Following the National Energy Regulator of South Africa (NERSA) and power utility Eskom agreeing to suspend legal proceedings on Friday over the licensing of five trading partners, energy experts have broken down the implications and have said the announcement creates the regulatory space to address the current gap which hinders trading
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Following the National Energy Regulator of South Africa (Nersa) and power utility Eskom agreeing to suspend legal proceedings on Friday over the licensing of five trading partners, energy experts said the announcement creates the regulatory space to address the current gap, which hinders trading
The announcement was made on Friday following Eskom's application proceedings in the High Court on 24 July seeking to review and set aside the decision of Nersa to grant five electricity trading licences.
The traders who Nersa granted licences to are Green Electron Market (Pty) Ltd, CBI Electric Apollo (Pty) Ltd, GreenCo Power Services (Pty) Ltd, Discovery Green (Pty) Ltd, and NOA Group Trading (Pty) Ltd.
The statement by Eskom and the trading partners said that following a period of constructive engagement and consultations between both parties, the parties have now jointly agreed to stay the review application.
“This agreement does not constitute a withdrawal of the review application but rather a procedural stay, pending the finalisation of the applicable regulatory framework. This decision reflects a shared intention to allow space for the ongoing regulatory processes relating to electricity trading rules and market design to proceed in an orderly and focused manner, without parallel litigation,” it said.
Professor Vally Padayachee, an energy expert and former Eskom generation executive manager, said that he understands and appreciates Eskom’s initial decision to pursue legal action, as it aligns with the challenges also faced by municipal electricity distributors.
“Municipalities, much like Eskom, are not against competition from any third party; rather, they embrace a competitive framework that promotes fair competition on an equitable basis and on a level playing field as envisioned in the revised Electricity Regulation Act Amendment (ERAA) of 2024,” he said
“Eskom initiated this review of Nersa’s licensing decisions to create a framework that ensures equitable, fair competition in the electricity trading landscape. The licences granted to various trading entities raised concerns regarding the regulatory parameters governing their operations. Eskom's application seeks to safeguard its interests in a market characterised by increasing participation from IPPs and other trading entities,” he said.
Padayachee added that this approach aims to ensure that all market players, including private sector participants, independent power producers (IPPs), traders, Eskom, and municipalities, can benefit collectively, avoiding a zero-sum outcome that could disadvantage licensed electricity distributors like Eskom and the municipalities.
“I am optimistic that the promulgation of the revised ERAA in 2026 will pave the way for a new effective and efficient electricity market, expected to launch in April 2026 with a five-year transition period. This development holds the potential to eliminate the monopolistic roles currently attributed to Eskom and municipalities, which have often been accused of misusing market power and of setting unreasonably high electricity prices. Instead, it will position Eskom and municipalities as equal players alongside the private sector, IPPs, and traders,” he said.
Padayachee said that this shift means that they will be subject to the same rules, ensuring that all parties can negotiate and conduct business based on business sustainability or viability, guaranteed profit (or surplus) margins, cash flows, and minimal costs and risks.
“The light at the end of the tunnel lies in the realisation that Eskom and municipalities, even as regulated entities, can still advocate for and secure the same protections in their dealings with the private sector or with the private sector entering their respective operating space. It is crucial for the regulator Nersa to focus on making electricity-related decisions whilst the government addresses socio-economic determinations,” he said.
Padayachee added that this balance is necessary to maintain cost-reflective tariffs, which are essential for the economic viability and sustainability of Eskom and municipalities. “Eskom's decision to stay the review application signifies a vital step forward in the electricity sector.
Ruse Moleshe, the managing director of RUBK, an energy and infrastructure consulting and advisory firm, said that the agreement to stay the legal review (related to Nersa granting trading licences in the absence of rules governing the process) reduces legal uncertainty.
“It avoids lengthy and costly litigation while allowing Eskom to reserve the right to return to court should the utility consider the rule-setting process unfair. It enables the Regulator to proceed with the electricity trading rules-setting process without defending the court process. Importantly, it creates the regulatory space to address the current gap which hinders trading (identified by Eskom and Municipalities) and to ensure proper sequencing (rules first, followed by market operation),” Moleshe said.
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