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

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Contents Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) Page 2 of 144 EXECUTIVE SUMMARY ..................................................................................................................................... 5 Introduction ....................................................................................................................................................... 5 Why are price increases necessary?................................................................................................................... 5 What is the impact of price increases? .............................................................................................................. 6 What is Eskom asking for? ................................................................................................................................. 6 Assumptions ....................................................................................................................................................... 7 Context of application ........................................................................................................................................ 7 Tariffs ................................................................................................................................................................. 8 Conclusion .......................................................................................................................................................... 8 1 Overview of MYPD 3 revenue application ............................................................................................. 11 1.1 Context of application ......................................................................................................................... 13 1.2 Why are price increases necessary? ................................................................................................... 15 1.3 What effect will the price increases have? ......................................................................................... 16 1.4 What is Eskom applying for? ............................................................................................................... 18 1.5 Requirement to meet IRP 2010 capacity needs .................................................................................. 28 1.6 Proposed changes to the retail tariff structures ................................................................................. 35 2 The MYPD process ................................................................................................................................. 37 2.1 Basis of application ............................................................................................................................. 37 2.2 Supporting legislation and policies ..................................................................................................... 38 2.3 History of MYPD .................................................................................................................................. 39
Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) Page 3 of 144 2.4 MFMA process: comments on proposed MYPD 3 application ............................................................ 42 3 Moving towards a sustainable electricity industry ................................................................................ 49 3.1 Advantages of cost-reflective prices ................................................................................................... 51 3.2 Disadvantages of cost-reflective prices ............................................................................................... 53 3.3 Analysis of advantages and disadvantages ......................................................................................... 54 3.4 Cost components ................................................................................................................................ 54 3.5 Cost components excluded (risks) ...................................................................................................... 72 3.6 Long-term financial viability and funding ............................................................................................ 74 4 Balancing the economic effects ............................................................................................................. 81 4.1 Electricity prices in context ................................................................................................................. 85 4.2 Impact on the economy ...................................................................................................................... 87 4.3 Impact on inflation .............................................................................................................................. 88 4.4 Impact on investment ......................................................................................................................... 88 4.5 Impact on economic sectors ............................................................................................................... 90 4.6 Protection for the poor ....................................................................................................................... 92 4.7 Benefits of price increases .................................................................................................................. 94 4.8 Conclusion ........................................................................................................................................... 95 5 Ensuring security of supply .................................................................................................................... 96 5.1 MYPD 3 sales forecast ......................................................................................................................... 97 5.2 Integrated demand management ..................................................................................................... 101 5.3 Maintenance ..................................................................................................................................... 106
Page 1: Part 1 Revenue Application: Multi-Y
Page 5 and 6: EXECUTIVE SUMMARY Introduction Over
Page 7 and 8: Overview of Multi-Year Price Determ
Page 9 and 10: 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
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Overview of Multi-Year Price Determ
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Environmental levy Overview of Mult
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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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Figure 9: Current cross-subsidies i
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INVESTMENT GRADE RATIOS CAPACITY AN
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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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