Electricity Transmission Infrastructure Regulations: What You Need to Know

On Thursday 3 April 2025, the Minister of Electricity and Energy ("the Minister") published the Draft Electricity Transmission Infrastructure Regulations ("Draft Regulations") pursuant to the powers which section 35(4) of the Electricity Regulation Act, 2006 ("the Act") vest in him. The Draft Regulations propose to establish the mechanisms that are necessary to give effect to the Determination which the Minister published on 28 March 2025 in accordance with the process envisaged under section 34(1)(b) of the Act ("Determination"). 

Bird's eye view of the Draft Regulations

The objectives of the Draft Regulations are to:

• facilitate planning for the procurement and establishment of transmission capacity by private parties to expedite the establishment of new electricity transmission infrastructure;
• support measures to enhance the reliability and security of the national transmission power system;
• facilitate electricity generation connection into the transmission power system; and
• ensure consistency and predictability in the implementation of section 34(1)(b) of the Act.

In pursuit of these objectives, the Draft Regulations set out: 

• the factors that the Minister must consider before deviating from the integrated resource plan ("IRP") or transmission development plan ("TDP") (regulation 4);
• the consultation process which the Minister must follow before making a determination (regulation 5); 
• the information that must be included in determinations. Key requirements include the transmission capacity required as well as the identity of the buyer, user or procurer of the required transmission capacity (regulation 6);
• the contents and outcomes of feasibility studies that may be commissioned prior to the finalisation or in the course of the implementation of a determination (regulation 7);
• the requirements where a determination contemplates establishment of cross-border transmission capacity (regulation 8);
• the possibility of energy infrastructure projects that combines new generation capacity, electricity transmission infrastructure and other interconnected infrastructure as contemplated in section 34(12) of the Act (regulation 9);
• the minimum content of transmission service agreements that govern the relationship between the buyer of the electricity transmission infrastructure and the transmission service (regulation 10); and
• the cost recovery factors which the Regulator must consider when determining licence conditions relating to the setting of prices and charges and transmitter's tariffs (regulation 11). 

The practical consequences of the Draft Regulations

The Draft Regulations form part of the legal framework concerned with the establishment of additional electricity, new generation capacity and electricity transmission infrastructure provided for under section 34 of the Act. The mechanisms proposed under the Draft Regulations thus cannot be considered in isolation but should be reviewed against the requirements imposed under section 34(1)(b) of the Act and in light of the information provided in the Determination.

With this in mind, the Regulations and Determination jointly identify the following:

• The transmission infrastructure: in the Determination, the Minister indicated that 400 kV transmission power lines with a total length of approximately 1,164 kilometres located in either the Northern Cape or North West or Gauteng Province or multiple provinces are required.
• The transmission service provider: a private party selected after a cost-effective, fair and competitive tendering process from independent transmission providers.
• The procurer of the transmission capacity: under the Determination is the Department of Electricity and Energy or more generally under the Draft Regulations an entity mandated by the Minister. As the procurer, the Department is responsible for the preparation, management and implementation of the activities related to the procurement of transmission capacity, including the negotiation of the applicable transmission services agreements.
• The buyer: Under the Determination, the National Transmission Company of South Africa SOC Limited ("NTCSA") will be the only buyer of the transmission infrastructure procured. 

Looking down the road

The Department (as procurer) will facilitate the tender process by preparing requests for proposals and facilitating the drafting of transmission services agreements and other project documents. The NTCSA is then required to enter into the transmission services agreement and other project agreements with the transmission service provider. 

We anticipate that the NTCSA will own the project assets of the transmission infrastructure envisaged under the Determination and be responsible for the transmission of the capacity generated. The transmission service provider, in turn, will be responsible for the development, finance and maintenance of the transmission infrastructure. This model is akin to the Build-Transfer-Operate investment model where the transmission service provider transfers the transmission infrastructure to the public utility after construction. This anticipation is based on the fact that the Determination identifies the NTCSA as the only buyer of electricity transmission infrastructure and because the transmission service providers are not expressly identified as transmitters of the capacity generated from the transmission infrastructure.

The Draft Regulations in addressing cost recovery allude to the buyer being able to recover, at least, the full amount of the costs incurred by the buyer in capacity and availability payments. Based on this it appears that the project company through which the transmission service provider establishes the transmission infrastructure would derive its revenue based on the availability of the transmission capacity. Under such circumstances penalties and deductions would be imposed for non-availability of transmission capacity. This revenue model follows the availability-based model in emerging electricity transmission markets like Peru and Brazil.

In conclusion, the Minister invited interested persons and organisations to submit written comments on the Draft Regulations by 3 May 2025. The Minister now has an opportunity to consider the submissions and where required revise the draft provisions. To ensure that the framework established under the Regulations follows international best practice the Minister ought to ensure that the mechanisms prescribed under the Regulations are fair, impose clear procedures and obligations and provides for processes that result in predictable outcomes.

Once the final Regulations are published, they will play a fundamental role in the South African government's efforts to upgrade the country's transmission infrastructure. Ideally, they should also contribute positively to the country's investment climate and attract greater investment in South Africa's electricity sector.