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


Regulatory Rules for Power Purchase Cost Recovery



The Regulator is directed by objectives under the Act to:

(a) achieve the efficient, effective, sustainable and orderly development and operation of electricity supply infrastructure in South Africa;
(b) ensure that the interests and needs of present and future electricity customers and end users are safeguarded and met, having regard to the governance, efficiency, effectiveness and long-term sustainability of the electricity supply industry within the broader context of economic energy regulation in the Republic;
(c) facilitate investment in the electricity supply industry;
(d) facilitate universal access to electricity;
(e) promote the use of diverse energy sources and energy efficiency;
(f) promote competitiveness and customer and end user choice; and
(g) facilitate a fair balance between the interests of customers and end users, licensees, investors in the electricity supply industry and the public.


All of these matters would appear to be relevant to making rules for assessing and determining the conditions under which power purchase costs will be recovered by a licensee.


A set of objectives encapsulating these objects of the Act is re-articulated for the purposes of these rules. The objectives to be met by these rules are to:

(a) give regulatory certainty to customers in terms of impact on tariffs;
(b) ensure availability of electricity to consumers on an efficient and cost effective basis;
(c) ensure the financial viability of the sector and attract investments by private sector producers inclusive of their supporting lenders in terms of financial viability on long term contract arrangements and surety of their investment;
(d) promote transparency, consistency and predictability in regulatory approaches and minimise perceptions of regulatory risks; and
(e) promote competition, efficiency in operations and improvement in quality of supply.