A public hearing into the National Transmission Company South Africa’s (NTCSA’s) application for a market operator licence will be hosted by the National Energy Regulator of South Africa (Nersa) on September 30.

The licensing of the NTCSA as the independent market operator is viewed as a key milestone for the launch of the South African Wholesale Electricity Market (SAWEM), which has been tentatively set for April next year.

Another important milestone will be the approval of the Market Code, which is expected to be submitted to Nersa for its approval after a final consultation session to be held on the draft Market Code, which is set to take place on September 11.

The launch of the SAWEM itself is viewed as another step in the creation of a competitive electricity market in line with the Electricity Regulation Amendment Act, which came into force earlier this year.

Although full competition is unlikely at its inception, the launch of SAWEM is anticipated to reinforce the structural transition under way. This, from an industry structure hitherto dominated by Eskom and a vertically integrated industry structure to one that progressively opens to include generation competition, and the participation of aggregators and traders.

These structural changes also hinge on the unbundling of Eskom’s generation, transmission and distribution entities into separate businesses and progress here is reportedly uneven, with only the NTCSA currently operating with its own board and executive team.

However, the NTCSA remains a subsidiary of Eskom Holdings and there is some uncertainty over whether the transmission assets will be transferred to the NTCSA as it emerges as the independent Transmission System Operator envisaged in legislation.

Nevertheless, preparations for the launch of the SAWEM are continuing, and a SAWEM School has been set up to expose future participants to day-ahead and intra-day trading and the market-balancing components.

Graduation from the SAWEM School has also been made mandatory for participation in the market once it is launched.

In a statement, Nersa confirmed that it received the NTCSA application for a market operator licence on July 25 and that the licence was required in addition to the transmission, trading and import/export licences already approved in favour of the NTCSA.

“If approved, this licence will empower the NTCSA to operate the future electricity trading platform, ensuring its administration is conducted fairly and transparently,” Nersa said.

The deadline for the submission of comments and objections has been set as September 22 and the hearing is scheduled to take place virtually between 9:30 and 13:00 on Monday, September 30.

The closing date for registration to participate in the public hearing is September 25, at 16:30.

The hearings come as Nersa is also moving to finalise rules for traders by November and amid heightened scrutiny of the regulator, following its acknowledgement that it made errors in the calculation of Eskom’s most recent three-year tariff application.

After Eskom approached the courts to have the decision reviewed, Nersa and Eskom entered into settlement negotiations, which were concluded behind closed doors and in the absence of public hearings.

On August 28, Nersa confirmed a settlement amount of R54-billion and announced that Eskom’s electricity tariffs would rise as a result by 8.76% on April 1 next year instead of the 5.36% approved previously, and by 8.83% instead of 6.19% in 2027/28.