Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
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Overview of <strong>Multi</strong>-<strong>Year</strong> <strong>Price</strong> <strong>Determination</strong><br />
2013/14–2017/18 (MYPD 3)<br />
Page 60 of 144<br />
minimise the impact of coal road transport on communities and to rehabilitate Mpumalanga‟s<br />
roads where feasible. Road-repair costs include only those rephased from MYPD 2.<br />
Subsequently, prioritised road repairs are being undertaken by the relevant national and<br />
provincial road authorities. Funding is through the fiscus, where a contribution is made<br />
through the increased environmental levy.<br />
Higher growth impact<br />
If a higher energy demand is experienced, the key impact is the utilisation of additional coal.<br />
The impact of a higher annual average economic growth rate of 2.3% compared to <strong>Eskom</strong>‟s<br />
assumption of 1.9% will require an additional 8 500Mt of coal (over the five year period) at<br />
an average cost of R347 per ton. The resultant overall additional cost for coal would be R3<br />
billion were this higher growth rate experienced.<br />
Table 15: Higher growth impact<br />
Higher growth impact 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3<br />
MYPD3 coal production (GWh) 222520 226956 236035 238849 244226<br />
Change in demand (2,3% Vs 1,9%) 0.40% 0.40% 0.40% 0.40% 0.40%<br />
Change in coal production (GWh) 890 908 944 955 977 4,674<br />
Extra coal required (Mt) 1,618 1,651 1,717 1,737 1,776 8,499<br />
Coal cost R/t 294 316 327 377 416<br />
Additional coal costs (Rm) 476 522 561 655 739 2,952<br />
Average cost of extra coal over MYPD3 347<br />
3.4.2 Independent power producers<br />
IPPs affect <strong>Eskom</strong>‟s costs in two ways. First, all IPPs have to be integrated into <strong>Eskom</strong>‟s<br />
transmission grid. These costs fall under Transmission‟s capacity expansion programme.<br />
Second, once integrated into <strong>Eskom</strong>‟s grid, <strong>Eskom</strong> has to pay the IPPs for energy purchased<br />
at a c/kWh rate. IPP costs are calculated based on rates provided by the DoE and total<br />
R78 billion (gross) over the MYPD 3 period. This cost is offset by savings in <strong>Eskom</strong>‟s primary<br />
energy expenditure resulting from reduced demand on <strong>Eskom</strong>‟s generating facilities because<br />
of these energy purchases, calculated at an average of 15c/kWh over the MYPD 3 period.<br />
The introduction of further IPPs also provides an opportunity to relieve the constraint in the<br />
electricity system. Based on the assumption that demand remains constant, the calculated<br />
savings in primary energy costs will total R3 billion for MYPD 3. Despite this deduction, IPP