National Energy Regulator Act [No. 40 of 2004]


Government Gazette
REPUBLIC OF SOUTH AFRICA

Vol. 478 Cape Town 6 April 2005 No. 27458
THE PRESIDENCY No. 340 6 April 2005
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:–
No. 40 of 2004: National Energy Regulator Act, 2004.

2 No. 27458 GOVERNMENTGAZETTE,6 APRIL 2005
Act No. 40,2004 NATIONAL ENERGY REGULATORACT, 2004
(English text signed by the President.) (Assented to 30 March 2005.)
ACT To establish a single regulator to regulate the electricity, piped-gas and petroleum
. .- , industries; and to provide for matters connected therewith.
B E IT ENACTED by the Parliament of the Republic of South Africa, as follows:- CONTENTS
Sections
1. 2.
3. 4. 5. 6. 7.
8. 9. 10. 11. 12. 13. 14.
15. 16. 17.
CHAPTER I
DEFINITIONS AND OBJECT
Definitions Object of Act
CHAPTER
NATIONAL ENERGY REGULATOR
5
10
Establishment of Energy Regulator Functions of Energy Regulator Composition of Energy Regulator Disqualificationsand requirements for membership of Energy Regulator Vacation of office and termination of appointment of members of Energy 15 Regulator Meetings of Energy Regulator Duties of members Decisions of Energy Regulator Personnel of Energy Regulator 20 Funds of Energy Regulator Accounting by Energy Regulator Reporting by Energy Regulator
CHAPTER
GENERAL PROVISIONS
Repeal of laws Transitional provisions Short title and commencement
25
SCHEDULE
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Act No.40,2004 NATIONALENERGY REGULATORACT, 2004
CHAPTER I
DEFINITIONS AND OBJECT
Definitions
1. In this Act, unless the context indicates otherwise- “administrative action” bears the meaning ascribed to it in the Promotion of 5 Administrative Justice Act, 2000 (Act No. 3 of 2000); “chief executive officer” means the chief executive officer contemplated in section 5; “Department” means the Department of Minerals and Energy; “Electricity Act” means the Electricity Act, 1987 (Act No. 41 of 1987); 10 “Energy Regulator” means the National Energy Regulator established by section 3; “Gas Act” means the Gas Act, 2001 (Act No. 48 of 2001); “Gas Regulator LeviesAct” means the Gas Regulator LeviesAct, 2002 (Act No.
“Minister” means the Minister of Minerals and Energy; “Petroleum Pipelines Act” means the Petroleum PipelinesAct, 2003 (Act No. 60 of 2003).
75 of 2002); 15
Object of Act
2. The object of this Act is to establish a National Energy Regulator for the regulation 20 of the electricity, piped-gas and petroleum pipelines industries.
CHAPTER
NATIONALENERGY REGULATOR
Establishment of Energy Regulator
3. The National Energy Regulator is hereby established as a juristic person. 25
Functions of Energy Regulator
4. (1) The Energy Regulator must- (a) undertake the functions of the Gas Regulator as set out in section 4 of the Gas
Act; (b) undertake the functions of the Petroleum Pipelines Regulatory Authority as 30
set out in section 4 of the Petroleum Pipelines Act; and (c) with effect from a date determined by the Minister by notice in the Gazette,
undertake the functions of the National Electricity Regulator as set out in section 4 of the Electricity Act.
(2) The date contemplated in subsection must be after 31 May 2005. 35
Composition of Energy Regulator
5. (1) The Energy Regulator consists of four full-time and five part-time members
(2) The Minister must designate one of the part-time members as chairperson of the appointed by the Minister.
Energy Regulator and another part-time member as deputy chairperson. 40
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Act No. 40,2004 NATIONAL ENERGY REGULATOR ACT,
(3) The Minister must designate one of the full-time members as the Chief Executive Officer of the Energy Regulator.
(4) The Minister must designate one of the other three full-time members to be primarily responsible for electricity regulation, another for piped-gas regulation and another for petroleum pipeline regulation. 5
( 5 ) If the chairperson is for any reason unable to perform his or her functions, the deputy chairperson must perform them until the Minister designates another chairper- son.
(6) (a)A part-time member of the Energy Regulator holds office for a period of four years. 10
(b)A full-timemember of the Energy Regulatorholds office for a period of five years. (c) The Minister may reappoint a member of the Energy Regulator. (d) If a vacancy occurs on the Energy Regulator the Minister may fill the vacancy
temporarily for a period of not more than 12 months by appointing a person without complying with section 15
(7) Members of the Energy Regulator must be paid for their services such remunerationand allowancesas the Ministermay determinewith the concurrenceof the Minister of Finance.
Disqualifications and requirements for membership of Energy Regulator
6. (1) No person may be appointed as or remain a member of the Energy Regulator if 20 that person-
(a) is not a South African citizenor the holder of a permit as a permanent resident
is an unrehabilitated insolvent; (c) has, within a period of 10 years immediately before the date of the proposed 25
appointment, been convicted of an offence involving dishonesty or served a sentenceof imprisonmentwithout the option of a fine for any other offence; or has, after appointment, been convicted of an offence involving dishonesty or been sentenced to imprisonment without the option of a fine for any other offence. 30
(2) The Minister must appoint, as members of the Energy Regulator, persons (a) collectively have adequate legal, technical, business, economic or other
experience relevant to the electricity, piped-gas and petroleum pipelines industries;
(b) are collectively broadly representative of South African society as a whole; 35 (c) are committed and available to fulfil their role as members of the Energy
(d) demonstrate impartiality and objectivity in such a manner that a fair balance
(3) Upon 40 (a) every full-time employment-or-consulting
relationship he or she has with any person, firm, association or company engaged in the electricity, piped-gas and petroleum pipelines industries and may not take up any such employment or consulting arrangement during his or her period of membership of the Energy Regulator; 45 every full-time and part-time member must disclose to the Minister and the Energy Regulator his or her pecuniary interest in any person, firm, association or company engaged in the electricity, piped-gas and petroleum pipeline industries; and
in the Republic;
Regulator; and
between continuity and capacity building is achieved.
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Act No. 40,2004 NATIONAL ENERGY REGULATOR ACT, 2004
(c) every full-time and part-time member must disclose to the Minister and the Energy Regulator if his or her spouse, life partner or child is in the employ of or acts as a consultant to, or has any relationship with, any person, firm, association or company engaged in the electricity, piped-gas and petroleum pipelines industries, or has any pecuniary interest in any such person, firm, 5 association or company.
(4) A member may not at any time be present during the discussion of or the making of a decision on, or take part in, any matter before the Energy Regulator in which that member or his or her spouse, life partner, child or associate has a direct or indirect pecuniary interest. 10
(5 ) If a member acquires an interest contemplated in subsection such member must immediately in writing declare that fact to the Minister and the Energy Regulator.
(6) If the spouse, life partner or child of a member acquires an interest contemplated in subsection such member must immediately in writing declare that fact to the Minister and the Energy Regulator. 15
(7) Before appointing members to the Energy Regulator, the Minister must by notice in the Gazette call for nominations from members of the public.
(8) The notice published before the commencement of this Act calling for nominations for the first appointments to the Energy Regulator must be regarded as having been validly published in terms of subsection (7). 20
Vacation of and termination of appointment of members of Energy Regulator
7.(1)A part-time or full-time member of the Energy Regulator must vacate his or her office if that
becomes of unsound mind; 25 has been absent from more than two consecutive meetings without leave of the chairperson for each absence; resigns by written notification to the Minister; materially fails to perform any duty imposed on him or her in terms of this Act, the Electricity Act, the Gas Act or the Petroleum Pipelines Act; or 30 becomes disqualified from being a member on any of the grounds referred to in section 1).
(2)The Minister may terminate the appointment of a member of the Energy Regulator if such member contravenes section 9.
Meetings of Energy Regulator 35
8. (1) (a) The Energy Regulator must meet at such times and places as may be
(b)The chairperson must convene such meetings of the Energy Regulator as are
(2)The chairperson must, upon a written request of the chief executive officer or two 40
determined by the chairperson.
necessary for the proper performance of its functions.
other members, convene a special meeting to be held within two weeks after the date of receipt of such request.
(3) If the chairperson is absent from a meeting of the Energy Regulator the deputy chairperson must chair the meeting.
(4) If both the chairperson and the deputy chairperson are absent from a meeting the 45 chairperson must designate another part-time member to chair that meeting.
(5 ) Unless other procedures are prescribed by the Energy Regulator, the chairperson of any meeting of the Energy Regulator must determine the procedures to be followed at such meeting.
members or four members, whichever is the greater.
decision of the Energy Regulator.
(6)The quorum for any meeting of the Energy Regulator is a majority of its serving 50
(7) (a)A decision of the majority of the members present at a meeting constitutes a
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Act No.40,2004 NATIONALENERGYREGULATORACT,
(b) In the event of an equality of votes on any matter the person chairing the meeting has a casting vote in addition to his or her deliberative vote.
(8)No decision taken by the Energy Regulator is invalid merely because of a vacancy on the Energy Regulator or because any person not entitled to sit as a member sat as such at the time when the decision was taken if the rest of the members present at the meeting 5 and entitled to sit as members at the meeting constituted a quorum and the decision was taken by a majority of those members present and entitled to vote.
(9) (a)Any meeting of the Energy Regulator must be open to the public unless the meeting passes a resolution to the effect that, for the part of the meeting
concerned, the information to be discussed during that part of the meeting would create 10 a record that would in oblige the Energy Regulator to refuse access to that informa- tion in terms of the Promotion of Access to Information Act, 2000 (Act No. 2 of 2000);
(b) If the Energy Regulator takes a decision in any other manner than at a formal meeting, such decision comes into effect after it has been reduced to writing and signed by a majority of the members and it must be submitted for noting at the first formal 15 meeting of the Energy Regulator following the decision.
(c) The Energy Regulator must cause a record of all of its proceedings to be kept. (10) (a) The Energy Regulator may establish subcommittees of its members to
perform such functions of the Energy Regulator as it may determine, including conducting hearings and enquiries and sitting as a tribunal. 20
(b)The Energy Regulator must determine the composition of a subcommittee. The Energy Regulator may at any time dissolve or reconstitute a subcommittee.
(d)The Energy Regulator must designate a member of a subcommittee as chairperson
(e)This Act applies, with the changes required by the context, to a subcommittee 25
The Energy Regulator is not absolved from the performance of any function
(11)The Energy Regulator must make rules concerning the manner in which notice of
of that subcommittee.
established in terms of this section.
entrusted to a subcommittee.
meetings to be held and the business to be conducted thereat is brought to the attention 30 of the public.
Duties of members of Energy Regulator
9. Members of the Energy Regulator act in a justifiable and transparent manner whenever the exercise of their discretion is required; 35 at all times act in the interests of the Energy Regulator and not in their own or
interests; act independently of any undue influence or instruction; recuse themselves from and refrain from voting on or discussing any matter, pending before the Energy Regulator in which they have a direct or indirect 40 pecuniary interest; act in a manner that is required and expected from the holder of a public office; and act in the public interest.
Decisions of Energy Regulator 45
10. (1) Every decision of the Energy Regulator must be in writing and (a) consistent with the Constitution and all applicable laws;
in the public interest; (c) within the powers of the Energy Regulator, as set out in this Act, the
Electricity Act, the Gas Act and the Petroleum Pipelines Act; 50
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Act No. NATIONALENERGY REGULATORACT,
taken within a procedurally fair process in which affected persons have the opportunity to submit their views and present relevant facts and evidence to the Energy Regulator;
(e) based on reasons, facts and evidence that must be summarised and recorded; and 5 explained clearly as to its factual and legal basis and the reasons therefor.
(2) Any decision of the Energy Regulator and the reasons therefor must be available to the public except information that is protected in terms of the Promotion of Access to InformationAct, (Act No. 2 of 2000).
an administrative action by the Energy Regulator in accordance with the Promotion of Administrative Justice Act, (Act No. 3 of
(4) (a)Any person affected by a decision of the Energy Regulator sitting as a tribunal may appeal to the High Court against such decision.
(b)The procedure applicable to an appeal from a decision of a magistrate’s court in a 15 civil matter applies, with the changes required by the context, to an appeal contemplated in paragraph (a).
(3) Any person may institute proceedings in the High Court for the judicial review of 10
Personnel of Energy Regulator
11. (1) Subjectto the directions of the Energy Regulator, the chief executive officer is also responsible 20
(a) the day-to-day management of the affairs of the Energy Regulator; (b) the appointment of other employees and contractingwith persons to assist the
administrative control over the employees of the Energy Regulator. Energy Regulator in the performance of its functions; and
(2) The Energy Regulator must, on the recommendation of the Chief Executive 25 Officer, from time to time determine the personnel and other resources to be made available to the full-time members contemplated in section
(3) The employees of the Energy Regulator must be paid such remuneration, allowances, subsidies and other benefits as the Energy Regulator may determine with the approval of the Minister and the Minister of Finance. 30
(4) Despite subsection the Minister may, where he or she determines a need exists, instruct the Energy Regulator to make use of persons employed by or contracted to the Department or another licensing or regulatory authority falling under the Minister’s jurisdiction.
the changes required by the context.
Funds of Energy Regulator
(5 )Section 9 applies to every member of the personnel of the Energy Regulator, with 35
12. (1) For the purpose of regulation of the piped-gas and petroleum pipelines industries, the funds of the Energy Regulator consist
(a) money appropriated by Parliament; 40 levies imposed by or under separate legislation; charges for dispute resolution and other services rendered in terms of this Act;
licence fees.
Regulator consist
and
(2) For the purpose of regulation of the electricity industry, the funds of the Energy 45
(a) money appropriatedby Parliament; funds collected under section 5B of the Electricity Act; and levies imposed by or under separate legislation.
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Act No.40,2004 NATIONAL ENERGY REGULATORACT,
Accounting by Energy Regulator
13. (1) The Energy Regulator must perform its functions in accordance with the Finance Management Act, 1999 (Act No. 1 of 1999).
(2) The Energy Regulator must keep separate accounts for the electricity, piped-gas and petroleum pipelines regulatory functions. 5
(3) (a) The costs of the Energy Regulator must be shared between the electricity, piped-gas and petroleum pipeline regulatory functions in proportion to the costs incurred by the Energy Regulator in respect of each of those regulatory functions.
(b)Money appropriated by Parliament must be allocated to the separate accounts for the electricity, piped-gas and petroleum pipeline regulatory functions in proportion to 10 the costs incurred by the Energy Regulator in respect of each of those functions unless Parliament determines otherwise.
(c) Money received by the Energy Regulator other than money appropriated by Parliament must be paid into the account that is kept in terms of subsection (2) for the industry from which such money was received, and must be used for the sole benefit of 15 that industry.
(4) The Energy Regulator must open one or more accounts in its name with one or more financial institutions and deposit therein all money received from the sources contemplated in section 12.
General.
on 31 March of the following year.
Reporting by Energy Regulator
( 5 ) The financial records of the Energy Regulator must be audited by the Auditor- 20
(6)The financial year of the Energy Regulator starts on 1 April of one year and ends
14. The annual report required of public entities in terms of the Public Finance 25 Management Act, 1999 (Act No. 1 of may include any matter that the Energy Regulator deems necessary but must, in respect of electricity, piped-gas and petroleum pipeline matters, include information
(a) licences granted, amended or withdrawn; regulations made and directives issued by the Minister; 30
(c) the envisaged strategies of the Energy Regulator; the existing position and envisaged commercial developments with respect to the electricity, piped-gas and petroleum pipeline industries;
(e) the position regarding health, safety and environmental matters; access to network infrastructure; and 35
(g) tariffs or tariff structures set or approved.
CHAPTER
GENERALPROVISIONS
Repeal of laws
15. The laws mentioned in the Schedule are hereby repealed or amended to the extent 40 indicated in the third column of the Schedule.
Transitional provisions
16. (1) As from the date of commencement of this the person who immediately before the commencement of this Act held the office of chief executive officer of the National Electricity Regulator is 45 deemed to be the chief executive officer of the Energy Regulator;
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(b) the persons who constituted the other personnel of the National Electricity Regulator immediately before the commencement of this Act are deemed to be the personnel of the Energy Regulator; the assets of the National Electricity Regulator vest in the Energy Regulator and the Energy Regulator takes over the liabilities of the National Electricity Regulator.
(2) Decisions of the National Electricity Regulator in force immediately before the date contemplated in section remain in force until amended, replaced or repealed by the Energy Regulator.
5
Short title and commencement 10
17. This Act is called the National Energy Regulator Act, 2004, and comes into operation on a date determined by the President by proclamation in the
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Act No.40,2004 NATIONALENERGY REGULATORACT, 2004
SCHEDULE
and year of
No. 41 of 1987
No. 48 of 2001
k t No. 75 of 2002
title
ElectricityAct, 1987
Act, 200
Regulator Levies 2002
Extent of repeal or amendment
1. The repeal, with effect from the date con- templated in section of the National Energy Regulator Act, 2004, of sections 2,
5D and 21. 2. The amendment, with effect from the date contemplated in item by the substitution for the definition of “regulator” of the following definition:
‘regulator’ means the National En- ergy Regulator established by section 3 of the National Energy Regulator Act, 2004;”.
I . The repeal of sections 8.9, 10, 11, 12, 13 and 14. 2. The amendment of section 1 by the
for the definitions of “Gas Regulator” “distribution” of the following
.ions, respectively:
Energy Regulator established by 3 of the
Act, 2004; ‘distribution’ means the distribution of bulk gas supplies and the transportation thereof by pipelines with a general oper- ating pressure of more than 2 bar gauge and less than 15 bar gauge or by pipe- lines with such other operating pressure as the [Gas Operator] National Energy Regulator may permit according to crite- ria prescribed by regulation to points of ultimate consumption or to reticulation systems, or to both points of ultimate consumption and to reticulation systems, and any other activity incidental thereto, and ‘distribute’ and ‘distributing’ have corresponding meanings;”.
The amendment of section by the :ion for the definition of “Gas Regulator” of :he following definition:
means the National Energy Regulator established by section 3 of the National Energy Regulator Act, 2004;”.
20 No. 27458 GOVERNMENT GAZETTE, 6 APRIL
Act No. 40,2004 NATIONAL, ENERGY REGULATOR ACT,
No. and year of Act
Extent of repeal or amendmentShort title
Act No. 60 of 2003 The repeal of sections 3, 7,8, 9,10,Petroleum Pipelines Act, 2003 11 , 12, 13 and 14.
2. The amendment of section by the substi- tution for the definition of “Authority”of the following definition:
‘Authority’ means the National En- ergy Regulator established by section 3 of the National Energy RegulatorAct, 2004;”.