Eskom takes charge of debts

Eskom could, by the end of the year, begin to take over the collection of electricity revenue in municipalities that fail to pay it for bulk electricity purchases. Municipal debt to Eskom at the end of March stood at R6 billion.

Eskom’s group executive for customer services, Ayanda Noah, made the announcement at a briefing in Cape Town yesterday on the state of the electricity system. She said Eskom is currently signing payment plans with 42 errant municipalities, and will act as a collection agent to these municipalities. This will see the utility installing smart meters, collecting revenue, taking what it is owed, and transferring the balance to the municipality.

According to Noah, Eskom was in talks with municipalities in the Free State and North West and had already concluded a memorandum of understanding with the Eastern Cape government. The first municipalities in the Eastern Cape to be assisted in this way have already been identified and Eskom will take over the collection by December.

CEO Brian Molefe said Eskom has regained control of South Africa’s power system and, as a result, there shouldn’t be load shedding during the coming winter or the summer thereafter. Molefe said the utility has 2 599MW of generation capacity at its disposal, thanks to its improved maintenance programme.

This has resulted in an average energy availability factor of 76.5% for the year to date, up from 69% a year ago, when Cabinet’s War Room was established to stabilise the parastatal.

During the briefing the following significant announcements were made:

• Eskom will not submit a tariff application for a new multi-year period by June 1 as the national energy regulator (Nersa) asked it to do, but will submit a further application for an interim tariff increase in terms of the Regulatory Clearing Account.
• Eskom has decided to revive the Pebble Bed nuclear project. It owns the intellectual property rights and will revive the pebble bed research unit within Eskom under the chief nuclear officer.
• Eskom has changed its plans to decommission its coal-fired power station fleet as they reach the end of their design lives and will follow a strategy of refurbishment to extend their lives instead.
• Eskom could, by the end of the year, start negotiations on a power purchase agreement to buy hydropower from the Grand Inga project, in the Democratic Republic of the Congo.

Molefe said as a result of its Tetris maintenance programme, unplanned breakdowns of power stations have decreased from 8 000MW a year ago to 5 000 MW. This has given Eskom the extra 3 000 MW of generation capacity needed to avert load shedding. This has led to the decreased use of open-cycle gas turbines, which played havoc with Eskom’s financials due to sky-high diesel bills in recent years.

Diesel costs have been reduced from R854 million in October last year to R25 million last month.

– Moneyweb