Eskom submits tariff application

More documents

Recommendations

Info

The IPPs, which will see the first large scale introduction of renewable energy into the South African market, include all three phases of the Department of Energy’s (DoE’s) renewable energy procurement programme (3 725 MW), in line with a determination by the Minister of Energy, as well as the DoE’s peaking projects (1 020 MW). Coal is Eskom’s single largest cost, and coal costs are seen increasing by 10% a year over the five years, with Eskom’s primary energy costs increasing by 8.6% on average within the five years. Eskom has called for a pact to contain coal cost increases, which averaged approximately 18% over the MYPD 2 period. Other operating costs increase by an average of 8% a year within the five years, with manpower costs rising in line with inflation. The tariff application will see Eskom’s return on assets improve from 0.9% to 7.8% over the MYPD3 period, with the return going mainly to support the debt raised to finance Eskom’s capital investment programme. Eskom is spending about R337-billion over the five years on its new build programme and the upgrading and refurbishing of its existing assets. The build programme has significant benefits for the economy, providing the necessary infrastructure to grow the economy, creating jobs and skills and stimulating the development of local supplier industries. There are currently more than 35 000 people on site at Eskom’s big build projects and more than R75-billion of contracts have been placed with South African suppliers. Eskom’s application covers only its committed new build programme up to the end of the Kusile power station project, which is expected to be completed by 2018/19. “An investment grade rating is vital to ensure that we can access funding, at cost-effective rates, for our build programme. The application will enable Eskom to move to a standalone investment grade rating by the end of the MYPD 3 period,” said Eskom Finance Director Paul O’Flaherty. As part of the application, Eskom modelled scenarios showing the pricing implications of new build beyond Kusile, in terms of the Government’s Integrated Resource Plan 2010, which indicated average increases of 20% over the MYPD 3 period. However, the additional capacity was not included in the tariff requested from Nersa. Eskom has submitted proposals to Nersa for a tariff structure which would ensure that poor households who use very little electricity experience only single digit price increases over the five years. Eskom also announced today that it would soon be submitting an application to Nersa to look into the special pricing agreements which Eskom has with BHP Billiton relating to the aluminium smelters in KwaZulu-Natal. The special pricing agreements link the price the Issued by: Eskom Media Desk Tel: +27 11 800 3304/3309/3343/3378 Cell: +27 82 805 7278 Fax: 086 664 7699 Email: mediadesk@eskom.co.za
smelters pay for electricity to the dollar price of aluminium and were entered into in the 1990s when Eskom had surplus generating capacity, which is no longer the case. ENDS Issued by: Eskom Media Desk Tel: +27 11 800 3304/3309/3343/3378 Cell: +27 82 805 7278 Fax: 086 664 7699 Email: mediadesk@eskom.co.za
Page 1: MEDIA STATEMENT ESKOM SUBMITS TARIF

Eskom submits tariff application

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?