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 58 of 144 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
Environmental levy Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) Page 59 of 144 demand until 2015. Eskom is entering into fuel-fabrication contracts that will cover Koeberg‟s fuel-fabrication demand until 2020. Volatility in the nuclear fuel market. Under Eskom‟s current contracts for nuclear fuel, 45% of the total nuclear fuel price for 2011 to 2017 will be market- related (fluctuating with market prices). The effect of price fluctuations will remain minimal as long as Koeberg is Eskom‟s only nuclear power plant. The National Treasury implemented an environmental levy of 2c/kWh on electricity generated from non-renewable sources in July 2009. This was escalated to 2.5c/kWh in July 2011 and to 3.5c/kWh in July 2012. All Eskom generators, with the exclusion of hydro and pumped-storage power stations, are registered and licensed to pay the levy. The levy is paid to the South African Revenue Service. It is calculated by multiplying the measured energy sent out by identified Eskom‟s power stations, including electricity consumption by those stations‟ auxiliary plants, multiplied by the per-unit levy, currently set at 3.5c/kWh. Eskom assumes the government will not introduce any further rate increases for the planning period. Table 14: Environmental levy forecasts Road maintenance 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3 Energy sent out ( GWh ) 239 896 243 639 249 542 252 930 259 281 1 245 288 Renewable sent out (GWh) 3 719 5 662 6 601 6 726 6 599 29 307 Non renewable sent out (GWh) 236 177 237 977 242 941 246 204 252 682 1 215 981 System average auxilliary % 7.02% 7.11% 7.26% 7.33% 7.47% Generated volumes (GWh) 254 580 258 904 267 520 272 090 278 274 1 331 368 Environmental levy rate ( c/kWh ) 3.50 3.50 3.50 3.50 3.50 Environmental levy cost ( Rm ) 8 842 9 037 9 324 9 490 9 746 46 439 Eskom‟s transportation of coal by road has adversely affected the quality of life and the economy of local communities. The transportation of coal by road has accelerated the deterioration of Mpumalanga‟s road networks, which poses immediate and real risks to the security and continuity of coal supply. Eskom is therefore pursuing several initiatives to
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Part 1 Revenue Application: Multi-Y
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Overview of Multi-Year Price Determ
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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
Page 57: Overview of Multi-Year Price Determ
Page 63 and 64: Table 17: IPP projects (costs and e
Page 67 and 68: Cost of cover Overview of Multi-Yea
Page 69 and 70: Operating efficiencies target Overv
Page 73 and 74: 3.5.2 Carbon tax Overview of Multi-
Page 75 and 76: Table 34: Eskom’s funding over th
Page 77 and 78: Weaknesses: Overview of Multi-Year
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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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