The Economic Regulation of Transport Act, 2024 (Act No. 6 of 2024)Chapter 3 : Economic Regulation of Transport Facilities and ServicesPart A : Price Regulation11. Determination of price controls |
| (1) | Every regulated entity is subject to price regulation in accordance with a price control determined by the Regulator. |
| (2) | The price control for a regulated entity may comprise— |
| (a) | a schedule of tariffs, charges, fees, tolls or other amounts that may be imposed by the regulated entity for the use of, or access to, any transport service or facility offered by that regulated entity; |
| (b) | a limit on the total amount of revenue it may raise from the facilities and services offered by it; |
| (c) | a limit on the return it may derive from the assets utilised by it to provide its facilities and services; or |
| (d) | any other appropriate pricing method, including any combination of the methods contemplated in paragraphs (a) to (c). |
| (3) | Each regulated entity must submit a proposal to the Regulator, requesting approval of a price control for the facilities and services offered by that regulated entity. |
| (4) | When considering a proposal submitted in terms of this section, the Regulator must— |
| (a) | consult with interested parties and the public in the prescribed manner; |
| (b) | determine whether the proposal is fair and reasonable, after considering all relevant circumstances, including— |
| (i) | the regulated entity’s operating efficiency and effectiveness; |
| (ii) | the need for investment and security of supply in the regulated market; |
| (iii) | the opportunity cost of capital including the average rate of return on other domestic or international facilities or services having similar or comparable risk; |
| (iv) | the actual or forecast cost of debt; |
| (v) | any reasonable cost differentials between the different types of facilities or services provided, arising due to geographical location or any other characteristic that the Regulator may deem relevant; |
| (vi) | the likely effect of the proposed price control on the economy, employment, consumers and small or medium enterprises; |
| (vii) | any advantage or disadvantage an operator has as a result of state investments, transfers, laws and regulation; and |
| (viii) | any other specific criteria prescribed by regulation. |
| (5) | If the proposal for the price control approval relates to a service that is subsidised, the Regulator must consult with a party that is providing a subsidy, in the prescribed manner. |
| (6) | The Regulator must consider any requests of the subsidising party, and to the extent possible, in a cost-effective manner, must grant requests for— |
| (a) | the details of the price control to be coordinated with the subsidising party’s budget cycle; |
| (b) | changes to the service level associated with the price control; |
| (c) | slower implementation of price changes, subject to the payment of compen-sation for the delay to the operator; or |
| (d) | access to any data on operator performance collected by the Regulator. |
| (7) | If the level of an existing subsidy changes materially, or a subsidy is introduced for a new service, the Regulator, on request by any interested party, may undertake research on the impact of the subsidy on intermodal competition, and provide an opinion to the party providing the subsidy and the requesting party. |
| (8) | The Regulator must consider each price control proposal on its merits in terms of subsection (4), and may— |
| (a) | determine the price control— |
| (i) | as proposed by the regulated entity, with or without conditions; or |
| (ii) | as varied by the Regulator, with or without conditions; or |
| (b) | require the regulated entity to submit a new or additional request, addressing any concerns that the Regulator may have, which may include a requirement to propose a different price control than originally proposed. |
| (9) | When determining a price control, the Regulator may impose conditions that— |
| (a) | provide for an annual adjustment to reflect changes in the relevant price index; |
| (b) | set service standards and a price rebate mechanism if such service standards are not met in respect of any activity that is subject to the price control; or |
| (c) | permit the relevant regulated entity to enter into an agreement with any other person to charge and pay at a rate other than set by the price control, if the deviation from the price control can be justified in terms of a mutually acceptable deviation from standard terms of service, which is associated with changes in the cost of service provision. |
| (10) | Before the price control deviation is implemented, the relevant regulated entity must submit, to the Regulator— |
| (a) | a calculation of the impact of the proposed price control deviation on the entity’s revenues, costs and profitability, as well as, any other relevant material financial management metrics; |
| (b) | a statement declaring whether the proposed price control deviation will materially affect the basis on which the overarching price control is determined; and |
| (c) | a statement declaring that other customers of the regulated entity will not be subjected to price increases or reductions in service quality as a result of the proposed price control deviation. |
| (11) | Within 15 business days of receipt of the price deviation request contemplated in subsection (10), the Regulator may, within 60 business days review the impact of the proposed price deviation and determine whether or not to approve it. |
| (12) | A price control, or any amendment to it, as determined by the Regulator— |
| (a) | must be published by the Regulator in the Gazette or in any other appropriate manner; |
| (b) | takes effect on a date determined by the Regulator by notice in the Gazette or in any other manner contemplated in paragraph (a); and |
| (c) | remains in effect until it has been withdrawn or replaced by a notice in the Gazette or in any other manner contemplated in paragraph (a), subject to— |
| (i) | any decision of the Council in terms of section 20, or of a Court after a review in terms of section 28(6); or |
| (ii) | any subsequent reduction in terms of section 21. |
| (13) | In respect of any facilities or services that are offered by a regulated entity and subject to a price control contemplated in subsection (2)(a), the regulated entity may not charge any person more than the maximum established— |
| (a) | in accordance with the price control as determined and published by the Regulator, or as subsequently reduced in terms of section 21; or |
| (b) | by agreement to the extent permitted in terms of subsection (9)(c). |