NERSA’s MYPD approval of 8% instead of 16%: response by Eskom & SALGA

PMG 24 May 2013.

Date of Meeting:24 May 2013
Chairperson:Mr S Njikelana

The meeting looked at the rationale behind the National Energy Regulator of South Africa’s price determination of 8% in response to Eskom’s request for a 16% tariff increase. The South African Local Government Association (SALGA) was asked to respond to the 8% increase on behalf of municipalities. Continue reading

Hints of more support as Eskom mulls ways to plug R225bn hole

Terence Creamer | 24 May 2013 | Engineering News

Eskom reaffirmed to the Parliamentary Portfolio Committee on Energy on Friday that it would not, through efficiencies alone, be able to close the R225-billion financial gap arising from the lower-than-requested tariff determination for the coming five years.

Several other responses were, therefore, being pursued, including an initiative to identify whether additional support might be required from the utility’s shareholder, the South African government.

On February 28, the National Energy Regulator of South Africa (Nersa) granted Eskom yearly increases of 8% for the period from 2013/14 to 2017/18, instead of the 16% it had requested. This translated into allowable revenue for the period of R862-billion, rather than the nearly R1.1-trillion sought. Continue reading

Eskom wind farm gets green light

SAPA | 20 May 2013 | Times LIVE

The National Energy Regulator of SA (Nersa) has granted Eskom a licence for its Sere wind farm in the Western Cape, the power parastatal said.

"This is an exciting milestone in Eskom’s move towards a cleaner energy mix," Eskom CEO Brian Dames said in a statement.

"Sere is our first, large-scale, renewable energy project. It demonstrates our commitment to reducing our carbon footprint and to investing in a sustainable energy future."

The licence would allow Eskom to start construction of the R2.4 billion project which was expected to deliver its first power to the national grid in the first half of 2014, with full commercial operation by the end of 2014. Continue reading

Eskom reviewing tariff decision – Gigaba

Sapa | 8th May 2013 | Engineering News

Eskom is reviewing the implications of Nersa’s decision to grant it a lower than requested electricity tariff hike, Public Enterprises Minister Malusi Gigaba said on Wednesday.

"We are studying it in detail, because we need to understand what will happen to Eskom’s operations through the build programme over the next five years," he said at a Cape Town Press Club breakfast.

Eskom welcomed the National Energy Regulator of SA’s ruling, because this was to the benefit of consumers, but it presented problems Eskom would need to deal with.

Eskom had applied for a 16 percent increase in electricity prices in each of the next five years. This would have more than doubled the current price, taking it from 61 cents per kWh in 2012/13, to 128 cents per kWh in 2017/18. Continue reading

Eskom’s deals leave us in the dark

Viola Manuel* | 26 Apr 2013 | M&G

The parastatal’s short-term view has led to profits in the beginning, but has come back to haunt it.

One cannot blame BHP Billiton for negotiating its electricity deal with Eskom. The Australian company had the foresight to see that, in the long term, the risk-sharing arrangement would work in its favour.

The essence of the agreement for the sale of electricity to the Hillside Smelter in Richards Bay in 1992 was that BHP Billiton would pay a tariff based on the current price of aluminium on the London Metal Exchange, and it would pay in dollars. This suited BHP because it sold the aluminium on the world market for dollars and the deal removed the foreign-exchange risk. And if world aluminium prices went down, so would its operating costs in South Africa.

In 1992 Eskom had surplus capacity and the dollar was worth less than R3. The deal brought increased electricity sales with very little in the way of increased costs, and it paved the way for a R60-billion investment and the jobs that it would bring. The deal made sense for Eskom and for South Africa at the time, but the problem was that the arrangement was valid for 25 years – it should have been clear to Eskom that its spare capacity would be absorbed long before the contract ended. Continue reading

Construction on Bronkhorstspruit biogas plant to start in June

Idéle Esterhuizen | 16 Apr 2013 | Engineering News

Construction on the Bronkhorstspruit Biogas Plant (BBP) would start in June and be completed in the first quarter of next year, the project developer Bio 2 Watt says.

Founder Sean Thomas told Engineering News Online that the project, with an initial installed capacity of 3 MW, would reach financial close by the end of May and eventually ramp up to a 5 MW capacity.

He explained that the plant would make use of technology supplied by Danish company ComBigaS to generate energy through anaerobic digestion. Cattle manure will be the primary feedstock of the plant, with the rest consisting essentially of food waste.

Further, consulting engineering company Bosch Projects would provide engineering support for the project.

Thomas noted that the plant would be connected to State utility Eskom’s grid and the power sold to a large industrial offtaker in Pretoria.

The National Energy Regulator of South Africa (Nersa) this week cancelled the public hearing on the project’s generation licence application, which was scheduled to take place on April 16.

This came as Nersa had received no comments or objections to the project and no members of the public had registered to present or attend the public hearing.

In October 2011, Bio 2 Watt submitted a Clean Development Mechanism (CDM) carbon credit project description of BBP to the South African carbon credit authority, Designated National Authority (DNA) within the Department of Energy.

The following month, the DNA provided Bio 2 Watt with a letter of no objection, stating the project does not show conflict with the sustainability development criteria for CDM carbon credit projects.



16 April 2013

Regulating the electricity supply of Municipalities

Municipalities have the executive authority and right to administer electricity reticulation according to the Constitution of the Republic of South Africa. The electricity business in the municipalities is not necessarily ring-fenced in all cases and it generates between 40% and 60% of the municipal revenue.

In some cases the electricity service is used as a credit control measure for all services that the municipality offers. The surplus from the electricity business, which is used to cross-subsidies other services within the municipality, needs to be kept at reasonable levels. Even though NERSA is mandated to regulate the electricity reticulation of municipalities there are additional surcharges municipalities can impose that are not regulated by NERSA. Continue reading