HomeIndustry SectorsBusiness and marketsEskom agrees to phase out the RCA balance of R66bn

Eskom agrees to phase out the RCA balance of R66bn

This week Eskom addressed stakeholders in Kimberley in the Northern Cape and Bloemfontein in the Free State on its three outstanding regulatory clearing account (RCA) applications to the National Energy Regulator of South Africa (NERSA).

The applications are for the 2014-15; 2015-16 and 20116-17 financial years totalling over R66 billion. Read more: Eskom CFO speaks out on affordability

“Since the application is for three years, Eskom is aware that the RCA balance of R66bn will not be liquidated as a once-off and we are agreeable for it to be phased over a number of years. However, the phasing of the liquidation of the RCAs needs to take Eskom’s financial sustainability and impact on customers into consideration,” said Hasha Tlhotlhalemaje, Eskom’s general manager for regulation.

Insufficient generating capacity

In Bloemfontein, Eskom delved deeper into the causes of insufficient generating capacity on the national grid that contributed to the increased usage of the expensive open-cycle gas turbines (OCGTs) during the years of the RCA applications.

These included: the delay in the decision to build new capacity; the deteriorating plant performance of Eskom’s existing ageing plant; and inadequate or delayed plant maintenance.

The power utility stated that the decline in plant availability from 2013 is what contributed to the constrained system, which required increased OCGT usage for system security and to minimise load shedding.

To this end, the power company stated that it had to run many of its power stations flat-out (in the red) to be in a position to avoid load shedding and eventually a black-out of the power system in South Africa.

“To support the power station units that were running flat-out it required additional coal to be sourced. This encompassed coal from existing long-term contracts as well as short- and medium-term contracts to fill the gap,” said Thava Govender, Eskom’s group executive for generation.

Govender added: “The prioritisation of maintenance was also required to enable capacity to be available when needed to avoid load shedding. Independent power producer (IPP) contracts were approved by NERSA to enable the gap to be filled.”

He said that every available megawatt was secured to allow the demand and supply to be managed. This was particularly applicable for the 2014/15 and 2015/16 years.

Govender said that it was thus prudent that the OCGTs were, as was expected when they were commissioned, utilised beyond their normal peaking function, during the 2015 and 2016 financial years, “to improve the supply / demand balance during the period of plant shortage” as NERSA said in December 2007.

“This contributed to creating space for maintenance and limiting the far more expensive load shedding, once all other demand and supply side options had been fully utilised. The improved plant performance from late 2015 was one of the contributing factors to the reduced OCGT usage in 2016/17,” Govender concluded.

African Utility Week

Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.