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


Regulatory Rules for Power Purchase Cost Recovery

9. Authorisation


These rules set out the process and assessment criteria under which the buyer’s power purchase cost recovery will be authorised by the Energy Regulator.


9.1        Process of authorisation

(a) On application from the system operator, the Energy Regulator will undertake an assessment of a PPA in question. The system operator will be expected to provide all relevant information and commercial agreements documentation to the Energy Regulator as requested.
(b) Having regard for the assessment criteria set out in rule 9.2, the Energy Regulator will make its decision regarding authorisation of power purchase cost recovery between the buyer and the IPP within 90 days of receiving an application and all relevant information.
(c) If authorised by the Energy Regulator, costs incurred will be allowed as a pass-through for the duration of the PPA subject to:
(i) the definition of recoverable costs as defined in rule 11;
(ii) the process for review of cost variances as set out in rule 16; and
(iii) in accordance with the IPP cost pass through rules.


9.2        Assessment criteria

NERSA, upon receipt of an application for power purchase cost recovery, will assess a PPA having regard for principles in rule 3 of these rules. It is advisable for parties to a PPA to involve NERSA from the beginning stages of the negotiation so parameters of a PPA can be provided if needed at early stages of the process. NERSA is not party to a PPA but may facilitate the conclusion thereof.