Municipal involvement in the energy Municipal involvement in the energy

crisiscrisis

Select Committee on Select Committee on

Labour & Public Labour & Public

EnterprisesEnterprises

IMC

ESKOM FEE

ESKOM Recovery Team

Industry

NERTIndustry Task

Team

Streams Work Groups Work Groups

National Response to South Africa’s Electricity Situation

NERSA(Regulator)

SACC

Other Bodies

Energy Supply Committee

TreasuryDME

DPE DEAT

DTI DPLG

President

The current response effort is being managed at various interfaces, these are:

There is municipal representation at key forums

NERTIndustry Task

Team

BUSA DEAT

NEDLAC

City of JHB

COSATU

DME

DPE

DPWDoL

DoT

CSIR

DPLG ESKOM

FEDUSA

GCIS

EDI Holdings

JHB City Power

Gauteng Gov.

NEEA

Indalo Yethu

National Treasury

Presidency

RTMC

NERSA

DTI

ESKOM

EIUG

AMEU

SALGA

Chamber of Mines

DPE

National Treasury

Labour Unions

DME

Specialist Groups

Co-generation & Market

DSM Implementation Co-ordination

Legal & Tariffs

Economic Impact

Financing

Comms

Strategic Steering Committee

Development of Communication

Protocols

Power Management

Implementation of Power

Conservation

Regulatory & Intergovernmental

Support

Monitoring & Evaluation

NERT = National Energy Response Team

4

The primary levers to recover security of supply are demand and supply management. These options are however impacted by a number of other factors.

Ext

ran

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Security of Supply

Demand-Side Options

Supply-Side Options

Load SheddingLoad

Reduction

DSM PCP

PricingPublic

AwarenessOCGT / CCGT

Primary Energy

Existing UCLF Go-generation

Municipal Gen.

New-Build

Import

Export

Energy Efficiency

Economic Factors

Financial Constraints

Regulatory Framework

Legislative Environment

Availability of Skills

Market Forces (Procurement)

The overarching role that municipalites are playing in the enery crises is the implementation of demand side options to reduce energy consumption

Eskom/ Municipal Task team

Objective: To drive rapid energy reductions to avoid load shedding

Members of Task Team Eskom City of Tshwane City of Johannesburg (City Power) Ekurhuleni City of Cape Town Nelson Mandela Metro Emfuleni Local Municipality Rustenburg Local Municipality Msunduzi Municipality Mangaung Municipality (Centlec) Buffalo city Municipality eThekwini Municipality

Meeting frequency is every 2

weeks

Eskom created a national task team with the metros and large

municipalities to deal with the energy crisis

5

Demand-Side Options

Load SheddingLoad

Reduction

DSM PCP

PricingPublic

Awareness

Energy Efficiency

Capital Expenditure and Funding

7

BuildBuild• Major infrastructure investments to deliver an

additional 40 000MW by 2025

• Two key extensions to OCGTs at Atlantis and Mossel Bay will add further 1000MW by end 2009

• First unit at Medupi scheduled to come on stream in 2012

• Return to service stations: Camden, Grootvlei and Komati projects proceeding to schedule.– Last unit from Camden on line by the second

quarter of 2008 (Total of 1600MW).– First unit from Grootvlei commercial (31

March) (± 200 MW)

Capital Expenditure 2009~2013

2008/09 '2009/10 '2010/11 '2011/12 '2012/13 Total

Generation 32,002 56,007 48,875 42,024 40,528 219,436

Transmission 4,832 9,614 10,717 8,150 4,942 38,255

Distribution 5,811 6,054 6,550 6,715 7,169 32,299

Corporate 1,329 2,985 4,393 2,441 172 11,320

Net regulated total 43,973 74,660 70,535 59,331 52,811 301,310

2008/09 '2009/10 '2010/11 '2011/12 '2012/13 Total

Generation 33,474 61,220 55,561 49,684 49,831 249,770

Transmission 5,054 10,509 12,183 9,636 6,077 43,459

Distribution 6,078 6,617 7,446 7,939 8,815 36,895

Corporate 1,390 3,263 4,994 2,886 211 12,744

Net regulated total 45,996 81,609 80,184 70,145 64,934 342,868

Eskom Holdings: Capital Expenditure 2009~2013 (2007/08 Constant Rand Millions)

Capex for electrif ication is funded by DME and is excluded from Eskom Holdings capex plan

Capex for electrif ication is funded by DME and is excluded from Eskom Holdings capex plan

Eskom Holdings: Capital Expenditure 2009~2013 (Nominal Rand Millions)

R71bn a year equates to R283m per day assuming 250 working days. This assumes capex expansion is FUNDABLE. Ever increasing upward pressure on capital costs

All projects

ITD YEF 1 2 3 4 5 6 7

Projects Approved

Total project cost

Total FinPlan 7

Years

Total FinPlan 5

YearsMarch 2007 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Medupi 76,473 72,680 62,858 107 3,107 11,235 15,805 15,751 11,362 8,706 6,586 3,236 579

Bravo 85,785 78,427 61,026 181 3,706 15,213 14,619 13,478 14,011 10,382 7,019 6,536 641

Gas 1 3,963 1,108 1,108 815 2,040 1,049 59

Ingula 15,836 15,219 15,093 209 408 2,768 4,780 3,633 2,952 960 126

Wind 1 1,281 1,277 1,277 4 318 951 8

Total Approved

183,340 168,712 141,362 1,132 5,740 19,076 36,807 34,010 27,792 23,677 17,095 10,255 7,115 641

Total not Approved

161,652 95,279 46,273 0 0 1,699 8,312 8,367 11,823 16,073 21,968 27,037 27,568 21,188

Total Approved +

Not Approved

344,992 263,991 187,635 1,132 5,740 20,775 45,119 42,377 39,615 39,750 39,063 37,292 34,683 21,829

The total not Approved projects include Pumped storage 1, Wind 2 and Nuclear 1

Nominal Rand Millions

Funding considerations

• Credit Rating maintenance critical– Access to funding– Cost of funding– Access to reputable equipment suppliers

• Maximisation of available funding options• Long term financial market access via

relationship management and credit rating• Active portfolio management necessary

Funding principles•No one source of financing can ensure a sustainable balance sheet hence a balance of the following sources is critical:

– Revenue – tariff increases, – Local and international debt markets

and – Committed equity like financial

support available from the Shareholder

•The level of price increases awarded will impact directly on the quantum of shareholder support needed

How Eskom will spend R60bn

• Shareholder support will be used for funding the capital expansion R343bn programme

• Build programme will ensure the capacity is added to improve the reserve margins

• Included in our funding pool of funds• Not allocated to any specific capital project• Utilised according to the cash inflows

received from government over next 5 years• Not utilised for operating costs or primary

energy costs• Terms and conditions of R60bn not yet

finalised

Thank You