‘Regional Regulation between the SADC Countries’ Presentation to 18 th World Energy Congress Round Table 10 – B 23 October 2001 Xolani Mkhwanazi Chief Executive Officer National Electricity Regulator

Need for Regional Regulation Increasing integration of electricity systems - common electricity market Significant benefits from scale economies and shared resources Needs a framework for transactions to take place Regulatory arrangements for systems operations Oversight of system of tariffs for use of transmission infrastructure

Possible Scope of Regional Regulation Sharing of expertise, experiences and information Cross border trading issues –Access to transmission capacity –Cross border transmission tariffs Regulatory aspects of co-ordination of system operation Harmonisation of market structures

Regional Regulatory Issues All SADC countries see benefit from establishment of regional regulatory association Not constrained by the different stages of regulatory development at national level Only deal with regional issues –Will not interfere with national mandates Designed to fill existing regulatory gaps Learn from other SADC initiatives

Objectives of RERA Capacity building, and information and experiencing sharing »Information sharing and skills training at a national and regional level Co-ordination of regional policy, strategy and legislation: »Recommend a framework for policy, legislation and regulations for cross-border trading, access and tariffs »Harmonization of regulatory frameworks and legal rules for systems operations/access Regional co-operation on regulation: »Recommendations on economic regulation of electricity interconnections and trade between SADC member states as mandated ART.4

Reaffirming Energy Ministers’ Approval and Statement of Intent Guiding Principles: Economic imperatives for the regional ESI »Benefits to member countries »Clear framework for regional ESI integration »Establish need for creating national and regional regulators »Self-funded organization Establishment and Implementation »Separate legal status »Capacity of RERA to act and make recommendations Principles of the RERA Constitution ART.2/3

Capacity Building and Information Sharing Functions: »Developing capacity-building programmes and sourcing funding for these programmes »Help develop independent regulators in member states where not yet established »Manage information relating to regional electricity trade Co-ordination Functions: »Examining policy in the ESI of the region, as well as market structure »Facilitate development/investment of new regional transmission interconnections together with SAPP Functions that will Achieve Outlined Objectives ART.5

Regional Regulatory Functions: »Require members to provide information required for co-ordination »Recommend appropriate framework for regional regulation of electricity trade and developments of ESI in the region »Investigate issues referred to it by members »Establish norms and standards for the region Functions that will Achieve Outlined Objectives (CONT.) ART.5

Membership Open to Regulators and relevant Government Departments in member countries and other countries by approval of SADC Energy Ministers Each country entitled to a single membership Membership will be renewed on an annual basis ART.6

Structure of RERA PLENARY - composed of full complement of members + SEC TU Executive Committee Chair + 3 Portfolio Chairpersons Capacity Building Committee Co-ordination Committee Regulation Committee Secretariat Executive Secretary + Staff Appoints Secretariat & its staff

Membership Fees and Funding Arrangements Objective is for RERA to be a self-funded association Thus, members will be required to pay annual membership fees The membership fee will be dependent on the annual budget that will be prepared by the RERA Secretariat on an annual basis. Details of the budget are to be worked upon the formal establishment of RERA Prior to the formation of RERA, funding is being sourced from outside organizations such as NORAD and the World Bank ART.8

Conclusion Gains to be made from increased co- operation and trade through SAPP –Shared system reserve –Merit order dispatch across a larger set of generators –Cost savings –Price reductions to end customers RERA intended to put in place regulatory framework to oversee market liberalization Common rules of the game and certainty will facilitate investment into the region