Minister, act now so that City can buy from IPPS – Dan Plato

Mayor says City is a staunch proponent of more affordable, secure, cleaner and diversified energy sources

Mayor Plato calls on Minister Mantashe to act now so that the City can proceed with buying independently produced power in future

21 January 2020

Following media reports that the ANC has endorsed a ‘market-friendly’ approach to address the electricity provision challenges facing South Africa, and which encourages local governments to procure their own electricity, I will be writing to the National Minister of Energy, Mr Gwede Mantashe, asking him as a leader in the ANC, to urgently clarify the regulations required for purchasing power from Independent Power Producers (IPPs). In addition, on behalf of the City of Cape Town, I will ask him not to oppose the pending court matter between the City, the Minister of Energy and the National Energy Regulator of South Africa (NERSA). This is an important case as legal clarification is required for the future purchase from IPPs to become a reality.

In December 2019 the Department of Mineral Resources and Energy issued a media release stating that it was seeking immediate measures to ensure security of energy supply. We responded and indicated that if the Minister were serious about implementing immediate measures, he would agree to the City’s request to purchase energy from IPPs.

Currently, the City is not allowed to purchase power from IPPs and it is forced to buy electricity primarily from Eskom. The City is a staunch proponent of more affordable, secure, cleaner and diversified energy sources. This has prompted the City to take the Minister and the National Energy Regulator of South Africa (NERSA) to court. Important legal clarification is also required.

Unfortunately, we have not had any response to our offer and we still await our day in court. The matter is currently scheduled to be heard in the Gauteng High Court in May 2020.

To repeat what we have previously said: Minister Mantashe has had sufficient time to consider short- and medium-term interventions and must now urgently engage with NERSA to implement them. South Africa needs clarity and a formal way forward. One of the key interventions is to allow municipalities to procure renewable energy from IPPs in accordance with the New Generation Capacity Regulations in the Electricity Generation Act.

Our fight to procure energy from IPPs dates back to 2015, when the City wrote to then Minister of Energy, Tina Joemat-Pettersson, requesting a Section 34 determination that would allow us to procure solar energy and 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, we have 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.

Load-shedding reached the unprecedented Level 6 in recent weeks and could not be avoided for the first week of January 2020 as had been committed to by the President of South Africa.

There can be no doubt that this is a matter of urgent national and local importance and as the ANC have now agreed that local municipalities should be allowed to procure electricity directly, I trust that Minister Mantashe will carry out his party’s wishes so that work on establishing a new power regime can begin.

Issued Greg Wagner, Spokesperson to the Executive Mayor, 21 January 2020