New Nersa CEO is energised

Johannesburg - The new CEO of the state energy regulator is looking to boost the watchdog’s staff as part of his plans to improve the entity’s performance and speed of operation.

Chris Forlee, who has a five-year term, said during an interview that the National Energy Regulator of SA (Nersa) had “robust processes” in place and no radical changes were required.

In his new job, Forlee will be running an entity that oversees the electricity sector as well as piped-gas and petroleum pipelines. The watchdog has been under intense scrutiny amid significant energy price hikes since 2008.

He said that Nersa had been criticised for taking too long with its decisions and he would look to “optimise that”. Forlee said that he recognised the need for businesses to get decisions in a timely manner.

There are also plans to grow Nersa’s permanent staff from 177 to about 220.

Shaun Nel, spokesperson for Energy Intensive User Group of Southern Africa, which represents the country’s major industrial power users, said that Forlee was “experienced” in handling energy matters and that they had every confidence in him.

“The challenge is to continue to interrogate the applications that Nersa receives and to avoid unreasonable increases in electricity prices,” Nel said.

Nersa’s decisions have faced legal challenges, especially its determinations regarding hikes in Eskom’s power tariffs.

Nersa and businesses from Nelson Mandela Bay, organised under the High Energy User Group, won a court ruling that declared the 9.4% increase that Nersa allowed Eskom as “irrational, unfair and unlawful”. This could force Eskom to reduce its power prices this year to compensate for the unlawful increase. Nersa has received leave to appeal the judgment, but the case hasn’t gone further in court.

The same Nelson Mandela Bay businesses have also brought a case against the tariffs that Nersa approved for municipalities to charge.

David Mertens, spokesperson for the High Energy User Group, said this week that he hoped the new Nersa CEO would ensure that municipalities only charge their customers cost of supply and don’t add on a significant margin.

He also hoped that Forlee would put Eskom under pressure to be efficient so that tariff increases could be constrained and the economy could see some growth.

“We hope that the new Nersa CEO will take our court cases seriously,” he said.

Forlee said that while Nersa’s processes were robust, it wasn’t a bad thing that the watchdog’s decisions were challenged.

These challenges would close the gaps that exist in the regulator’s processes and “would guide Nersa how to improve”.

Regulatory decisions were characterised by tension between the regulator and those affected by its determinations, Forlee said.

He said that every comment made in any public consultation process that Nersa undertook was being considered.

“We don’t discount anything,” he said.

Forlee said he had both private and public sector experience, but found that he could make the greater contribution in the public sector.

Being in a leadership position also meant that he “could contribute more”, he said.

Turning to the debate about private versus state
power production, Forlee said there was a need for both sources of energy.

The inclusion of the private sector provided South Africa with a diversity of power sources and different types of technology.

The renewable producers had also brought foreign direct investment into the country, Forlee said.

The inclusion of both private and public players in the energy space meant all parties in the sector were kept on their toes, he said.

The key debate was how much power should be generated by Eskom and how much should be produced by the private power producers, Forlee said.