http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.51Change: 0.07
R/$ = 10.50Change: 0.05
Au 1287.44 $/ozChange: -8.13
Pt 1412.00 $/ozChange: -16.50
 
 
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
 
Nelson Mandela 1918 - 2013   Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science & Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Suppliers Directory Research Jobs Announcements 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.
Energy Intensive User Group|Eskom|Projects|Renewable Energy|Kusile Power Station|State-owned Electricity Utility|Dipuo Peters|Eskom|Sanyo R227 Portable Audio Device|South Africa
energy-intensive-user-group|eskom|projects|renewable-energy|kusile-power-station|stateowned-electricity-utility|dipuo-peters|eskom-person|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
 
 
 
 
 
 
 
 
Other Infrastructure News
MORE IN SA Phase 2 should see local content on the mainline locomotive increase from 65% to 80% by the end of 2014
The world’s lowest-cost diesel-electric locomotive is not made in China, but in Pretoria, at RRL Grindrod Locomotives’ newly upgraded 30 000 m2 plant. The company’s locomotive pricing is “more competitive than any other original-equipment manufacturer (OEM)...
HYDROPOWER POTENTIAL The 2 067 MW Laúca hydropower station will provide electricity for about 750 000 Angolans
Work on the 2 067 MW Laúca hydropower station, in Angola’s Kwanza riverbed, has started. The country aims to have the facility commissioned by the end of 2017, says Angolan State-owned power utility Empresa Nacional de Electricidade de Angola (ENE) international...
Renewable-energy projects, such as this Northern Cape solar farm, seen as key to low‐carbon energy supply.
Upfront investment costs will and should remain a critical consideration as South Africa moves to upscale and accelerate its infrastructure programmes. But one of the lead authors of the latest Intergovernmental Panel on Climate Change (IPCC) argues that the...
More
 
 
Latest News
Few would argue with the notion that unemployment, which stands at around 25% on the narrow definition as reported by Statistics South Africa, remains one of the country’s most pressing challenges. Fewer still could contest the view that South Africa’s education...
Renewable-energy projects, such as this Northern Cape solar farm, seen as key to low‐carbon energy supply.
Upfront investment costs will and should remain a critical consideration as South Africa moves to upscale and accelerate its infrastructure programmes. But one of the lead authors of the latest Intergovernmental Panel on Climate Change (IPCC) argues that the...
The barrier to efficient water service delivery in South Africa was not of a technological nature but rather related to legal and Constitutional challenges, Water Research Commission (WRC) CEO Dhesigen Naidoo said on Thursday. Opening a WRC debate under the theme...
More
 
 
Recent Research Reports
Steel 2014: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2014 report provides an overview of the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon steel and stainless...
Projects in Progress 2014 - First Edition (PDF Report)
This publication contains insight into progress at the delayed Medupi and Kusile coal-fired projects, in Mpumalanga and Limpopo respectively, as well as at the Ingula pumped-storage scheme, which is under construction on the border between the Free State and...
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
 
 
 
 
 
This Week's Magazine
The Electronic Systems Laboratory (ESL) of the Department of Electrical and Electronic Engineering at Stellenbosch University is strongly reaffirming its position as one of South Africa’s leading centres for satellite technology and expertise. It is currently...
MORE IN SA Phase 2 should see local content on the mainline locomotive increase from 65% to 80% by the end of 2014
The world’s lowest-cost diesel-electric locomotive is not made in China, but in Pretoria, at RRL Grindrod Locomotives’ newly upgraded 30 000 m2 plant. The company’s locomotive pricing is “more competitive than any other original-equipment manufacturer (OEM)...
The South African Defence Review 2012, released to the public at the end of last month (despite the year given in its title) recommends the creation of the post of Chief Defence Scientist. This official would be responsible for the management of defence technology...
AltX-listed engineering technology company Ansys has been awarded an R188-million contract by Transnet to supply integrated dashboard display systems to the freight rail utility’s locomotives. Black-owned and controlled Ansys developed the bespoke integrated system...
South Africa’s sole nuclear power station Koeberg, which is located in the Western Cape, breached a major operations milestone on April 4, which marked the thirtieth anniversary of Unit 1 having been connected to the grid. Eskom, which operates the two-unit plant,...
 
 
 
 
 
 
 
 
 
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