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

Repairs and maintenance
Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
Page 66 of 144
Eskom‟s maintenance philosophy addresses statutory and emissions requirements, the
safety of assets and of people, and plant performance. Many of Eskom‟s power stations are
in their midlife and require higher levels of maintenance spending. In addition, the ageing
supply network requires essential maintenance and upgrading. This includes providing the
distribution infrastructure needed to support the electrification of an average of 100 000
households per year and establishing additional technical service centres in rural areas.
The increasing asset base also requires support and maintenance, and the extended
transmission network requires additional resources to monitor and maintain assets.
Table 23 reflects the gross maintenance costs per division and the net amount after
capitalisation. Gross maintenance includes the capitalised portion of major overhauls.
Infrastructure refurbishment (periodic maintenance) is not included in repairs and
maintenance costs (routine maintenance). Corporate maintenance refers to costs incurred to
maintain assets held at corporate level such as head office buildings, IT infrastructure and
other assets.
Regarding capitalisation of costs, the accounting treatment of some operating costs requires
that not all the expense incurred in the year is reflected in the income statement. Some of
the human capital and maintenance costs that are directly attributable to capital projects are
allocated to those assets and depreciated with the asset over its useful life. They are
therefore not included in the price in the years in which they are actually incurred.
Table 23: Gross maintenance costs per division (R million)
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 MYPD 3
Generation 9 894 10 706 11 488 14 065 14 409 12 920 63 588
Transmission 397 383 399 424 473 501 2 181
Distribution 8 298 9 863 11 383 12 930 14 256 15 112 63 545
Corporate 211 204 205 200 208 221 1 038
Total gross costs (Rm) 18 801 21 156 23 476 27 619 29 346 28 754 130 352
Manpower included in gross - 5 542 - 6 218 - 6 722 - 7 330 - 8 025 - 8 506 - 36 800
Consulting fees included in gross
Capitalised - 2 815 - 2 767 - 3 172 - 3 632 - 3 221 - 3 414 - 16 206
Total net maintenance (Rm) 10 443 12 172 13 582 16 658 18 100 16 833 77 345