Section 26: Competition during the post privatisation stage

(1) Immediately following the declaration by the Minister, under section 24 (3), that a more competitive market is to be initiated:
(a) the trading licensee described in section 25 (a) shall not enter into any further contracts for the purchase of electrical power or ancillary services and it shall, in accordance with its licence, begin the process of novating its existing rights and obligations to purchase electrical power and ancillary services to other licensees;
(b) successor generation companies shall, in accordance with their licences, sell electrical power to distribution companies and eligible customers, under the terms of any contracts existing prior to the declaration by the Minister, pursuant to section 24 (3), or under the terms of any new contracts with distribution companies and eligible customers;
(c) successor generation companies shall, in accordance with their licences, sell ancillary services either to :
(i) the successor company identified in section 25 (b), under the terms of the contracts entered into prior to the declaration by the Minister, under section 24 (3), until such contracts are novated to an independent system operator, or under the terms of any new contracts with such successor company; provided that such contracts should allow for novation to the independent system operator in the same manner as specified in section 25 (d); or
(ii) the independent system operator, once it has been established under section 25 (d) ;
(d) independent power producers shall, in accordance with their licences, sell electrical power:
(i) to the trading licensee described in section 25 (a), under the terms of the contracts formed with that trading licensee prior to a declaration by the Minister, under section 24 (3), until such contracts are novated to distribution companies or eligible customers; and, following such novations ;
(ii) to distribution companies and eligible customers, under the terms of any contract formed with such distribution companies and eligible customers ;
(e) independent power producers shall, in accordance with their licences, sell ancillary services:
(i) to the trading licensee described in section 25 (a), under the terms of the contracts formed with that trading licensee prior to the declaration by the Minister under section 24 (3), until such contracts are novated to distribution companies or eligible customers; and, following such novations;
(ii) to the successor company identified in section 25 (b), under the terms of the contracts entered into prior to the declaration by the Minister under section 24 (3), until such contracts are novated to an independent system operator, or under the terms of any new contracts with such successor company; provided that such contracts should allow for novation to the independent system operator in the same manner as specified in section 25 (d) ; or
(iii) the independent system operator, once it has been established under subsection (7) of this section;
(f) the successor company identified in subsection 1(b) of this section shall, in accordance with its licence, purchase ancillary services pursuant to the terms of the contracts for ancillary services that it has entered into with successor generating companies and with the trading licensee described in subsection 1(a) of this section and with independent power producers prior to the declaration under section 24 and it may also purchase ancillary services under the terms of contracts novated to it under section 25 (d) (i), until all such contracts are novated to an independent system operator established pursuant to subsection (7) of this section ;
(g) distribution licensees shall purchase electrical power in accordance with their obligations to purchase under subsection (1) (b) and (d) of this section and pursuant to those obligations that have been novated to them under subsection (1)(a) of this section, and may also purchase other supplies of power from generation licensees and trading licensees, all in accordance with the terms of their respective distribution licences; and
(h) eligible customers shall purchase power in accordance with their obligations to purchase under subsections (1) (b) and (d) of this section and pursuant to those obligations that have been novated to them under subsection (1) (a) of this, section; and may also purchase other supplies and powers from generation licensees or from trading licensees.
(2) The Minister shall recommend to the President for approval of market rules, to be developed by the system operator:
(a) for the operation of the national grid by the system operator; and
(b) for the establishment and governance of markets related to electricity and ancillary services.
(3) In respect of markets for electricity and ancillary services, the market rules may include provisions:
(a) governing the making and publication of market rules;
(b) settlement of payments among different participants ;
(c) authorizing and governing the making of orders by the system operator, including orders:
(i) imposing financial penalties on market participants ;
(ii) authorising a person to participate in the markets ; or
(iii) terminating, suspending or restricting a person's rights to participate in the markets ; and
(d) concerning the administration and enforcement of the market rules, including provisions for market rule amendments, dispute resolution, penalties and market surveillance.
(4) A market rule may be general or particular in its application.
(5) The system operator shall publish the market rules in accordance with the publication provisions within the market rules and shall make the market rules available for public inspection during normal business hours at the offices of the system operator.
(6) Amendments to the market rules shall be developed by the system operator in accordance with the amendment provisions in the market rules, provided that all amendments shall be approved by the Commission before they come into force and provided that the system operator shall, in accordance with the market rules, publish any proposed amendment to the market rules at least 22 days before the proposed amendment comes into force.
(7) At any time following the declaration of a substantially privatised market under section 24, the successor company identified in section 25 (b) may transfer the function of system operation to an independent system operator on such terms and conditions as the Commission may direct and on such transfer, the independent system operator shall be subject to the same powers and duties as have been imposed on the transferring successor company under this Act in relation to system operation.