34 determination that would allow us to procure 150 MW of solar energy and 280 MW of wind energy from IPPs. In terms of Section 34 of the Energy Regulation Act of 2006, the Minister may, in consultation with NERSA, determine the types and quantity of electricity that is to be generated and the manner in which it may be sold.

Since 2015, the City has written regularly to successive Ministers on this matter, and eventually had to turn to the courts seeking a declaration that a determination by the Minister of Energy is not required for an IPP to produce and sell electricity to the City of Cape Town.

When load-shedding was renewed and escalated this week, the City’s legal team initiated engagements with the legal teams of other parties to the matter, with a view to approaching the Judge President with mutually agreeable dates for an earlier hearing. The matter is currently scheduled to be heard in the Gauteng High Court in May 2020.

In light of the recent announcement by the Department of Mineral Resources and Energy, the City has today written a letter (see attached) to Minister Mantashe, advising him of previous efforts to engage his predecessors and the City’s efforts to seek an order from the High Court on this matter. The City furthermore urges the Minister to advise urgently whether he will consider our request for a determination, and if so, when he anticipates that we may receive an outcome to our application.

NERSA and the Department of Mineral Resources and Energy should seize the opportunity to reach agreement on the legal framework to allow for the issuing of purchasing licenses to the City and other municipalities. Should they reach agreement on this before the proposed original date for the hearing, it will not only enable the City to move forward with its plans sooner, but will also mean that litigation in this matter is not required.

There can be no doubt that this is a matter of urgent national and local importance.

The City will continue to do everything possible to pursue a positive outcome.

Issued by Ian Neilson, Executive Deputy Mayor, City of Cape Town, 11 December 2019