Eskom defends legal challenge against private trading licences

Eskom has received some criticism for proceeding with its review application challenging the granting of trading licences to five private trading companies, but the electricity giant defended this step.

Eskom CEO Dan Marokane said in a statement the utility had little choice but to participate in legal proceedings challenging the National Energy Regulator of South Africa (NERSA)'s decision to grant trading licences to the companies.

NOA Group Trading, Green Electron Market, CBI Electric Apollo, GreenCo Power Services, and Discovery Green were last year issued trading licences by NERSA, aimed at introducing competition and flexibility into the electricity supply sector.

In September last year, Eskom said it “paused” or “stayed” its legal challenge. But it has, meanwhile, emerged that Eskom has confirmed with the court that it will go ahead with its legal challenge.

This step followed criticism that Eskom has acted inconsistently or misleadingly in this matter, which the utility denied.

In defence, Eskom said it supports the reform of South Africa’s electricity market, welcomes competition, and remains committed and is participating alongside other traders in the NERSA-led process to develop trading rules that enable a fair, transparent, and sustainable competitive marketplace.

“The period for submission of inputs has been announced as the end of January. It is for this reason that Eskom is disappointed that it has been compelled to proceed with the case, given the work under way,” it said.

Eskom said it has no intention of restarting or escalating litigation as a substitute for regulatory reform and is still not actively progressing the application.

In clarifying its position regarding the “staying” or pausing of its legal action, Eskom explained that it was communicating its intention to create space for NERSA to conduct consultations and public hearings on the development of new trading rules.

The utility explained this as “rather a pragmatic step to ensure the most optimal outcome for the electricity supply industry”.

Subsequent procedural steps occurred not because Eskom reversed its position, but because Eskom was placed in a position where it was required either to abandon its review application entirely or to participate in procedural processes initiated by trader parties, it said.

Specifically, NOA Group Trading (Pty) Ltd declined Eskom’s request that the matter be stayed and proceeded to convene a case management conference to pave the way to advancing the application.

This was done instead of waiting for the NERSA-led process to reach its conclusion.

“In these circumstances, Eskom had no practical option but to participate in procedural steps to protect its legal position,” it said.

It added that its objective has been to avoid regulatory uncertainty while ensuring that reforms are implemented within a lawful and coherent framework.

“The original grounds for Eskom’s review application remain unchanged. The granting of trading licences to new market entrants, such as traders, enables subsidy-contributing customers to evade contributing to billions of rands in subsidies, which is why new, fair-trading rules are required,” Marokane said.

He added that until new trading rules are finalised, all market participants - incumbent and new - are required to operate under the existing regulatory framework to preserve the rule of law, maintain public oversight, and avoid unintended consequences for customers and municipalities.

Proceeding with reform without clear and enforceable rules risks creating uncertainty over obligations, subsidies, and consumer protection mechanisms, Marokane said, adding that Eskom supports competition on a level playing field.

“Eskom will continue to participate constructively and in good faith in regulatory processes aimed at strengthening energy security, attracting investment and supporting a just and sustainable transition for South Africa,” the entity said.

zelda.venter@inl.co.za