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

More documents

Recommendations

Info

Table 19 : Other primary energy purchases Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) Demand market participation and power buy-back agreements Page 64 of 144 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3 Distribution IPPs 8 8 9 9 10 36 Imports 2 970 3 611 3 006 2 810 2 973 3 243 15 644 Demand market participation and power buy-back 4 552 3 275 1 973 1 972 1 835 2 001 11 056 Other primary energy purchases (Rm) 7 531 6 894 4 988 4 792 4 818 5 244 26 737 Power buy-backs are not included in the MYPD 3 period. They were applied during March 2012 to May 2012 only. Power buy-back costs are incurred to compensate companies for cutting down on electricity usage in the short term to help with the tight supply system, while demand market participation has longer-term arrangements. Refer to Integrated demand management in the Ensuring security of supply section for more detail on IDM initiatives. Hence the overall cost of primary energy includes Generation, IPPs and other purchase costs equating to R432 billion over the period. Table 20 : Total Eskom primary energy 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3 Generation primary energy (Rm) 51 606 55 433 60 380 64 865 70 512 77 022 328 212 IPPs costs (Rm) 4 784 5 189 13 302 18 043 20 143 21 042 77 719 Other primary energy purchases (Rm) 7 531 6 894 4 988 4 792 4 818 5 244 26 737 Total Eskom primary energy (Rm) 63 920 67 517 78 669 87 699 95 474 103 308 432 667 3.4.4 Operating costs Operating costs include all costs involved with the day-to-day running of the business, including staff costs, maintenance and repair costs, cost of cover, arrear debts, IDM and other costs such as insurance, training and travel. While operating costs are separate from capital expenditure, the two are closely linked. For instance, the cost of building a new generating plant would fall under capacity expansion and would therefore not fall under Nersa‟s cost building blocks. However, as soon as that
Overview of Multi-Year Price Determination 2013/14–2017/18 (MYPD 3) Page 65 of 144 plant is commissioned, the costs of the primary energy used to fuel it, the staff members that repair and maintain it and the depreciation on that plant will all be included as recoverable costs. Table 21 reflects the costs incurred in operating the business. Human capital is the largest cost item, followed by costs incurred to maintain the assets of the business. These costs are net of capitalisation and are therefore directly recoverable through the electricity price. Table 21: Operating costs forecasts (R million) 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3 Human capital after capitalisation 21 166 22 540 24 740 26 765 29 313 31 364 134 721 Maintenance 10 261 12 020 13 288 15 839 18 120 16 855 76 122 Cost of cover 1 038 2 158 1 828 1 678 1 025 485 7 174 Arrear debt 763 927 1 051 1 215 1 388 1 511 6 092 Integrated demand management 7 784 2 941 2 709 1 862 1 966 3 612 13 090 Other 9 392 10 271 11 336 13 576 13 534 13 651 62 368 Operating costs before efficiencies target (Rm) 50 404 50 857 54 952 60 934 65 346 67 478 299 568 Efficiency targets - 3 000 - 6 000 - 6 000 - 6 000 - 6 000 - 6 000 - 30 000 Net operating costs (Rm) 47 404 44 857 48 952 54 934 59 346 61 478 269 568 Human capital costs Eskom employment is set to increase during MYPD 3 as new generating facilities come online, as operations expand deeper into rural areas and as Eskom strives to improve its technical and business performance. This will require greater numbers of skilled staff and additional training. Table 22 outlines how Eskom‟s staff complement and gross costs per head are expected to grow over the MYPD 3 period. The gross employee costs directly incurred for capital projects are allocated to the projects (capitalised) and recovered over the life of the capital asset through amortisation when the asset is depreciated. These costs are therefore not recovered immediately through the price. Table 22: Projection of employee numbers and gross costs per head for MYPD 3 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Gross human capital costs (Rm) 26 858 28 045 29 946 32 215 34 995 37 442 Human capital headcount 43 450 44 280 44 833 45 187 45 601 45 601 Gross human capital costs per head R000 618 633 668 713 767 821
Page 1 and 2:
Part 1 Revenue Application: Multi-Y
Page 3 and 4:
Overview of Multi-Year Price Determ
Page 5 and 6:
EXECUTIVE SUMMARY Introduction Over
Page 7 and 8:
Page 9 and 10:
ESKOM PROFILE Overview of Multi-Yea
Page 11 and 12:
Page 13 and 14: Overview of Multi-Year Price Determ
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 59 and 60: Environmental levy Overview of Mult
Page 63: 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
Page 83 and 84: Phasing in price increases over fiv
Page 93 and 94: Figure 9: Current cross-subsidies i
Page 115 and 116:
INVESTMENT GRADE RATIOS CAPACITY AN
Page 117 and 118:
Page 119 and 120:
INVESTMENT GRADE RATIOS CAPACITY AN
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Simplify tariff structures Modify s
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
7 CONCLUSION Overview of Multi-Year
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Transmission Overview of Multi-Year
show all

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

Create successful ePaper yourself

Delete template?

Save as template?