Author: Gary Moore

Date: 18 November 2016

The National Energy Regulator Act, 2004[1] established a single Energy Regulator to regulate the electricity, piped-gas and petroleum pipeline industries.[2] The Act stipulates[3] that the Energy Regulator must undertake the functions of the Gas Regulator, the Petroleum Pipelines Regulatory Authority, and the electricity Regulator, as set out in the respective statutes governing these industries.[4]

The Act states that every decision of the Energy Regulator must be in “the public interest.”[5]

The courts have observed that the expression “the public interest” does not permit of a clear and comprehensive definition:[6] The precise meaning of such an expression, like most questions arising from use of vague and inexact language in Acts of Parliament, can be one of considerable difficulty, on which divergence of opinion is matter for no surprise.[7]

Arguably then, this provision of the Act, that the Regulator’s decisions must be in “the public interest,” is unduly vague and confers an unduly wide discretion:

The provision would thus violate the Rule of Law principles that laws should indicate with reasonable certainty what is required,[8] and that discretion should not be so broad that a regulator cannot determine the scope of its power.[9]

(It must be pointed out however that such a conclusion that the provision violates the Rule of Law is debatable: There is case law holding that a statutory provision that a licensing board must not grant a licence application unless it is in “the public interest” means unless “the public would be better served” if the applicant were granted the licence.[10]

(Applying this line of authority, the provision that the Regulator’s decisions must be in the public interest would not be vague: The Regulator would be enjoined to determine if “the public would be better served” by granting an application for a licence to (for example) operate an electricity generation, transmission or distribution facility; or import or export electricity; or be involved in electricity trading as a commercial activity.[11] Accordingly, so the reasoning would go, any discretion conferred by the “public interest” provision on the Regulator would be legitimate, in that the factors relevant to exercise of the power would be clear, and the Regulator would have expertise[12] relevant to the decisions to be made.[13]

(Thus the contention that requiring the Regulator’s decisions to be in “the public interest”[14] is unduly vague and confers an unduly wide discretion, and hence contravenes the Rule of Law, is not unassailable.)

[1] National Energy Regulator Act 40 of 2004. (This enquiry should be read with the corresponding analysis of the Electricity Regulation Act 4 of 2006 (1 Nov 2016).)

[2] National Energy Regulator Act s 3 read with Long title, s 1 sv “Energy Regulator” and s 2.

[3] National Energy Regulator Act s 4(1)(a), (b) and (c) read with s 1 svv “Gas Act” and “Petroleum Pipelines Act.”

[4] Gas Act 48 of 2001, Petroleum Pipelines Act 60 of 2003, Electricity Regulation Act 4 of 2006.

[5] National Energy Regulator Act s 10(1)(b).

[6] Ex parte President of the Conference of the Methodist Church of Southern Africa No: In re William Marsh Will Trust [1993] 4 All SA 416 (C) 420; Transnet Ltd t/a Metrorail and others v Rail Commuters Action Group and others; Rail Commuters Action Group and others v Minister of Safety and Security and another [2003] 4 All SA 228 (SCA) para [15].

[7] Rondebosch Municipal Council v Trustees of the Western Province Agricultural Society 1911 AD 271 282–3 about the expression “public purposes.”

[8] Affordable Medicines Trust and Others v Minister of Health of RSA and Another 2005 (6) BCLR 529 (CC) para [108].

[9] Affordable Medicines Trust and Others v Minister of Health of RSA and Another op cit paras [33], [34].

[10] Than that the existing state of affairs were to continue (concerning the expression “in the public interest” in Liquor Act 27 of 1989 s 22(2)(d)(i)(ee)). Maharaj v Chairman, Liquor Board 1997 (2) BCLR 248 (N) at 281G–I; Montagu Springs (Pty) Ltd t/a Avalon Springs Hotel v Liquor Board of the Western Cape and others [1999] 2 All SA 549 (C) at 558 per Full Bench.

[11] Electricity Regulation Act s 7(1)(1)(a),(b) and (c), read with s 1 svv “distribution,” “generation,” “transmission” and “trading.”

[12] The Minister must appoint as members of the Regulator persons who collectively have adequate legal, technical, business, economic or other experience relevant to the electricity, piped-gas and petroleum pipelines industries. Electricity Regulation Act s 6(2)(a).

The Regulator consists of four full-time and five part-time members. The Minister must designate one full-time member to be primarily responsible for electricity regulation, another for piped-gas regulation and another for petroleum pipeline regulation: s 5(1) and (4).

[13] Affordable Medicines Trust and Others v Minister of Health of RSA and Another op cit paras [33], [34].

[14] National Energy Regulator Act s 10(1)(b).

The following two tabs change content below.

Gary Moore

Gary Moore BA LL.B. (Witwatersrand) LL.M. (UC London) is a South African lawyer and Senior Researcher at the Free Market Foundation.

Leave a Reply

Your email address will not be published. Required fields are marked *