http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.69Change: -0.05
R/$ = 12.32Change: -0.01
Au 1168.78 $/ozChange: -0.02
Pt 1083.00 $/ozChange: 1.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Sep 05, 2012

Eskom asked to integrate additional new-build options into tariff submission

Back
Eskom CFO Paul O'Flaherty on the reason for delaying its tariff submission to the National Energy Regulator of South Africa. Camera Work & Editing: Darlene Creamer. Recorded: 5.9.2012.
 
 
 
Africa|CoAL|Energy Intensive User Group|Eskom|Nuclear|Projects|Renewable Energy|Renewable-Energy|Africa|Kusile Power Station|Energy|State-owned Electricity Utility|Dipuo Peters|Eskom|Power|Sanyo R227 Portable Audio Device|South Africa
Africa|CoAL|Eskom|Nuclear|Projects|Renewable Energy|Renewable-Energy|Africa||Energy||Power||
africa-company|coal|energy-intensive-user-group|eskom|nuclear|projects|renewable-energy|renewable-energy-company|africa|kusile-power-station|energy|stateowned-electricity-utility|dipuo-peters|eskom-person|power|sanyo-r227-portable-audio-device|south-africa-region
© Reuse this



State-owned electricity utility Eskom, which was asked by government last week to refrain from delivering its tariff application to the regulator to allow for the inclusion of additional scenarios, has requested clarity as to the precise nature of these new considerations so as to enable it to redraft its request.

The initial deadline for submission to the National Energy Regulator of South Africa (Nersa) had been set for August 31 and CFO Paul O'Flaherty said on Wednesday that Eskom had been more than ready to submit its third multiyear price determination period (MYPD3) documentation, which ran to around 3 000 pages, by that date.

He stressed, too, that Eskom’s “compliant” and “competent” application had been widely canvassed with government and civil society stakeholders.

Nevertheless, O’Flaherty refused to be drawn on the quantum, or the phasing, of the increases being sought, saying only that the application that was meant to have been submitted on Friday had included “double digit” increases over the period.

The utility currently estimated cost-reflective tariffs to be 90c/kWh (real), against prevailing tariffs of around 60c/kWh and the application had been guided by the principle of transitioning towards cost-reflectivity over a five-year horizon, from April 1, 2013 to March 31, 2018. Such a transition was necessary to provide assurance to Eskom bondholders and to the credit ratings agencies that the utility had the standalone capacity to repay the R227-billion of borrowings it was raising to pay for its R323-billion build programme.

It had been reported separately that Eskom would be seeking yearly increases of between 14.6% and 19% over the period, which was likely to meet resistance from stakeholders. The Energy Intensive User Group had already indicated that prices were rising “too fast and too high” for companies to remain globally competitive.

Should the clarifications being sought from government be forthcoming by the end of the week, O’Flaherty said Eskom should be able to redraft its submission by the end of September or early October.

But Nersa, whose consultation timeframes were being curtailed by the delay, had the authority to set a new deadline. At this stage, there was broad-based agreement that the March 15, 2013, deadline for approval by Parliament should not be shifted.

OTHER CONSIDERATIONS

Government was concerned that the MYPD3 application had not catered for likely costs associated with any new Eskom projects beyond the Kusile power station, and had also limited the renewable energy horizon to those associated with the current process to procure 3 725 MW.

O’Flaherty said multiple scenarios had been considered, but Eskom felt it could only submit on the basis of approved projects, or for projects supported by a determination by the Energy Minister Dipuo Peters.

The application had also been informed by an assumption that energy demand would not grow by more than 1.9% a year, which was far below initial estimates of demand expanding by over 3% a year.

In other words, the application was not aligned to the Integrated Resource Plan (IRP2010), which implied additional new build costs that could arise during the MYPD3 period.

In fact, Peters indicated recently that she was poised to make determinations that would to transform the Renewable Energy Independent Power Producer Programme into a rolling procurement process in line with the IRP2010. She was also considering new determinations for the procurement of conventional capacity from independent power producers.

However, O’Flaherty said that, in the absence of these determinations or any “direction” on possible future build options, Eskom had had to make a call on what should be included in the application. Eskom also did not agree with the IRP2010’s demand growth assumptions, which had been a major feature in guiding the application.

“[For instance], it is already to late to expect a nuclear programme in 2023 – it’s too late. It’s also too late to expect that there is going to be 500 MW of new coal in 2014, as the IRP2010 indicates, because there have been no decisions.”

Besides the transition to cost reflectivity, O’Flaherty also confirmed that the MYPD3 had been premised on single-digit increases in primary energy costs and the institution of a mandatory energy conservation scheme.
 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Economy News
An end to wage negotiations within the local government sector could be in sight as a conciliator’s proposal, setting out a number of settlement suggestions to resolve the deadlock, was expected on Monday. The Independent Municipal and Allied Trade Union (Imatu)...
After becoming the first provincial government to adjudicate its central banking services tender selection process in public on Friday, the Gauteng provincial Government (GPG) now plans to roll-out the “transparent” tender award process across the province to...
JSE-listed black controlled and managed investment company Brimstone expects its earnings per share (EPS) and headline earnings per share (HEPS) for the six months ended June 30 to be negative, owing to the downward fair value adjustments to investments. The prior...
Article contains comments
More
 
 
Latest News
An end to wage negotiations within the local government sector could be in sight as a conciliator’s proposal, setting out a number of settlement suggestions to resolve the deadlock, was expected on Monday. The Independent Municipal and Allied Trade Union (Imatu)...
Development financier Eastern Cape Development Corporation (ECDC) executive Noludwe Ncokazi on Friday said the organisation had the “huge responsibility of ensuring business continuity”, following the resignation of ECDC subsidiary Automotive Industry Development...
South Africa’s second-largest oil refinery, Engen Refinery (Enref), is set to undergo a three-day planned maintenance outage from July 9 as part of an ongoing maintenance programme to ensure that the facility, which delivers a significant portion of South Africa’s...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
NHLANHLA NENE The main constraints to economic growth are domestic
Finance Minister Nhlanhla Nene earlier this month stated that, while South Africa’s 2015 economic growth target of 2% was achievable, it was not enough to deliver the tax revenue needed to combat the country’s challenges.
The World Steel Association has published the 2015 edition of the World Steel in Figures report, which shows an increase in steel production as well as provides an overview of steel industry activities from crude steel production to apparent steel use.
The 25-year master plan for Gauteng’s Aerotropolis project will go through a process of approval and adoption during June and July, says Aerotroplis project manager Jack van der Merwe. “We are also in the process of putting together a special purpose vehicle (SPV) to...
SOLAR PANELS The existing buildings in the Coega Industrial Development Zone lent themselves well to rooftop solar panel installations
The Coega Development Corporation (CDC) plans to fit 15 of its buildings, totalling 127 000 m2 of roof space, in the Coega Industrial Development Zone (IDZ), in the Eastern Cape, with solar panels.
The Supreme Court of Appeal’s (SCA’s) November 2014 judgment, ordering steel producer ArcelorMittal South Africa (AMSA) to hand over the 2003 Environmental Master Plan for its Vanderbijlpark steel plant to environmental pressure groups, confirmed the right of civil...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96