Government brings back laws to boost energy supply in South Africa

 ·25 May 2023

The Department of Trade, Industry and Competition (DTIC) has gazetted energy user and energy supplier block exemptions for this year.

The exemptions were originally instituted under the State of Disaster in March 2023; however, the old exemptions fell away after the disaster ended. The Competition Commission has now reintroduced the exemptions.

After consultation with the Competition Commission, the department has exempted a category of agreements or practices by Energy Users and Energy Suppliers, enabling the efficient securing of backup or alternative power, reducing energy costs, promoting the efficient use of energy supply and securing shared infrastructure or equipment.

The exemptions allow groups to work together to boost the uptake of new energy generation. They specifically aim to increase and optimise the supply of energy in the market or reduce the costs of energy supply.

As defined in the two gazettes, an “energy user” refers to firms that are users of energy supply, including all forms of energy supply.

Under the notice relating to the supplier, the gazette defines an “energy and related products and services suppliers” as a firm that supplies energy-related products, including diesel, batteries, solar panels, inverters, generators and more.

The new regulations surrounding energy users ultimately aid the uptake of new energy generation relating, exempting agreements relating to the following:

  • Joint procurement of backup or alternate energy supply for purposes of supply to the national grid – including power purchase agreements;
  • Sharing of backup or energy generation capacity, including energy generation equipment;
  • Joint negotiation and purchase of energy related to product and service supply;
  • Joint financing of backup and alternative energy supply to the national grid;
  • Joint purchasing of shared backup and alternative energy generation capacity;
  • Energy use, saving and optimisation initiatives to limit operational downtime and reduce energy demand;
  • Joint procurement and the sharing of security services for purposes of securing shared sites.

Regulations relating to the supply of energy products exempt agreements relating to:

  • Joint investment in shared energy infrastructure
  • Joint financing and risk-sharing in energy projects
  • Joint training and skills development
  • Collaboration on optimising the level and timing of energy supply.
  • Joint negotiation and purchasing of energy supply inputs and related products or services
  • Joint procurement and the sharing of security services for purposes of securing infrastructure.

Although the department has encouraged the easing of certain criteria, it has reaffirmed that it will not allow uncompetitive behaviour, especially those relating to price fixing, collusive tendering and anti-competitive business practices – outlined in sections 4 and 5 of the Competition Act.

Section 4(1)(b) of the Competition Act prohibits outright (per se) competing firms from:

(i) colluding to fix a purchasing or selling price or other trading condition,

(ii) dividing markets by allocating customers, suppliers, territories or specific types of goods and services or

(iii) collusive tendering.

Section 5(1) of the Competition Act prohibits agreements between parties in a vertical relationship which may have the effect of substantially preventing or lessening competition in a market unless the agreement can be justified by technological, efficiency or pro-competitive gains that outweigh the effect.

The full gazette can be seen below:

Energy User block exemption

Energy Supplier block exemption

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