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 />
5 ENSURING SECURITY OF SUPPLY<br />
Key points<br />
Page 96 of 144<br />
<strong>Eskom</strong>‟s electricity sales are projected to grow on average at 1.9% per year over the<br />
MYPD 3 period. The drivers of low sales growth include a steady GDP growth, lower<br />
commodity prices, a reduction in exports, increasing electricity prices and the effects<br />
of IDM initiatives.<br />
The revenue request includes the cost of doing crucial maintenance, without which<br />
<strong>Eskom</strong> will not be able to guarantee a reliable electricity supply for the MYPD 3<br />
period and beyond. The total maintenance bill for MYPD 3 comes to R77 billion.<br />
IRP 2010 states that the country will need above 45 000MW of new generating<br />
capacity (excluding <strong>Eskom</strong>‟s committed expansion programme) to meet South<br />
Africa‟s energy needs to 2030. The plan does not make it clear who will be<br />
responsible for building this capacity and determinations in this regard are expected<br />
in due course.<br />
The IRP 2010 allocation could affect <strong>Eskom</strong>‟s revenue requirements for MYPD 3 if a<br />
decision on the allocation is made during the control period. For illustrative purposes,<br />
<strong>Eskom</strong> has modelled the financial repercussions of being allocated 65% or 100% of<br />
new build, as requested.<br />
Various scenarios have been provided to assist in showing the implications of the<br />
capacity needs of the IRP 2010.<br />
<strong>Eskom</strong>‟s purpose is to provide sustainable electricity solutions to grow the economy and<br />
improve the quality of life of the people in South Africa and in the region.<br />
At present the country‟s energy demand is closely matched by <strong>Eskom</strong>‟s ability to produce,<br />
transmit and distribute electricity. In order to supply enough electricity during the MYPD 3<br />
period, <strong>Eskom</strong> needs to know how much electricity South Africa is likely to require. This<br />
information is contained in its sales forecast, a projection of future electricity demand based<br />
on South Africa‟s likely GDP levels in the current global economic climate, given factors such<br />
as commodity prices and export levels. The forecast also considers the moderating effect on