State-owned power utility Eskom says the current National Energy Regulator of South Africa- (Nersa-) approved rules for Licensable Distribution Areas of Supply prohibit two or more licensees supplying in the same area.

In explaining the position it took during a July 18 virtual public hearing held by Nersa to discuss applications for trading, import and export licences, Eskom says that, if Nersa approves the trading licences applied for by the applicants, the trading licence holders will be able to sell electricity to existing Eskom customers.

This would result in multiple licensees supplying in the same area or customers within another licensee’s supply area, which is prohibited in the current rules, it states.

“It is crucial that regulatory changes keep pace with industry advancements and Eskom remains committed to reform and supporting an orderly transition based on established rules.

“Eskom advocates for a competitive and dynamic electricity market that ensures energy security, access and affordability, fosters growth and delivers long-term benefits for South Africa,” the utility says.

Additionally, some of the applicants for a trading licence have confirmed in their application that they will not supply residential or small business customers but rather only large power users. This is cherry-picking of customers,” the utility says.

The current rules and tariff decisions accommodate cross-subsidies for certain tariff categories.

If a group of contributing customers is removed from this cross-subsidy base, it will exert further pressure on the remaining customers. Large power users cherry-picked by licence applicants are subsidy-contributing customers, Eskom says.

The utility says it awaits the outcome of Nersa’s consultation process and will keep its stakeholders and the media updated on these developments.