Connection And Use Of System Code (CUSC) Rules

1. Introduction

Connection and Use of System Code (CUSC) Rules are regulatory rules that govern how electricity generators, distributors, large consumers and other users connect to and use an electricity network. A CUSC-type framework normally deals with connection rights, technical standards, network access, use-of-system charges, responsibilities of network operators, system capacity and dispute resolution.

In South Africa, there is not one single statutory document formally called the “CUSC” in the same way that some other electricity markets use that term. Instead, similar functions are performed through the South African Grid Code, electricity licences, connection agreements, tariff rules and the Electricity Regulation Act 4 of 2006. The Grid Code contains connection conditions for generators, distributors and end-use customers and provides standards for planning and developing the transmission system.

2. Legal Foundation

The main legal foundation is the Electricity Regulation Act 4 of 2006 (ERA). The Act regulates electricity generation, transmission, distribution, trading and related activities. Section 35 allows NERSA to make guidelines and publish codes dealing with relationships between licensees, customers and end-users and with the operation, use and maintenance of transmission and distribution systems.

In Eskom Holdings SOC Ltd v Sonae Arauco (Pty) Ltd (2024), the Supreme Court of Appeal explained that codes made under section 35 regulate relationships between electricity licensees and customers and can form part of licence conditions. The Court therefore treated the relevant electricity codes as legally binding regulatory instruments rather than merely informal policies.

3. Connection Rules

CUSC-type rules establish the procedure for obtaining a new grid connection or modifying an existing connection.

Under the South African Grid Code, a customer seeking transmission-system connection must apply to the Network Transmission Company and provide the required information. The network operator must provide appropriate cost estimates or quotations according to the approved tariff methodology. Contracting and connection timeframes are generally agreed between the relevant transmission service provider and customer.

The rules therefore create a structured process instead of allowing a network operator to accept or reject connections without regulatory standards.

4. Use-of-System Rules

After connection, users must comply with technical and operational requirements. These can include:

network performance;

protection systems;

voltage and frequency requirements;

fault-level requirements;

metering;

maintenance;

information exchange;

system security; and

compliance with system-operator instructions.

The Grid Code requires connected customers to meet specified technical requirements and provides mechanisms for dealing with poor network performance and disputes concerning responsibility or costs.

5. Network Costs and Charges

A major CUSC issue is deciding who should pay for network infrastructure.

Where a new connection requires reinforcement or expansion, the relevant costs must be allocated according to applicable regulatory and tariff rules. The South African Grid Code specifically provides that where a system development has a major cost effect on other customers, affected participants should be notified. If a dispute arises concerning funding, the matter may be referred to NERSA for a decision.

This prevents individual connection disputes from being treated purely as ordinary private contractual disputes.

6. Role of NERSA

NERSA has an important governance role. The Grid Code Governance Code identifies NERSA as the administrative authority responsible for ensuring that the Grid Code is compiled, implemented and complied with.

The Grid Code Advisory Committee (GCAC) supports consultation by reviewing proposed amendments and exemption requests and making recommendations to NERSA.

Therefore, CUSC-type governance involves both technical regulation and administrative accountability.

7. Relevant Case Law

Eskom v Sonae Arauco (2024)

This is particularly important because the SCA confirmed the legal significance of electricity codes. The Court held that codes issued under section 35 can bind licensees and regulate electricity-system operation. The case concerned load-shedding rather than a conventional CUSC dispute, but its reasoning is directly relevant to the legal status of Grid Code obligations.

Eskom v Lekwa Ratepayers Association and Vaal River Development Association (2022)

The case illustrates that electricity relationships involve both contracts and statutory regulation. Electricity supply agreements operate within the broader regulatory framework established by the ERA and NERSA. This is important for CUSC because a connection agreement cannot simply disregard mandatory regulatory requirements.

J R Properties CC v Eskom Holdings Ltd (2016)

This case concerned obligations relating to electricity infrastructure required for a development. It illustrates the practical importance of determining responsibility for connection infrastructure and the obligations of electricity suppliers in connection arrangements.

8. Dispute Resolution

CUSC-type rules also require mechanisms for resolving disputes. Disputes may concern:

refusal of connection;

connection costs;

technical compliance;

network capacity;

delays;

use-of-system charges;

quality of supply; or

responsibility for network reinforcement.

Depending on the nature of the dispute, the applicable Grid Code, licence conditions, contractual provisions and section 30 of the ERA may become relevant.

9. Importance for South Africa

CUSC-type rules are increasingly important because South Africa's electricity sector is becoming more decentralised. Renewable generators, independent power producers, battery storage, embedded generation and private electricity traders require predictable access to transmission and distribution networks.

NERSA's current regulatory work also includes rules concerning grid capacity allocation and third-party transportation of electricity, showing the growing importance of regulated network access.

Conclusion

Connection and Use of System Code Rules provide a framework for fair, technically safe and legally controlled access to electricity networks. Although South Africa does not use one single document formally called CUSC, its functions are substantially reflected in the Grid Code, licences, connection agreements, tariff rules and the Electricity Regulation Act. The framework balances the rights of network users with the duties of system operators and NERSA. The reasoning in Eskom v Sonae Arauco confirms that electricity codes can have binding legal consequences, making CUSC-type rules an important part of modern South African electricity governance.