South Africa Introduces New Regulations to Boost Energy Supply and Prevent Price Gouging During Load Shedding

The South African Department of Trade, Industry and Competition (DTIC) has released draft regulations for Energy Suppliers 2023 and similar exemptions for Energy Users under the Competition Act. These new regulations will exempt certain agreements or practices by energy suppliers and users in South Africa, in a bid to boost the uptake of new energy generation.

The Electricity supply crisis in the country has led to the implementation of these changes, which come under the new freedoms allowed by the declared national state of disaster. In response, the DTIC has introduced the Exemption for Energy Users, which deals explicitly with securing backup energy supplies, reducing energy costs and promoting the efficient use of the energy supply.

The exemptions include various agreements relating to joint procurement, energy use, saving and optimisation initiatives, as well as the sharing of security services for purposes of securing shared sites. These exemptions encourage businesses to work together on energy solutions but exclude uncompetitive behaviour like price fixing and collusion.

The DTIC has specifically excluded such practices from the exemptions to protect South African consumers and energy buyers from anyone looking to take advantage of the demand. Patel said the sole purpose of the regulations is to increase and optimize the supply of energy in the market or reduce the costs of energy supply.

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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. To make the transition more affordable, Finance Minister Enoch Godongwana recently announced several sweeping initiatives starting from 1st March.

These include two new incentives for investing in renewable energy, wherein businesses can deduct 125% of the cost of their renewable energy investments from their taxable income. 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.

In addition to this, the new regulations will ensure the keen eye of the Competition Commission is kept on business practices within the new energy market. The proposed regulations will be open for comment over the next two weeks, and businesses can take advantage of these exemptions to boost the uptake of new energy generation.

The full gazette is provided can be viewed here: https://www.compcom.co.za/wp-content/uploads/2023/03/48182-8-3-TradeIndComp-Comp-Comm-Comments-Energy-Block-Exemptions.pdf

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