/ 15 May 2014

Eskom: Switch off now or we’ll load shed

South Africa could be facing both load shedding and a tariff increase.

Eskom has warned that anticipated demand for electricity far exceeds supply for Thursday night and that load shedding will kick in if consumers do not “urgently” switch off non-essential appliances. 

“We require voluntary savings of at least 10% in order to manage demand,” it said. 

The state-owned utility warned that, while it would use all emergency resources at its disposal first, “load shedding will be implemented as a last resort to protect the national grid from a total shutdown”. The crunch has come as a result of the increase in demand associated with colder winter temperatures, combined with the unavailability of “some” of Eskom’s generating units. 

According to Eskom’s latest system status bulletin, released on Thursday afternoon, the unplanned outages anticipated for Thursday night were at 8 500 MW.

That is almost the entire capacity of new megapower stations Medupi and Kusile combined. 

Energy commentator Chris Yelland noted that this was more than 20% of Eskom’s total power generation capacity. 

“Eskom unplanned generator outages should be kept less than 4000 MW [less than 10% of total generation capacity] but today it’s 8 500 MW!” Yelland said on Twitter. 

Proposed rate hike
The news comes on the same day that the power utility warned that South Africans might need to prepare themselves for another electricity rate hike. 

In a statement released on Thursday morning, Eskom confirmed that the National Energy Regulator of South Africa (Nersa) will announce at the end of this month whether consumers can expect another electricity tariff increase in 2015. 

The regulator is currently conducting an evaluation on the expenses incurred by Eskom over the past three years, ending March 2013, by scrutinising Eskom’s regulatory clearing account (RCA).    

“Eskom’s approved revenues and expenditures are based on forecasts, so the RCA reconciles the variances to quantify the over – or under – collection of revenue by Eskom, or its over – or under – expenditure,” spokesperson for Nersa, Charles Hlabela, told the Mail & Guardian.  

In its statement, Eskom said: “The RCA mechanism allows Eskom to adjust for the over or under recovery to ensure that both Eskom and the customer are treated fairly.

“The under – or over –recovery is then recovered through the electricity tariffs in the following year or subsequent years. Customers could experience an increase or decrease in the price of electricity as a result thereof.”

Funding gap of R225bn
Eskom is currently battling with a funding gap of R225-billion over five years. It claims this is partly due to the fact that Nersa granted it an 8% tariff hike increase rather than the 16% it applied for last year.

The shortfall translates into R45-billion per year for the next five years. 

And Finance Minister Pravin Gordhan made it clear in this year’s February budget speech that the national treasury had no more money to spare. 

“The government has no scope to give Eskom cash in the context of an expenditure ceiling that government has imposed as a matter of necessity,” the treasury spokesperson, Jabulani Sikhakhane, said in an April interview with the M&G

“So electricity must either fund itself or must be paid for by those who use it, not taxpayers through general revenues.”

Still speculation
It is widely anticipated that a tariff increase will be announced, taking into account the still-rising costs associated with Medupi and Kusile, which are now estimated at a combined R280-million and counting.  

However, Nersa’s Hlabela would not confirm that another hike was in store. 

“I think that’s speculation,” he said. “Let’s wait for the outcome of the assessment.”

If a tariff change is determined, it will likely take effect in April 2015. 

Eskom spokesperson Andrew Etsinger said that the parastatal had no indication whether an increase or decrease in tariffs would be announced. 

“We haven’t been officially informed other than that the outcome will be announced shortly,” he said.