2023 represented a low-water mark in South Africa’s electricity production story. The country experienced over 6,800 hours of loadshedding, much of it at stage 6 – which saw South Africans go without power for up to 12 hours or more a day. What is positively startling is how different 2024 has been.

As of late September 2024, South Africa had not experienced loadshedding since 26 March 2024. Scepticism that the pause in loadshedding was related to the May general election soon ebbed away. South Africans have become increasingly comfortable since March, with the steadily growing public perception being that loadshedding is behind us. Additional capacity has been added to the grid through a mixture of increased and improved Eskom capacity, rooftop solar and other sources of reliable base power, with government and business seemingly speaking with one voice. 

While the positivity and optimism is refreshing, it may be misplaced, even if well-intentioned. 

Government, Eskom and business have continued to emphasise that South Africa is not yet free of loadshedding. As noted by President Cyril Ramaphosa, the electricity system is still vulnerable, with the supply gap between available and needed power remaining tight. Furthermore, similar to the water infrastructure challenges that have escalated in Johannesburg recently, while sufficient energy may be available, infrastructure (particularly at a municipal level) continues to bedevil electricity supply through a lack of maintenance, theft, and poor service delivery. 

It is encouraging that many businesses remain vigilant as they proactively seek ways to mitigate loadshedding if it is ever to return. One way some have sought to protect themselves is through attaining a loadshedding exemption. It is understandably an attractive option. In principle, a loadshedding exemption negates the need to purchase expensive back-up generators or solar power infrastructure. 

However, to accrue the full benefit of a loadshedding exemption and avoid its pitfalls, it is vital to understand the regulatory framework governing loadshedding and on what basis certain electricity users or customers can be exempt from loadshedding. 

Nersa's Code of Practice for loadshedding

The National Energy Regulator of South Africa (Nersa) is the authority responsible for regulating the supply of electricity in South Africa. Nersa has issued a national code of practice known as 'NRS 048-9:2023' (the Code of Practice) which sets out best practice for loadshedding and related matters. It is a legal requirement for all licensees in the electricity supply industry to comply with the Code of Practice.  Nersa has made the Code of Practice a licence condition for all licensees. 

The Code of Practice deals with loadshedding exemptions. The general rule is that all electricity users should be subject to loadshedding based on the principle of equitable participation unless agreed otherwise in writing between the licensee and the customer. An exemption can take the form of a letter or agreement. Nersa has delegated its authority to exempt customers from loadshedding to the various electricity utilities, e.g. Eskom, City Power and municipalities. In short, an electricity utility may exempt a customer from loadshedding based on factors such as:

• the customer's participation in a demand response programme (ie the customer and the electricity utility have agreed that the customer will give up a portion of their load for payment, and for the purpose of load reduction);
• the customer being categorised as a 'critical load', meaning that interruptions to its electricity supply must be avoided, otherwise this will negatively impact on health, safety, the environment, public infrastructure and the economy, as a few examples; 
• the customer implements load curtailment measures through discipline, smart metering technology or load switches; or 
• the customer is an independent power producer. 

Notably, in United Democratic Movement v Eskom, the High Court found that the preventable failure of Eskom to provide electricity violated unjustifiably the rights to human dignity, life, freedom and security of the person, access to healthcare and education, among others, and ordered the Minister of Electricity, working with Eskom and other organs of state to take all reasonable steps to ensure that electricity is supplied to the following institutions or facilities without interruption:

• hospitals and other public health establishments;
• public schools; and
• the South African Police Service and police stations.

Using the lens of the Code of Good Practice, the above institutions would fall under the 'critical loads' category. 

Risk factors relating to loadshedding exemptions

Customers who possess a loadshedding exemption are advised to confirm that the party that issued the exemption has the requisite authority to do so. The party issuing the exemption must be the holder of a valid Nersa licence to supply or distribute electricity. 

While Nersa has delegated the authority to grant exemptions to licensees, Nersa holds the overall responsibility for exemptions. This is where customers who have a loadshedding exemption may face difficulties. According to section 4.4.2.7 of the Code of Practice, if a loadshedding exemption is audited or questioned, Nersa must step in to investigate, and either confirm the exemption or reject it. In such cases, Nersa’s decision is driven by a set of factors listed in section 4.4 of the Code of Practice which include:

• protection of critical and essential loads;
• loadshedding schedule availability;
• loadshedding schedule nature;
• declaration of a system emergency;
• the minimal level of impact on customers;
• predictability and advance warning of load reduction; and
• customer load reduction participation.

An exemption is thus not impervious. If Nersa finds that none of the factors warranting an exemption exist, and the exemption should therefore not have been granted, there is a risk of the exemption being revoked. Nersa's investigation must follow a procedurally fair process in which the customer is given an opportunity to make representations.  

We also note that loadshedding exemptions usually include a clause that states that the exemption does not cover 'unforeseen electricity supply interruptions'. An exemption from loadshedding is not a guarantee against all electricity supply interruptions. 

The decisions to grant or revoke an exemption likely constitute administrative action in terms of the Promotion of Administrative Justice Act, 2000 (PAJA). A customer may seek to have such actions reviewed and set aside in terms of PAJA or the principle of legality if the actions are found not to constitute administrative action. 

Given the complexities involved, and the continuing risks posed by loadshedding no matter how distant they may now seem, customers should not avoid attaining or maintaining an adequate supply of backup electricity. The Code of Good Practice provides that certain categories of exempt customers such as data centres supplying critical national infrastructure should provide their own back-up facilities.

While South Africa may soon enter an era where loadshedding is consigned to the past, until that moment arrives, we encourage electricity users, large and small, to be prepared and vigilant. Preparation is the best defence.

Written by Mzukisi Kota, Partner, Lubumba Kamukwamba, Partner & Kelly-Rain Green, Candidate Attorney from Webber Wentzel