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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Water-treatment costs are incurred for chemically purifying the water used in the turbines.
Start-up gas
Start-up gas and oil costs are incurred for the heavy fuel oil used to start up and shut down
coal-fired power stations and stabilise their boiler flames when they are being operated at
low loads.
Open-cycle gas turbine costs
Eskom has four open-cycle gas turbine stations in the Western Cape, with a total capacity of
2 400MW. They run mainly on diesel and were originally designed as peaking stations (to
meet demand for short periods at peak times) and to provide reserves to cushion the power
system in the case of emergencies. The cost of running the turbines is more than 10 times
the cost of running coal-fired generating stations. The gas stations were planned to operate
at less than 6% load factors.
The cost of the open-cycle gas turbines is difficult to forecast due to the volatility in the cost
of diesel. For the purposes of this application, it is assumed that these stations will be limited
to a 6% annual load factor, in line with average annual demand growth of below 2% over the
MYPD 3 period. The open-cycle gas turbine stations are theoretically capable of running for
16 hours a day, equal to a 55% load factor.
Nuclear costs
Based on today‟s nuclear fuel-supply market prices and trends, Koeberg‟s nuclear fuel cost
will increase to about R60 per MWh(e) (not levelised) by 2015. This increase is being
phased in and will only be fully reflected in Koeberg‟s primary energy cost by 2014/15.
Nuclear fuel powers Koeberg‟s two units for between 45 and 54 months before it is spent. As
a result, the burn (primary energy) costs of Koeberg during a given year will not reflect the
actual nuclear fuel purchasing costs during that year.
Factors influencing nuclear fuel costs include:
Electricity demand forecasts. Eskom has contracts that cover 100% of
Koeberg‟s demand until the end of 2017 and 40% of Koeberg‟s demand from
2018 to 2020. Fuel-fabrication service contracts cover 100% of Koeberg‟s