Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom

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Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) and grow sustainably. The corporate strategy is centred on: Page 10 of 144 Becoming a high-performance organisation by focusing on safety, improving operations, building strong skills and ensuring internal transformation. Ensuring financial sustainability. Keeping the lights on by managing demand and delivering on the capital expansion programme. Reducing its environmental footprint and pursuing low-carbon growth opportunities. Securing Eskom’s future by obtaining the natural resources required for power production, working with the government to achieve its mandate, and creating an enabling environment for its operations. Implementing coal haulage and the road-to-rail migration plan. Eskom is shifting coal transportation from road to rail to improve safety, reduce environmental impact and scale back road damage. Pursuing private-sector participation. Eskom is acting as a catalyst for private- entity participation in South Africa‟s electricity industry. Setting Eskom up for success through transformation.
Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) 1 OVERVIEW OF MYPD 3 REVENUE APPLICATION Key points Page 11 of 144 South Africa‟s economy needs a reliable, stable electricity supply to support economic growth. This requires a financially sustainable electricity industry that has the resources to build the generating capacity necessitated by demand. In order for the electricity industry to be financially sustainable, electricity prices need to reflect the true cost of production. For historical reasons, that is not currently the case. During the forthcoming third MYPD period, South Africa will continue the transition towards cost-reflective electricity prices started in MYPD 1. Eskom‟s revenue requirement up to 2017/18 translates into price increases of 13% for each of the five years of the MYPD 3 period for Eskom‟s own needs, plus 3% to support the introduction of IPPs, giving a total of 16%. It takes into account operating costs, primary energy costs, depreciation and a return on assets, and capacity expansion up to the substantial completion of Kusile power plant, the DoE peaker plant and 3725MW in terms of the renewable energy IPP programme. This is a price increase of 67c/kWh from the current average of 61c/kWh (2012/13) to an average of price level of 128c/kWh (nominal in 2017/18) or reaching 96c/kWh (real in 2017/18) This revenue application is based on the following assumptions: o The revenue covers capacity expansion (only the return and depreciation component) up to the substantial completion of Kusile power plant. o Electricity demand will be as forecast. o Provision needs to be made for IPPs already contracted through the Medium Term Power Purchase Programme (MTPPP), short term purchases, the DoE‟s peaker plant and all three rounds of the DoE‟s renewable energy IPP programme. o There will be single-digit increases in the cost of primary energy. o Appropriate demand reduction will be achieved.
Page 1 and 2: Part 1 Revenue Application: Multi-Y
Page 3 and 4: Overview of Multi-Year Price Determ
Page 5 and 6: EXECUTIVE SUMMARY Introduction Over
Page 9: ESKOM PROFILE Overview of Multi-Yea
Page 21 and 22: 1.4.2 Independent power producers O
Page 31 and 32: Price path: Funding: Other: Overvie
Page 37 and 38: 2 THE MYPD PROCESS Key points Overv
Page 39 and 40: Electricity Pricing Policy Overview
Page 41 and 42: Accomplishments during MYPD 2 Overv
Page 43 and 44: Base case application Overview of M
Page 59 and 60: Environmental levy Overview of Mult
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Overview of Multi-Year Price Determ
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Table 17: IPP projects (costs and e
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Cost of cover Overview of Multi-Yea
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Operating efficiencies target Overv
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3.5.2 Carbon tax Overview of Multi-
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Table 34: Eskom’s funding over th
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Weaknesses: Overview of Multi-Year
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Phasing in price increases over fiv
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INVESTMENT GRADE RATIOS CAPACITY AN
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Simplify tariff structures Modify s
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7 CONCLUSION Overview of Multi-Year
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Transmission Overview of Multi-Year
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Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom

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