Connection and Use of System Code (CUSC) Governance

1. Introduction

The Connection and Use of System Code (CUSC) is a regulatory framework that establishes rules governing the connection of electricity generators, distributors, consumers and other network users to an electricity transmission system and their use of that system.

CUSC-type governance is important because electricity networks are shared infrastructure. Different users must have access to the network while technical safety, reliability, capacity and financial responsibilities are maintained.

In South Africa, there is not currently a single statutory document called the CUSC equivalent to the CUSC used in some foreign electricity markets. 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 South African Grid Code Network Code expressly contains connection conditions for generators, distributors and end-use customers and establishes standards for planning and developing the transmission system.

2. Main Purpose of CUSC Governance

CUSC governance has several objectives.

A. Regulating Grid Connections

The framework establishes procedures through which new generators, renewable-energy projects, industrial consumers and distributors can obtain network connections.

The South African Grid Code requires a customer seeking a transmission connection, or a modification of an existing connection, to submit an application with the required technical information.

B. Defining Technical Standards

CUSC-type rules establish requirements relating to:

voltage;

frequency;

protection systems;

metering;

power quality;

network stability;

operational communication; and

safety.

These requirements ensure that one user's connection does not damage the reliability of the wider electricity system.

C. Allocating Costs

Connection governance also determines who pays for connection infrastructure and network reinforcement.

The South African Grid Code Network Code requires the transmission network company to provide connection quotations or cost estimates according to the approved tariff methodology.

D. Managing Existing Network Users

The rules can also govern changes to existing connections, capacity increases, maintenance, outages, curtailment and compliance with technical requirements.

3. Institutional Governance

The South African Grid Code has a specific governance structure. NERSA is the administrative authority for the Grid Code, while the Grid Code Advisory Committee (GCAC) provides a consultative stakeholder mechanism and reviews proposed amendments and exemptions.

This is important because technical electricity rules should not be developed entirely by a single network operator. Stakeholder participation and regulatory approval provide greater accountability.

4. Relationship Between CUSC and Contracts

CUSC governance operates together with individual connection agreements.

The Code establishes general technical and regulatory requirements, while the connection agreement normally contains project-specific obligations concerning:

connection point;

construction;

equipment;

capacity;

costs;

commissioning;

operation;

maintenance;

liability; and

dispute resolution.

A contract cannot simply remove mandatory regulatory requirements. Where there is a conflict, statutory requirements and applicable Grid Code obligations remain important.

5. Relevant Case Laws

Eskom Holdings v Sonae Arauco (2024)

This Supreme Court of Appeal case is particularly important for Grid Code governance.

The Court explained that codes made under section 35 of the Electricity Regulation Act regulate relationships between electricity licensees and users and the operation, use and maintenance of transmission and distribution systems. The Court also confirmed that the relevant Codes form part of licence conditions and bind licensees such as Eskom.

Although the case concerned load-shedding rather than a CUSC, it establishes an important principle: Grid Code requirements have legal significance and are not merely voluntary technical guidelines.

Eskom v Lekwa Ratepayers Association (2022)

The Supreme Court of Appeal confirmed that generation, transmission and distribution are regulated under the Electricity Regulation Act and that NERSA is the electricity-sector regulator. It also examined the contractual and regulatory relationship between Eskom and municipalities concerning notified maximum demand.

The case demonstrates that electricity network relationships are governed by both contracts and statutory regulation.

Eskom v Vaal River Development Association (2022)

The litigation also demonstrated that electricity supply decisions can have major consequences for municipalities and consumers. The Court recognised that Eskom, as an organ of state, operates within constitutional and statutory obligations rather than through purely private contractual powers.

This principle is relevant to CUSC governance because network-access decisions can affect essential public services.

Sibanye Gold v Eskom (2026)

The High Court considered a proposed solar PV project and issues concerning Eskom electricity infrastructure and access to transmission lines. The case demonstrates the importance of technically supported and legally authorised decisions concerning access to electricity infrastructure.

Although the case did not directly interpret a CUSC, it is relevant by analogy to modern connection governance because renewable-energy developers increasingly require access to existing transmission infrastructure.

6. Legal Principles of CUSC Governance

A strong CUSC governance framework should follow several principles.

Transparency: Connection requirements, costs and procedures should be clearly published.

Non-discrimination: Comparable network users should receive comparable treatment.

Technical reliability: Network connections must not compromise system security.

Accountability: Decisions to approve, reject or modify connections should be supported by proper reasons.

Regulatory oversight: NERSA should retain appropriate supervisory authority.

Stakeholder participation: Network users should have meaningful opportunities to participate in Code development and amendments.

7. Importance for Renewable Energy

CUSC-type governance is increasingly important because South Africa is connecting large amounts of renewable generation, battery storage and private electricity projects to the grid.

A clear connection framework can reduce disputes, provide predictable investment conditions and ensure that new projects comply with technical requirements.

It can also help manage transmission congestion, because connection decisions must consider available network capacity and the need for future reinforcement.

Conclusion

CUSC governance provides a structured framework for managing grid connection, network use, technical standards, costs, capacity and responsibilities.

South Africa does not presently rely on one document formally titled CUSC. Instead, comparable governance is found in the South African Grid Code, the Electricity Regulation Act, NERSA rules, licences and connection agreements.

The cases of Eskom v Sonae Arauco, Eskom v Lekwa Ratepayers Association, Vaal River Development Association and Sibanye Gold v Eskom demonstrate important principles concerning the legal status of Grid Codes, regulatory authority, contractual relationships and infrastructure access. These principles provide a strong foundation for developing clearer CUSC-style governance as South Africa's electricity system becomes more decentralised and interconnected.