Regional electricity from REDs

5 July 2005

South Africa’s first regional electricity distributor, known as RED One, was signed into operation at a ceremony in Cape Town on Monday.

The establishment of REDs wills help the government improve delivery of electricity, Minerals and Energy Minister Lindiwe Hendricks said at the ceremony.

She said the restructuring of the electricity distribution industry was aimed at improving governance of the sector and stimulating economic development.

“We want to improve access and the service delivery of electricity. We believe we will achieve this by consolidating the electricity industry.”

REDs will be made up of power utility Eskom and local authorities, which will buy electricity from power generators at wholesale prices determined by the National Energy Regulator.

The launch of RED One is expected to pave the way for five other REDs, which will combine the distribution function of Eskom with that of 187 municipalities already distributing electricity in the country.

An operating agreement signed between RED One and Eskom commits both to continued good service delivery.

Hendricks said work was being done on the Electricity Regulation Bill to address limitations placed by current legislation on electricity distribution industry reform.

The legislation will be tabled in Parliament by the end of August.

“We will soon thereafter embark on a process to fast-track the electricity distribution restructuring legislation to ensure that work becomes easier and faster,” she said.

Cape Town is the first municipality in the country where a RED has been established.

The mayor of the city, Nomaindia Mfeketo, said RED One would maintain “relative price stability and reasonable tariff increases.

“We will strive as a matter of principle to ensure affordability, equity, sustainability and cost recovery in the price of electricity,” she said.

The mayor also announced that councillor Saleem Mowzer had resigned to become chief executive officer of RED One.

Source: BuaNews