New DA bill aims to split Eskom into two

The Democratic Alliance plans to introduce new regulations which will see Eskom split into two separate entities.

In a notice gazetted on Friday (12 July), DA MP Natasha Mazzone said that the Independent System and Market Operator (ISMO) Bill will be introduced during the second half of 2019.

The bill aims to create the Independent System and Market Operator (ISMO) as the entity responsible for system operation and the purchase of electricity from electricity generators.

ISMO will function as electricity wholesaler, selling electricity to distributors and large customers at a wholesale tariff.

The bill will further eliminate Eskom’s effective monopoly on the production of electricity by splitting the entity into two parts, Mazzone said.

“Eskom will continue to function as an electricity generator, and ISMO, which will take ownership and control over the national electricity grid and serve as the central buyer and distributor of electricity from all electricity generators.

“It also seeks to allow metropolitan municipalities to purchase electricity directly from IPPs in certain circumstances.”

Structure of ISMO

To avoid conflict of interest, ISMO will be independent of activities related to electricity generation to ensure equal treatment of all generators.

It will function as a public-private partnership, and will be governed by a board consisting of members appointed by both the minister and shareholders.

The board will be required to represent a sufficient spread of skills, knowledge, expertise and experience to enable ISMO to function efficiently and effectively.

According to Mazzone, ISMO will ultimately have the following core functions and capabilities:

  • It will be required to purchase power from the generators, including IPPs through power purchase agreements. ISMO will then sell this power to distributors and large customers at a wholesale tariff;
  • It will be expected to include in the wholesale tariff its operational cost in accordance with the approval of the Regulator. The Regulator will regulate the wholesale tariff in terms of the Electricity Regulation Act. Wholesale trading refers to the buying of power from generators at different prices and selling it to large customers and distributors at a wholesale tariff;
  • ISMO will also be responsible for the system operation function through dispatch. ISMO will dispatch all the generation plants into the national grid except for self-dispatched plants, including but not limited to, wind- and solar plants.

Read: Eskom’s biggest power plant has broken pollution equipment

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New DA bill aims to split Eskom into two