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Independent Electricity Management Operator Bill Rejected

September 9, 2020


The portfolio committee on mineral resources and energy has recommended to the national assembly that the Independent Electricity Management Operator (IEMO) Bill is not desirable.

The private member’s bill was tabled in parliament in October 2019.

The bill, drawn up by Natasha Mazzone, a Democratic Alliance member of parliament, seeks to set up an independent electricity wholesaler.

The bill was originally referred to as the Draft Independent System and Market Operator but the name was changed in July 2019.

Its memorandum describes Eskom as a “zombie enterprise that is both overinflated and riddled with corruption”.

It is also pointed out that Eskom currently serves as both the main generator and the central buyer and distributor of electricity.

“It marginalises independent power producers (IPPs) to maintain the stranglehold that it has over energy production to the expense of end-users, who have to endure hours of load-shedding as a result. It has become an archaic entity suffering from institutionalised maladministration so severe that it threatens every aspect of South African life.”

The bill aims to:

• provide for the establishment of an Independent Electricity Management Operator as a public-private partnership entity which will provide an independent system operation to ensure safe, secure and efficient operation of the integrated power system and trading of electricity at wholesale level, and to allow metropolitan municipalities to purchase electricity directly from independent power producers; and
• provide for matters connected therewith.

The bill seeks to set up the IEMO as the “entity responsible for system operation and the purchase of electricity from electricity generators”.

IEMO will operate as electricity wholesaler selling electricity at a wholesale tariff.

The proposed legislation calls for Eskom to continue operating as an electricity generator while IEMO, operating as a public-private partnership, will take ownership and control over the national electricity grid and serve as the central buyer and distributor of electricity from all electricity generators.

The bill also stipulates that metros will be allowed to buy electricity directly from independent power producers in certain circumstances.

In a nutshell, the creation of ISMO will ensure that Eskom’s monopoly is broken down and that the market is opened up to all power producers.

In a statement, the committee confirmed that, on 1 September 2020, deliberations on the bill took place and a motion of non-desirability was considered.

The committee report was adopted on 2 September 2020.

The report will now be tabled in the national assembly for a final consideration and adoption.

“The committee is of the firm view that the IEMO Bill is not desirable, considering that the Minister of Public Enterprises has already tabled to Parliament a special paper on the Eskom roadmap. The roadmap outlines steps required to restructure Eskom and proposes the establishment of a fully regulated Transmission Entity that is 100% owned by Eskom. The
roadmap further makes provision for possible generation subsidiaries to introduce inter-company competition and drive efficiency in generation.”

The committee also points out that the “roadmap further proposes a formation of distribution entity under Eskom Holdings, and the entity will be authorised to buy from another sister entity, namely transmission, as well as from licensed municipal generators and embedded generation”.