HomeIndustry SectorsGenerationThree big items on Eskom's agenda for year ahead

Three big items on Eskom’s agenda for year ahead

Eskom CEO
Brian Dames
15 July 2013 – During a presentation on the Eskom’s annual results during July, CEO Brian Dames said, “We have three big agenda items for the year ahead. We are committed to keep the lights on while the power system remains constrained, and while increased levels of plant maintenance are required for our generation, transmission and distribution assets. We will focus on ensuring that the new base-load power stations deliver first power to the national grid. And we must re-shape our business to adapt to the limits imposed by the 8% annual average tariff increase granted by the National Energy Regulator of South Africa (Nersa) for the next five years.”

Eskom’s revenue for the year to end-March 2013 increased to R128.8 billion, from R114.8 billion in the previous year, with a decline in electricity sales offsetting a 16% increase in tariffs. Eskom had applied to Nersa that it reduce the original tariff increase for the final year of the multi-year-price determination (MYD2) that from the original 25%. Sales volumes declined by 3.7% to 216,561 GWh, the lowest since 2006, reflecting lower than expected economic growth, as well as the impact of industrial action, the power buyback programme and Eskom’s very successful demand side management programme.

This translated into revenue per kilowatt hour of 58.5c (2012: 50.3c), while costs per kWh in Eskom’s electricity business were 54.2c (2012: 41.3c). Primary energy costs rose by 36.1% to 28.1 c/kWh, making up almost half of operating costs.

The cost of coal burnt increased by 24.2%, driven mainly by higher costs and lower output from the cost-plus mines feeding Eskom power stations. Eskom’s demand side management initiatives achieved 2,244 GWh of electricity savings, outperforming the targets set by Nersa and the government. This brings the accumulated verified demand savings since 2005 to 3,587 MW, equivalent to the output of a typical power station.