Good news for Eskom’s big split

Eskom Group chief executive officer Dan Marokane says the National Transmission Company South Africa (NTCSA) is on track to start trading by 1 July 2024.

During a media briefing on Friday, 14 June 2024, Marokane highlighted some of the milestones achieved by Eskom during his first 100 days at the helm, including the operationalisation of the NTCSA.

“In the area of the unbundling of the business, the plans are on track to operationalise the NTCSA on 1 July 2024, following the fulfilment of the suspensive conditions at the end of March 2024,” Eskom said in a statement following the briefing.

The NTCSA is the first of three entities to be established through Eskom’s unbundling. The process will also see Eskom’s generation and distribution divisions split into new companies.

The power utility says it will use the lessons it learnt from unbundling its transmission business to carry out the remainder of the programme as efficiently as possible.

“This is expected to enable a faster execution of the unbundling process in line with international trends,” said Eskom.

The National Energy Regulator of South Africa (Nersa) granted the NTCSA a licence to operate South Africa’s electricity transmission system in July 2023.

Eskom welcomed the decision, which marked a major milestone for its unbundling programme.

“The Transmission licence decision marks a significant milestone in the legal separation process of the Transmission Division,” the power utility said.

It added that the NTCSA had also applied for a trading and import/export licence, which the regulator was considering at the time.

“The granting of the requisite operating licences to NTCSA is one of the key dependencies required to enable the operationalisation of the NTCSA,” said Eskom.

The state-owned power utility announced the appointment of the NTCSA’s board of directors roughly six months later.

Eskom’s board appointed twelve non-executive directors to the NTCSA’s board.

“The appointment of the NTCSA Board takes Eskom a step closer to unlocking the potential that comes with the planned transformation of the electricity industry,” said Eskom chair Mteto Nyathi.

“We thank all the individuals who raised their hands to guide Eskom into a future where South Africans have reliable, affordable, and environmentally friendly supply of power.”

Dan Marokane, Eskom Group CEO.

In March 2024, Eskom received consent from Nersa to transfer its powers and duties related to section 34 Power Purchase Agreements with IPPs to the NTCSA.

At the same time, it sanctioned the issuing of a cost recovery letter to the transmission company to designate it as a buyer under the Energy Regulation Act.

Nersa described Eskom’s application for permission to transfer its powers and duties as a pivotal step in the unbundling process. It was submitted in December 2023.

“The transition of the Buyer role for section 34 IPPs from Eskom to the NTCSA is a critical component of this process,” said Nersa.

“The Reasons for Decision document will be available in due course.”

The designation of the NTCSA as a buyer is critical to South Africa’s plan to create an open market for electricity trading.

The National Council of Provinces passed the Electricity Regulation Amendment (ERA) Bill in mid-May 2024. It aims to create an open and competitive platform for electricity trading in South Africa.

This involves replacing Eskom’s System Operator with a Transmissions System Operator (TSO), which will take over control of the country’s transmission grid.

The TSO, which will be under the NTCSA’s control, will also act as a wheeler and dealer of electricity.