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

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