Tag

netwerk24 Archives - EP Home Solutions

Head in the sand: Eskom fails in a land of cheap energy

By | Articles | No Comments
Dom Williams of SOLA Future Energy has recently written this article for Fin24 regarding Eskom’s inability to produce cheaper energy.

Renewables pose a threat to coal and nuclear, because wind and solar are undeniably cheaper forms of energy, argues Dom Wills.

This year Eskom turned 94 years old. But so far 2017 has been one of the most damaging years yet for South African’s besieged power utility.

In 2008 and 2014 Eskom had to cope with load shedding and the power utility took a lot of heat for the rolling blackouts and the subsequent damage to the economy. Yet, during those years, Eskom was at least perceived to be the good guys doing a tough job.

This apparent positive spin led to many South Africans and businesses supporting Eskom’s initiatives to cut energy consumption and increase efficiency.

In contrast, 2017 paints a bleak picture. When compared to 10 years before, the figures speak for themselves. In 2007, Eskom sold 218 TWh electricity for 18.33c per kwh at a 16.11% profit margin. A decade later in 2017, Eskom sold less power – 214 TWh electricity for 82.66c per kWh at a 0.5% profit margin.

Thus, in the last 10 years, the state utility has grown worse off. It is selling less power, for higher tariffs, at a lower profit margin. This begs the question whether solutions exist that could reduce Eskom’s costs and boost profit. And could Eskom implement these solutions?

Click here to read the full article.

 

Fin24: Why Eskom is asking for a 19.9% tariff hike

By | Articles | No Comments
Fin24 has recently reported on the reason why Eskom is asking for a 10.9% tariff hike.
Johannesburg – Eskom was making a sacrifice on its allowable returns in its latest tariff application to the National Energy Regulator of South Africa (Nersa), which will see a drop of R12bn in returns.

This is according to Eskom’s team of experts who unpacked the details of the power utility’s application for a tariff hike of 19.9% to the regulator for the 2018/19 year.

Nersa has given Eskom the green light to pursue the hike and hearings into the viability of the proposed tariff increase is scheduled for later this year.

Eskom wants its allowable revenue to increase to R219.5bn, up from the allowable revenue of R205.5bn which Nersa maintained for the 2017/18 year. Essentially the 2.2% increase for 2017/18 was below inflation, said Deon Joubert, corporate specialist of finance and economic regulation.

Hasha Tlhotlhalemaje, general manager of regulation said that in essence Eskom was asking for an absolute revenue increase of R14.3bn. “This is a 7% increase from the previous allowable revenue (approved by Nersa),” she said.

Of this 3.6% of the allowable revenue will be generated from standard tariffs, which is comprised of local customers and the remaining 3.4% of revenue would be generated from export and Negotiated Pricing Agreement (NPA) customers, she explained.

If the application succeeds, Eskom expects an income of R206.2bn from tariffs, Fin4 reported previously. Its average tariff is expected to then rise from 89c per kWh to R1.07 per kWh.

In monetary terms this R219.5bn comes from an increase in primary energy sources of R1bn, an increase of R11.2bn in local Independent Power producers (IPPs), an increase of R13.2bn for operating costs and a R2.8bn increase in international purchases. No change is expected in the level of depreciation. The environmental levy is also expected to decrease with R1.8bn

Eskom is also taking into account that returns will drop R12bn from Nersa’s previous decision. if this decision was not made, the price increase would have been “phenomenally” higher, explained Tlhotlhalemaje.

Read the full article here.