- Eskom identifies ten legal flaws in draft trading rules and reserves right to seek court review.
- Municipal bodies back utility stance while traders call for refinements to strengthen competition.
- Ramaphosa confirms independent state owned Transmission System Operator as restructuring enters final phase.
Eskom has warned that it may pursue legal action if draft electricity trading rules under consideration by the National Energy Regulator of South Africa (NERSA) are approved without significant amendments, raising fresh questions about the pace and sequencing of South Africa electricity market reform.
The state owned utility tabled its concerns during virtual public hearings convened by the regulator yesterday. Eskom representatives Onicah Rantwane and Camintha Moodley outlined a series of legal and structural objections, arguing that the proposed framework could undermine an orderly and phased transition to a competitive electricity market.
Moodley identified ten legal concerns that Eskom believes render the draft rules vulnerable to review. These include references to provisions contained in a market code that has not yet been approved, as well as clauses that the utility says conflict with existing legislation affirming the licensed rights of Eskom and municipalities to distribute and supply electricity.
Eskom maintains that, in their current form, the rules could weaken investor confidence and compromise the sustainable implementation of retail competition. While the utility has reiterated its support for a competitive bilateral trading environment, it has stressed that market opening must follow a structured and sequenced approach. Eskom has confirmed that it reserves its right to institute a legal review in terms of the National Energy Regulation Act.
The development follows Eskom 2025 High Court review application challenging the regulator decision to grant trading licences to five companies. Although that application was previously stayed to allow regulatory processes to proceed, Eskom has indicated that it is continuing with the review to protect its legal position.
Rantwane argued that aspects of the draft framework could allow certain market participants to avoid system and policy related costs, including fixed generation and grid infrastructure expenses, legacy costs and social subsidies. Eskom has proposed that all grid connected customers should be subject to non-bypass charges, separated from energy charges, to ensure full cost recovery and preserve the financial sustainability of incumbents.
To support a phased market opening, Eskom has put forward two alternatives. The first is a tariff reform driven approach, in which broader tariff adjustments are implemented before expanded market access is granted. The second is a volume restricted approach, under which private sellers would initially be limited in the volume of electricity they may supply. In motivating this option, Eskom cited Namibia decision to cap the share of electricity supplied to large customers by private sellers at 30 percent during the initial phase of reform.
Municipal backing and industry response
Eskom position has received support from the South African Local Government Association and the Association of Municipal Electricity Utilities, which have called for more structured engagement with the regulator as the framework evolves.
By contrast, most licensed traders and industry bodies have broadly endorsed the draft framework, while proposing targeted refinements to enhance investment certainty and customer choice. Stakeholders including the South African Electricity Traders Association, independent energy traders and Sasol have called for clearer market rules and streamlined supplier switching processes.
Several participants urged that the scope of the trading rules be extended beyond high voltage transmission customers to include medium and low voltage users. Others argued that tariff reform, wheeling arrangements, grid allocation mechanisms and participation in the forthcoming wholesale market should be addressed separately to maintain regulatory clarity.
The outcome of the regulator deliberations is expected to have material implications for utilities, municipalities, traders and investors across the electricity value chain.
Transmission reform and restructuring gain momentum
The regulatory debate unfolds against the backdrop of renewed policy clarity at national level. In his 12 February 2026 State of the Nation Address, President Cyril Ramaphosa reaffirmed government commitment to modernising the electricity sector, finalising Eskom restructuring and accelerating grid expansion to secure long term energy stability.
In a decisive intervention, the President confirmed that South Africa will establish a fully independent, state owned Transmission System Operator that will own and control national transmission assets and operate the electricity market. The move resolves recent uncertainty over whether these assets would remain under Eskom Holdings and aligns with calls from organised business for a standalone national transmission company.
Government has established a dedicated task team under the National Energy Crisis Committee to oversee the phased implementation of Eskom restructuring. The task team is mandated to address outstanding issues and report directly to the President within three months.
The unbundling of Eskom into separate generation, transmission and distribution entities is regarded as one of the final structural reforms required to entrench competition and prevent a return to supply instability.
With nationwide load shedding officially ended, government is now targeting the elimination of load reduction by 2027. This will require coordinated provincial interventions to address transformer overloading, illegal connections and infrastructure failures.
Framing the next phase as a shift from power generation crisis response to structural reform, Ramaphosa set a target for more than 40 percent of South Africa electricity supply to come from renewable sources by 2030. Regulatory reforms have already unlocked a substantial pipeline of private investment in wind and solar generation.
To support this expansion, the first round of independent transmission projects will be launched this year, opening the grid to private capital participation. Through the Infrastructure Fund and updated public private partnership regulations, government aims to reduce project risk and accelerate delivery across energy and other strategic infrastructure sectors. Read more
As South Africa advances toward a more competitive electricity market, alignment between regulatory design, institutional reform and investor confidence will be critical to sustaining momentum.
Author: Bryan Groenendaal
