Surprise at Nersa decision to close during lockdown

Energy regulator Nersa on Tuesday defended its decision to suspend its operations during the nationwide Covid-19 lockdown.

In a statement it said it “has recently received concerns regarding delays in decision making, particularly related to the approval of licence and registration applications from independent power producers during the lockdown period”.

It defended the decision on the basis that public participation, as required by the Promotion of Administrative Justice Act, cannot be conducted during the lockdown.

However, in Nersa’s initial announcement on 26 March, acting chief human capital officer Sello Hlobelo said that “all Nersa business originally scheduled to take place” from midnight on 26 March until midnight on 16 April “is put on hold, and cannot be carried out”.

This indicates that all Nersa business, not only that dependent on public participation, has been suspended. The suspension of operations has in the meantime been extended to 30 April, in line with President Cyril Ramaphosa’s announcement that the lockdown was extended by two weeks.

The complete closure of Nersa has been met with surprise by Chris Yelland of EE Business Intelligence and other energy experts, in light of the crucial decisions Nersa has to deal with.

These include:

• The determination of Eskom’s application for an additional R27-billion in terms of the regulatory clearing account (RCA) mechanism for 2018/2019;
• The finalisation of the guideline for municipal electricity tariffs and approval of individual municipal tariff applications due to take effect on 1 July; and
• The process of concurrence with minister of mineral resources & energy Gwede Mantashe’s ministerial determination for emergency procurement of additional generation capacity as well as the next round of renewable energy procurement.

Public participation related to the Eskom RCA decision was completed in February and the announcement of Nersa’s decision was due on 24 March, according to a timetable Nersa published earlier.

Yelland said it is concerning that Nersa is totally closed for business. He said the electricity industry is being plagued by delays and that this will only exacerbate the situation. “There is no reason why they cannot do their work remotely, like many others are doing.”

Suspended

In the meantime, it has become known that Nersa CEO Chris Forlee was suspended on 25 March, just before the lockdown started. Nersa chair Jacob Modise informed staff in a letter dated 25 March that Mantashe had placed Forlee on precautionary suspension earlier that day.

The energy department confirmed Forlee’s suspension, saying it “follows an investigation by the Nersa board into allegations of impropriety against Mr Forlee” and will continue until the completion of a disciplinary hearing. Forlee has not been furnished with any charges yet, and did not want to comment on the matter.

According to Yelland, however, the matter relates to efforts last year by “ambitious factions within Nersa to get Forlee out of the way on dubious charges”.

A senior Nersa official who asked not to be named confirmed that Forlee was accused of awarding himself an unapproved salary increase and wrongly approving the registration of a number of rooftop solar projects. These charges were reportedly investigated at the time and nothing came of them, but they have now resurfaced.

In 2017/2018, Forlee was earning a basic salary of R1.912-million plus a performance bonus, which amounted to a total of R2.4-million, the Nersa annual report shows. In 2018/2019, his basic salary increased to R1.937-million. The performance bonuses had not been finalised by the time the annual report was published and his total income, which includes other allowances, amounted to R2.2-million.

Nersa received an unqualified audit report in 2018/2019 and a clean audit for the fifth consecutive time in 2017/2018.

Nersa also announced that Mantashe appointed Nhlanhla Gumede as full-time regulator member for electricity, starting 1 April. This position has been vacant since 2017, when the term of well-respected member Thembani Bukula ended.

Nomfundo Maseti, full-time member for piped gas, has been acting in the electricity position as well for the last two years. According to Yelland, the second 12-month appointment was non-compliant with the Electricity Regulation Act.

A Nersa press release stated that Gumede is an experienced energy consultant and former chair of PetroSA. His term at PetroSA was, however, turbulent and the board in 2018 adopted a motion of no confidence in him. Several stakeholders expressed their concern over his lack of expertise, specifically with regard to electricity.

• This article was originally published on Moneyweb and is used here with permission