Government proposes exemption of energy supply collaboration from Competition Act

Trade, industry & competition minister Ebrahim Patel has issued draft regulations exempting agreements and practices entered into by energy suppliers from sections of the Competition Act.

The draft regulations, which were published in the Government Gazette Wednesday for public comment by March 28, are aimed solely at addressing the electricity supply shortage and to reduce its cost. They come in the wake of and are framed within the context of the recently announced state of disaster for electricity.

The proposals relate to suppliers of energy, whether that be electricity, natural gas, liquefied petroleum gas, diesel, liquefied natural gas, and paraffin as well as related product suppliers of inverters, batteries, solar panels, wind turbines, and generators, inputs such as coal and service providers of storage and installation.

Exempt from the Competition Act will be joint investments in shared energy infrastructure; joint financing and risk-sharing in energy projects; joint training and skills development; and collaboration on optimising the level and timing of energy supply to the national grid where these are aimed at increasing supply.

Also covered will be agreements aimed at reducing the cost or improving the efficiency of energy supply, including but not limited to joint negotiations and purchasing of energy supply inputs and related products and services; and the joint procurement and sharing of security services for the purpose of securing infrastructure.

Specifically excluded from the exemptions will be “any discussion and/or agreement on fixing the selling prices of goods and services to customers or consumers and collusive tendering”.

The regulations also state that historically disadvantaged firms and SMMEs must be given an opportunity to opt-in to agreements or practices.

Prior approval by the Competition Commission must be obtained for the agreements or practices entered into and the commission may attach conditions to its approval, which will be refused if the agreement or practices do not fall within the scope of the regulations. The commission will have 30 days to make a decision, failing which the agreement or practice will be regarded as approved.

Commission approval can be revoked if the attached conditions are breached, the collaboration exceeds the exemption granted, the approval was granted on the basis of false information, or if the reason for granting the approval no longer exists.

The department and the commission must be notified of the implementation of the agreements or practices; energy and related product and service providers must keep minutes of meetings and written records of any agreements or practices entered into.

ensorl@businesslive.co.za