Ensuring Universal Service

May 15, 2012

Phindile Nzimande, CEO,National Energy Regulatory of South Africa

STRIKING A BALANCEIN THE MIDST OF CHANGE

May 13-16, 2012Québec City, Québec (Canada)

Discussion Outline

1. Energy poverty

• The concept of energy poverty2. Energy poverty in the South African market context3. Interventions to tackle energy poverty4. Role of Regulators in ensuring access to energy:-

• Meeting the energy needs of remote customers• Sharing costs of universal access service• Challenges faced by Regulators in dealing with energy

poverty in developing markets

2

Energy Poverty: Electricity Consumption in Africa

Electricity consumption per capita in Africa is still very low compared to that of Western economies

But this map shows that even within Africa, there are stark differences in levels of access to electricity between South Africa and the rest of sub-Saharan Africa.

South Africa, electricity access at > 80%, while in some sub-Saharan Africa countries less than 20% of population has access to electricity

3

Energy poverty Concept

• Energy poverty refers to when a population does not

have access to regular, modern, clean and

affordable energy fuel supplies

• In the South African case, our population’s access to

electricity (the electrification rate) would be the best

indicator of our country’s energy poverty status

• Because, electricity is the most predominant energy

fuel used in South Africa

4

Addressing Energy poverty in South Africa

• Electrification programme is a government of South Africa’s policy

agenda – resulting from the White Paper on Energy Policy (1998)

• Electrification rate has increased from 30% in 1994 to about 80% in

2011 (5.4 million households connected) –Map on the next slide

shows electrification intensification

• Under universal access objective - 92% access to electricity by

2014/15 for all formal households

• Off Grid supplies:- 18 projects supply 28 845 households of which

19 320 get Free Basic Electricity (FBE)

• Free Basic Alternative Energy is supplied to 52 653 households

• Government budget allocation of US$375Million annually

5

Addressing Energy poverty in South Africa

Baseline: Access in 1996 (country was red to green)

6

Addressing Energy poverty in South Africa

National Progress: Access in 2010 (only pockets of red left, country becoming more blue)

7

Interventions to tackle energy poverty

Policy • The White Paper on Energy Policy (1998) underpins

increasing access to affordable energy services“Government commits itself to implementing reasonable legislative and other

measures, within its available resources, to progressively realise universal

household access to electricity.”Regulation• Inclining Block Tariffs• Allowance of transparent cross subsidies

8

Interventions to tackle energy povertyImplementation • Establishment of National Electrification Fund • Establishment of entity to drive electrificationEducation• Education on conservation & improve efficiency of

biomass fuel cook-stoves Non-grid electrification programmes • promise arising from renewable energy sourcesAffordability • lifeline tariffs, free basic electricity and inclining block

tariffs

9

Challenges faced by regulators in dealing with energy poverty

• Infant regulatory framework/policy about-turns?

• Lead time for the economy to transition from current

prices to cost-reflective prices – potential public/political

backlash

• Affordability – setting prices that maintains sustainable

cross-subsidies

• Enforcement powers and capacity of judiciary to allow

reviews/appeals of regulator decisions10

Conclusion

• Addressing energy poverty requires a variety of

measures and sustained investments

• Regulators have a role to play – engender regulatory

certainty to attract investments, transparency,

predictability, pricing and advising policy makers

• Renewable energy – an opportunity to increase access

to clean energy for all via off-grid/mini grids generation

• Pro-poor tariff still required to deal with energy fuel

affordability

11

Thank you

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