The Department of Trade, Industry and Competition (DTIC) has published the draft block exemption regulations for Energy Suppliers 2023 and similar exemptions for Energy Users under the Competition Act.<\/p>\n
Minister of the DTIC, Ebrahim Patel, said that the new regulations would exempt certain agreements or practices by energy suppliers and users in South Africa in a bid to boost the uptake of new energy generation.<\/p>\n
This is in direct response to the electricity supply crisis, with the changes coming under the new freedoms allowed by the declared national state of disaster.<\/p>\n
The Exemption for Energy Users deals explicitly with securing backup energy supplies, reducing energy costs and promoting the efficient use of the energy supply.<\/p>\n
The exemptions include agreements relating to:<\/p>\n
However, despite these exemptions encouraging businesses to work together on energy solutions, the department doesn’t want businesses to get too close.<\/p>\n
The regulations specifically exclude uncompetitive behaviour from the exemptions – like price fixing and collusion – to protect South African consumers and energy buyers from anyone looking to take advantage of the demand.<\/p>\n
This includes fixing the prices of selling goods and services to customers or consumers, as well as collusive tendering.<\/p>\n
Patel said the sole purpose of the regulations is to increase and optimise the supply of energy in the market or reduce the costs of energy supply.<\/p>\n
On top of this, the regulations contribute to the various other regulatory measures aimed at the prevention of the escalation to a total blackout as contemplated in the declaration of a national state of disaster, said the minister.<\/p>\n
Both sets of regulations specifically deal with issues around price fixing, collusive tendering and anti-competitive business practices – specifically those mentioned in sections 4 and 5 of the Competition Act.<\/p>\n
According to the law firm Cliffe Dekker Hofmyer:<\/p>\n
Section 4(1)(b)<\/strong> of the Competition Act prohibits outright (per se) competing firms from:<\/em><\/p>\n (i) colluding to fix a purchasing or selling price or other trading condition,<\/em><\/p>\n (ii) dividing markets by allocating customers, suppliers, territories or specific types of goods and services or <\/em><\/p>\n (iii) collusive tendering.<\/em><\/p>\n Section 5(1)<\/strong> 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.<\/em><\/p>\n The proposed regulations will be open for comment over the next two weeks.<\/p>\n Shifting households and businesses off Eskom’s grid has become imperative in South Africa, with the national government now using the declared state of disaster to expedite the process.<\/p>\n Fnance minister Enoch Godognwana recently announced – in late February – several sweeping initiatives to make the transition more affordable.<\/p>\n Godongwana said starting 1 March, there will be two new incentives for investing in renewable energy. Businesses can deduct 125% of the cost of their renewable energy investments from their taxable income.<\/p>\n Individuals who install rooftop solar panels can receive a rebate of 25% of the panel cost, up to a maximum of R15,000. This rebate can be used to reduce their tax liability in the 2023\/24 tax year and is available for one year only.<\/p>\n This, paired with the declaration of a state of disaster over the energy crisis by president Cyril Ramaphosa has led to a boom in procurement procedures from private generation projects, all with instances where companies may be overcharged or suppliers collude with each other.<\/p>\n The new regulations will ensure the keen eye of the Competition Commission is kept on business practices within the new energy market.<\/p>\n The full gazette is provided below:<\/p>\n