Parliament gives birth to ISMO system

ISMO  to get Eskom’s transmission assets…

In practical terms, the transfer of electricity transmission assets (as distinct from the grid itself) from Eskom into the body of a new government utility known as the Independent System Market Operator (ISMO) has begun in theory.

This follows the agreement of the portfolio committee of energy to process the ISMO Bill in phases in the light of the fact that in practice whilst the exercise has only just commenced “on the ground”, nevertheless, a regulatory environment in which to transfer Eskom transmission assets in the course of time is needed.

Eskom at helm of exercise

The committee acknowledged such a transfer is in fact a lengthy and highly technical process, on the whole completely supervised and finally staffed by Eskom staff, they themselves being transferred to the new entity.

The state law advisors (SLA) present at a recent meeting of parliament’s energy portfolio committee agreed that such a “phased in” approach to the Bill was possible but with careful drafting of a time frame or “framework” to accompany the process.

SLA needs certainty on process of writing changes

This was providing each clause of the Bill before Parliament, said SLA, had the both the agreement and political sanction of the committee beforehand, enabling the SLA to re-write the Bill with certainty.

The purpose of moving in such direction was to provide an enabling environment to the initial phases of creating such a statutory body as an ISMO and at the same time providing clear intent and certainty in the marketplace that such a process was due to take place.

Some reservations were expressed in opposition circles that an operating environment would be particularly difficult for industry and commerce to go forward in with only a partially completed legal and regulatory environment present. Independent power producers (IPPs) were finding it difficukt to strategise without the playing field being defined. It was stated also that agreement on all aspects of the establishment of an independent transmission operator had not yet been agreed to by all parties.

However, the consensus was, with the agreement of SLA, that movement forward could be established in terms of a timing framework being written into or accompanying the Bill as far as the implementation of the portions of the Bill were concerned.

Meeting presidential requirement stated in SONA

Thus Parliament could meet the presidential requirement stated by President Zuma in the state of nation address (SONA) that the ISMO Bill be created as soon as possible and whilst it was appreciated that much of the creation of such a state utility as an entity could happen much of the detail such as the transfer of assets and the question of operational ability would be a much slower and detailed process.

Meetings have now taken place over the next few weeks re-drafting the Bill on this basis and a “B” draft version of the Bill produced clearly defining a portion for a timing framework and one for the usual definitions and establishment provisions.

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