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) Page 42 of 144 begin during 2012 and on the concentrated solar thermal project, near Upington, in 2015. Solar panels were installed at Kendal and Lethabo power stations to supplement auxiliary power consumption – this was the start of a programme that will be rolled out at all coal-fired stations. In 2011/12, Eskom improved its performance regarding relative emissions, water usage and contraventions of legislation, compared with the prior year. Expanding social investment commitments. Eskom takes responsibility for the way its operations affect the environment and promotes the objectives of the government‟s New Growth Path. Building human capital and contributing to the national skills base. Over the past five years, Eskom has tripled the number of engineering/technical learners receiving training and continuously trains existing staff. 2.4 MFMA process: comments on proposed MYPD 3 application On 18 June 2012, Eskom sent a proposed MYPD 3 application to the National Treasury and Salga for comment before making its final submission to Nersa. Eskom also had various engagements with other stakeholders informing them of the proposed application. On 30 July, Eskom received comment from the National Treasury and Salga on the proposed application. Eskom has considered the comments received and has taken them into account in finalising its application. A summary of the comments received, as well as Eskom‟s approach regarding the issues raised, is set out below. 2.4.1 Proposed application The proposed MYPD 3 application submitted to the National Treasury and Salga put forward a “base case” outlining Eskom‟s minimum revenue requirements for the MYPD 3 period and “build-up options” that listed additional requirements, should certain decisions be made during the MYPD 3 period.
Base case application Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) Page 43 of 144 The base case included only Eskom‟s operating and primary energy costs, depreciation and returns, assuming Eskom‟s committed new build programme up to the substantial completion of Kusile, as well as the first round of the DoE‟s renewable energy IPP bid programme and peaker plant. For the base case, the average annual tariff increase for the first four years was proposed at 16%, with a 9% increase for the last year of MYPD 3. This translated into an annual average increase of 14.56% per year for the five-year period. Certain information was also set out regarding changes to the tariff structures and tariff increase date for Eskom‟s customers. Build-up options The proposed MYPD 3 submission intended to empower stakeholders to make choices with regard to what role Eskom should play in South Africa‟s electricity market, not only over the next five years but also in the longer term. These options included: New build beyond Kusile using an allocation of 65% to Eskom and 35% to IPPs. Additional IPPs, including the DoE‟s full renewable energy IPP procurement process and others from the IRP 2010 allocation. The consequences of implementing the proposed carbon tax. Accelerating the national electrification programme by connecting 1 million households in Eskom‟s proclaimed licence area during the MYPD 3 period. Including all the build-up options to the base case resulted in an average increase of 19% over the MYPD 3 period. 2.4.2 Feedback from Salga and the National Treasury Additional options regarding capacity The National Treasury and Salga both recommended that the price implications of all the new build options beyond Kusile, as well as the IPPs contemplated in IRP 2010, be included in the revenue requirement, as opposed to a base case application with options as outlined. It was felt that failing to reflect the implications of the country‟s capacity needs on the price path was misleading and irresponsible.
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Page 3 and 4: Overview of Multi-Year Price Determ
Page 5 and 6: EXECUTIVE SUMMARY Introduction Over
Page 9 and 10: ESKOM PROFILE Overview of Multi-Yea
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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
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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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