by Chris Yelland, EE Publishers (follow EE Publishers on Twitter) To comment and respond to this article, and/or to any of the views and positions expressed, visit EE Publishers' blog: "The best from EE Publishers...", click on the title of the article of interest, and respond.
After gazetting a flawed and widely criticised 3-year interim electricity integrated resource plan (IRP 1) on 31 December 2009, well after Eskom had submitted its initial (45% pa for 3 years) and revised (35% pa for 3 years) multi-year price applications to NERSA in the second half of 2009, the DoE is now franticly working on the long overdue real thing - a 20-year national integrated resource plan for electricity (IRP 2) as required in terms of the National Energy Act of 2008, the Electricity Regulation Act of 2006, and the Electrical Regulations on New Generation Capacity of 2009.
As it does not have the resources to do the task itself, the DoE has co-opted a task team of stakeholders (who are supposed to work as experts in their individual capacities), comprising: Kannan Lakmeeharan, Eskom System Operations and Planning Division; Callie Fabricius, Eskom Planning and Market Development; Mike Rossouw, Xstrata; Ian Langridge, Anglo American; Brian Day, Exxaro; Piet van Staden, Sasol; Kevin Morgan, BHP Billiton; Roger Baxter, Chamber of Mines; Doug Kuni, SAIPPA; Paul Vermeulen, City Power; Prof. Anton Eberhardt, UCT Graduate School of Business; Shaun Nel, project manager; plus four DoE members, Nelisiwe Magubane, Ompi Aphane, Thabang Audat and Ria Govender.
To ensure the confidentiality of the discussions and work of the DoE IRP Task Team, the above members have been required to sign a confidentially agreement, and may not communicate directly or otherwise with any third party, including the media, on matters related to both their involvement with the Task Team and the so-called "proprietary and trade secret information relating to the electricity sector in South Africa, including the business of Eskom and municipal electricity suppliers".
According to the terms of reference from the DoE dated February 2010, the DoE IRP Task Team is required to produce a technically competent and credible IRP that considers principles of electricity sustainability, affordability, accessibility, security of supply and environmental impact. Furthermore, the Task Team must develop a stakeholder strategy and plan for implementation by the DoE. Finally, they must develop, where necessary, a position around the legislative and regulatory framework that would be required to implement the IRP.
Perhaps controversially, the Task Team is required to work closely with Eskom's System Operations and Planning Division, and must utilise, review, update and refine a draft IRP produced by this division of Eskom on 21 October 2009. Critics argue that an IRP developed essentially by Eskom and fine-tuned by big mining and resource business interests will inevitably be unbalanced, and that the Task Team comprises a narrow group of stakeholders with significant vested commercial interests, instead of a balanced team of independent experts acting in the national interest.
This DoE IRP Task Team was constituted in February 2010, and reviewed the Eskom draft IPP in March and April 2010. The output of this will form a submission to a government inter-departmental task team, who will then produce a so-called "government IRP" for the commencement of a public participation process in June 2010. The final "national IRP for electricity" is then scheduled for completion and gazetting in September 2010.
Another draft policy document dated 15 March 2010 prepared by the DoE's Working Group 6 of the Inter-Ministerial Committee on Energy, entitled "Concept Paper on the Establishment of an Independent System and Market Operator (ISMO)", is however sharply critical of a central role for Eskom, which it says inhibits the development of industrial cogeneration and the entry of independent power producers (IPPs). This is attributed to Eskom's risk aversion and/or to a desire by Eskom to restrict competition in generation through the exercise of market power.
The concept paper says that there is a need to change the current business model, funding model and the market operator to attract investors. To this end, it says that the implementation of an Independent System and Market Operator (ISMO) is critical for the development of a sustainable environment that encourages IPP participation in assisting to resolve the energy crisis.
The document describes the current state of the South African electricity supply industry as characterised by inefficiencies in the current electricity structure, a lack of transparency, inefficient regulation, a lack of competition, and conflicts of interest.
The document argues that independence from ownership and control by market participants is key to the success of an independent system operator, so that the operator does not favour one over another, and that independence is not just a matter of fairness - it has real consequences; and that the transmission network must also be independent from the participants.
It appears that this document is putting forward a very different model for the electricity supply industry than that envisaged in the draft IRP prepared by Eskom dated 21 October 2009.
It is clear that the 20-year IRP 2 will determine a number of critical, long-term national energy and technology options having very important economic consequences, and involving massive generation, transmission and distribution capacity and infrastructure investments of well over R1,2-trillion over the next two decades.
It is therefore critical that this planning process be done meticulously and thoroughly in a non-partisan way in the national interest. However, after being without a valid IRP for several years, critics now argue that IRP 2 is being rushed through by partisan interests without the necessary in-depth research, attention to detail and diligence, and that this could have severe negative economic impacts for the country if the right long-term choices based on sound research and input are not made.
Whatever the truth of the matter, the future well-being of the economy of South Africa hangs in the balance, and requires the conclusion of a professionally conducted national planning process as soon as possible.
Let's also hope that the policy issues within and between the various government departments are resolved, and that the planning outcomes are properly aligned with these policies, otherwise there will be conflict brewing within both government and the electricity supply industry, with dire consequences.
To comment and respond to this article, and/or to any of the views and positions expressed, visit EE Publishers' blog: "The best from EE Publishers... ", click on the title of the article of interest, and respond. 
