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

Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
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Assumption 4: A mandatory Energy Conservation Scheme will be implemented
Changes to the demand forecast pose a risk to the price path. Consequently, it is assumed
that a safety net in the form of a mandatory ECS will be in place to ensure a stable power
system, even if other supply-and-demand levers are not able to close the energy gap.
Energy Conservation Scheme
The mandatory ECS is a proposed safety net that can be relied upon in the event that
targeted reductions are not realised through voluntary mechanisms. The scheme would
apply to South Africa‟s 500 largest electricity users – those using more than 25 gigawatt-
hours (GWh) a year – to reduce their energy usage. The ECS would involve recording these
customers‟ baseline electricity consumption and using this information to set reduced
energy-usage targets. Customers would be responsible for implementing and managing
their own energy savings. Exceeding the monthly energy allocation would incur additional
costs. Implementing a mandatory ECS would be the last resort to maintain security of supply
in the short to medium term. Nersa still needs to approve this framework.
Assumption 5: Nersa will allow a five-year price path
A five-year price path allows electricity prices to move towards cost reflectivity over a longer
period, smoothing the economic impact of increases and providing certainty to customers
and investors, while supporting ongoing operations and progress on Eskom‟s credit rating.
Assumption 6: Electricity demand will be as forecast
A 1.9% compound average growth rate for sales (electricity demand) is projected for the
MYPD 3 period. This is considerably lower than the 2.8% a year estimated in the MYPD 2
decision (see figure 1 below) and the IRP 2010 forecast of 2.9% up to 2030.