Jun 22, 2012
Eskom moves to secure five-year tariff visibility as it initiates MYPD3 processBack
Construction|Engineering|Africa|Eskom|Public Enterprises|Renewable Energy|Renewable-Energy|Africa|Energy|Brian Dames|Hilary Joffe|Jacob Zuma|Malusi Gigaba|Power|The National
© Reuse this
In other words, the application, which Eskom hopes to formally submit to Nersa during July, covers a period from April 1, 2013, through to March 31, 2018. No further details as to the nature of the application have been provided, including the size of the increases being sought.
The utility has submitted a draft of its proposed MYPD3 application to the South Africa Local Government Association (Salga) and the National Treasury for comment, in compliance with the requirements of the Municipal Financial Management Act.
Both entities have 40 days in which to comment, but Eskom is hoping to accelerate this mandatory consultation process in order to meet its stated goal of making a final application to Nersa next month.
The regulator will then initiate public hearings on the application, before making a final determination, which Public Enterprises Minister Malusi Gigaba has to table to lawmakers by March 15, 2013.
Eskom says the five-year determination period should help ensure ‘a predictable, longer-term price path for customers, investors and the country’.
CE Brian Dames has indicated previously that the application will take its cue from President Jacob Zuma’s State of the National address, in which Zuma outlined the need for a moderation in the rate of tariff increases.
However, he has also indicated that the principle of transitioning towards cost-reflective tariffs will be incorporated.
Dames insists that power tariffs are not yet cost reflective, despite a slew of double-digit price increases since 2008, which increased the utility’s average selling price to 50.3c/kWh in 2011/12, up from 40.3c/kWh in the prior year – ahead of the increases, Eskom’s average tariffs were closer to 20c/kWh.
Dames has also indicated that the average of 77c/kWh being paid to independent power producers (IPPs) is more in line with what would be cost reflective.
But once the new power stations that are currenlty under construction (Medupi, Kusile and Ingula) are included, together with the new renewable energy IPPs that will emerge over the coming few years, it is anticipated that a cost-reflective tariff could be higher than 95c/kWh.
It is anticipated, therefore, that Eskom could apply for increases of around 15% a year for the five-year period, which would raise tariffs to closer to 98c/kWh by the end of the period.
However, various scenarios will be presented and it will be up to Nersa to make the final determination.
Eskom spokesperson Hilary Joffe tells Engineering News Online that Eskom’s draft application contains a number of assumptions and scenarios, including expectations for primary energy inflation, as well as the cost associated with the introduction of renewable energy and conventional IPPs, as currently outlined in the Integrated Resource Plan.
She says the utility wants to offer the National Treasury and Salga an opportunity to digest and comment on the application and its assumptions before releasing further details.
But Dames has also indicated that the MYPD3 application will seek to balance the need to improve the long-term financial viability of the group, which includes incorporating IPPs, with the economy’s need to sustain growth and create jobs.
It will also include proposals for shielding poor consumers from the full brunt of future increases.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Regulation News
Article contains comments
A trading demonstration has showcased the applicability, functionality, utility and readiness of the well-established, commercial and financial electronic infrastructure provided by private-sector commodity registry Silocerts and the JSE as a potential platform for...
Recent Research Reports
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
This Week's Magazine
The international Square Kilometre Array (SKA) radio telescope – which is to be jointly hosted by South Africa and Australia with, later, outstations in other countries – may not yet exist, but international scientific working groups are already deciding what...
A free Web-based solar power plant capacity-planning tool offers project planners and developers, as well as governments, a means to assess the solar energy potential of thin-film solar PV power over an area of land. The tool was developed by thin-film solar...
As yet, no specific methodology, timeline or costs have been finalised to remedy the water ingress, excessive to contractual specifications, into the Gautrain tunnel between emergency shaft two (E2) and Park Station, says Bombela Concession Company technical and...
The “seriously disruptive” electricity outages in South Africa have cost packaging group Astrapak more than R2-million in “irrecoverable downtime costs”, the company said on Monday, adding that the power cuts were negating some of the benefit of energy saving...
Bakkies and more affordable cars dominated South Africa’s new vehicle market in 2014. Unaudited data from the Department of Trade and Industry (DTI) shows that South Africa’s most popular vehicle in 2014 was the Toyota Hilux, selling 37 562 units.