14 October 2024
Operationalisation of the Open Access Regulation
On 19 July 2024, the Zambian government, through the Ministry of Energy, enacted the Electricity (Open Access) Regulations, SI No 40 of 2024 (the “Open Access Regulations”). These regulations provide a legal framework that allows qualified participants to access and use the electricity transmission and distribution system in Zambia for a specified period. The regulations cover the application process for open access, transmission and distribution charges, and the roles of Zambia Energy Supply Corporation (ZESCO) and the Energy Regulation Board (ERB). They ensure fair access to the electricity market for stakeholders, including consumers with a consumption capacity of at least 1 Megawatt.
While transactions under the Open Access Regulations are in progress, it is important to address certain key issues that may affect the effective implementation of the regulations. These issues include:
Lack of a Pricing Methodology
The regulations allow a qualifying participant to apply for open access to a Transmission Network Service Provider (TNSP) or Distribution Network Service Provider (DNSP) using Form I, as outlined in the Schedule of the Open Access Regulations. According to the Electricity Act No.11 of 2019, a DNSP is responsible for operating, maintaining, and developing a distribution system within a specified area, while a TNSP is tasked with developing, maintaining, and operating a transmission network.
Currently, ZESCO serves as the dominant TNSP and DNSP in Zambia.
The application to the TNSP or DNSP must include documents such as a statement of the participant’s available infrastructure, a declaration of funds demonstrating financial viability, and the volume of electricity intended for transmission. Applications can be submitted either physically or electronically.
Despite the existence of an application process, there is currently no pricing methodology in place to determine the fees for access to the transmission and distribution systems. This absence of clarity may impede the effective implementation of the Open Access Regulations.
Additional Framework and Guidelines
A critical aspect of the Open Access Regulations is the development of guidelines and procedures for operating transmission and distribution systems. This responsibility lies with the system operator, a role currently held by ZESCO. These guidelines are essential for ensuring safe and efficient operations and include protocols for emergency situations.
The Energy Regulation Board is tasked with developing a pricing methodology to determine the fees a licensee may charge for access to transmission or distribution systems. Without such a methodology, participants are left to negotiate with the TNSP or DNSP, which creates uncertainty regarding the access fees or the criteria used to calculate them. This lack of clarity could hinder the implementation of the regulations.
It is important to note that, according to Regulation 21(2) of the Open Access Regulations, the guidelines and procedures must be submitted for approval to the Energy Regulation Board within 180 days of the regulations’ commencement—180 days from 19 July 2024. This timeline is likely intended to provide the system operator with enough time to develop the necessary guidelines.
Conclusion
The Open Access Regulations represent a progressive step by the Zambian government, with the potential to drive economic growth and attract new investments. By addressing the issues outlined above, Zambia can move toward fully realizing the benefits of these regulations, fostering a more competitive and efficient electricity market. This transformation could enhance reliability, promote innovation, and contribute to the overall development of the energy sector in Zambia.
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