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Electricity Regulation Act, 2006 (Act No. 4 of 2006)


Regulatory Rules for Power Purchase Cost Recovery

8. Exclusions from the rules


8.1        Short-term power purchases


Short-term power purchases (contracted for a term of less than three years) are not explicitly covered in these rules due to practical considerations. It would be overly cumbersome to apply the ex ante review process to the numerous short-term trades carried out by the buyer. The basic principles set out in these rules would provide a good basis for considering the prudency of such costs, and it would be expected that as such, short-term power purchases would be a recoverable cost of service.


For short-term purchases [0-3] years, the buyer would present its capacity, energy requirements and the costs to NERSA and NERSA would review the plans and allow or disallow costs. Specifically, the Energy Regulator would allow a stated rand amount for the short-term power purchase cost which will be communicated to the buyer


The buyer would present its year-to-date actual for nine- months to NERSA and projections to year end on short-term power purchase costs with reasons for variances. NERSA would then review and make a determination on whether the variance should be allowed as pass-through and the determined figure would then be deposited into the regulatory control account.


8.2        Existing contracts


The status of existing contracts would not be reviewed or altered under the scope of these rules but should the contract be re-negotiated, these rules will apply to that particular PPA