The latest plan has put strong emphasis on regulatory compliance of electricity distributors, in the form of maintenance investment in distribution infrastructure, which is seen as key to creating security of supply, and gives the NER increased power of enforcement and monitoring of such funding.
The objective of the NIRP is to determine the least-cost energy supply options, provide information to market participants on opportunities for investment in new power stations and evaluate security of supply.
Speaking at the launch, NER chairperson Colin Matjila pointed out that the regulator is not only responsible for drawing up the NIRP, but also for establishing mechanisms to monitor the behaviour of power distributors in South Africa, as part of efforts to ensure adequate supply capacity and distribution.
Matjila pointed out that serious power outages experienced in parts of the country in recent months are expected to recur during winter, resulting from inadequate distribution infrastructure and lack of maintenance.
The NIRP, he said, sets out standards for independent electricity distributors, such as municipalities, to invest in the maintenance of distribution infrastructure, which will be monitored by the NER.
Distributors' contribution to infrastructure maintenance would be evaluated during their tariff applications to NER.
“This not only about financial compliance, it's also about regulatory conditions that have to be adhered to,” Matjile stated, adding that the regulator has the power to impose stringent penalties against those who do not comply, including taking away distribution licences.
Matjile commented that the NER is currently also working closely with the Department of Minerals and Energy to introduce regional electricity distributors – a move that, to some extent, is expected to solve the problem of under investment in distribution infrastructure due to a lack of municipal funding.
Also speaking at the launch, Deputy Minister of Minerals and Energy Lulu Xingwana noted that the NIRP should be used as a fundamental basis to inform government to make decisions regarding the licensing of new generation capacity and decommissioning generation plants.
She alluded to recent comments made by Public Enterprises Minister Alec Erwin that, in order to meet the growing demand for energy, Eskom would build at least 70% of the capacity required in the next two decades. Alongside this process, using Eskom's purchasing power, government would introduce the first significant independent power producers.
South Africa's current peak demand is 34 000 MW and Eskom's capacity is 35 000 MW. Government's efforts to increase generation capacity include a R12-billion rehabilitation programme of the Camden, Grootvlei and Komati power stations, which will result in 3 612 MW of new capacity.
Two peaking stations – one Eskom and independent power producer – will provide and additional 2 000 MW by 2009.
Xingwana pointed out that the some of the main findings of the second NIRP include studies that show immediate decisions are required for peaking and base load plants from 2006 and 2012, respectively, as well as that base load plants competing for commercial operation from 2012 are pulverised fuel coal-fired, fluidised bed combustion and combined cycle gas turbine.
The second NIRP also maintains that, in order to meet government's renewable energy source targets by 2013, immediate decisions are required for renewable energy options, while options for diversification are still insufficient to meet all of the forecast demand for electricity over the next 20-year planning horizon.