BCCI CENTLEC BREAKFAST The RSA electricity crisis

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BCCI / CENTLEC BREAKFASTThe RSA electricity
crisis

• LG Kritzinger (Pr Eng)
• 18 August 2008

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• Vision is foresight with insight based on
  hindsight
• Be an innovator, not an imitator

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Introduction

• SA not the only country with energy crisis
  world phenomenon
• Market principle of supply demand not enforced
  due to regulation
• Electricity prices too low
• Previously limited incentives to customers to
  change consumption patterns
• What was can be done about it?

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What is the problem?

• Demand not enough plant
• Energy not enough coal
• Both ?
• What is role of price ?

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What is the problem?
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What is the problem?
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What is the problem?
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What is the problem?
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What is the problem?

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Supply / Demand BalanceLoad Duration Curve
Analysis 1 300 MW Load Reduction

• Some periods of reserve shortages in summer can
  be accommodated by periods showing excess capacity

Note Light-blue area (area under red line) is
demand that can be supplied
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Approach to action

• Price increases tariff changes
• TOU tariff implementation
• Save energy (PCP Load control)
• Fuel switching (paraffin, gas solar)
• Implement time zones
• Legislation

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Government Proposed Savings quotas

• Industrial 10
• Commercial (general) 15
• Hotels, resorts, shopping malls conference
  centres 20
• Large office buildings, government, Universities,
  Technicons, municipal electricity utility
  offices 15
• Agriculture 5
• Residential 10

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Current load reduction progress
System Stabilisation phase
4000 MW
Power Rationing
Resolved
1000 MW Coal
3000 MW
1800 MW Residential, Commercial, Agricultural l
Customers
Limited Progress
Power Conservation Program and Supply Side Options
1200 MW Industrial Customers
Received
Phase 1 4 weeks
Phase 2 4 months
Phase 3 4 years
1 March
1 February
1 July
2012

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Impact of load reduction on net reserve margin
Increase reserve margins to operate in a more
stable and sustainable manner

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SOUTH AFRICAN NET RESERVE MARGIN

• Eskom base case

• 10 demand savings

• 5 demand savings

• net capacity reserve margin

• Key assumptions

• Growth 4 p.a.
• Supply side assumptions
• Eskom supply base case plans including Medupi,
  Bravo and Mmamabula (2013)
• Excluding UCG at Majuba, extra wind capacity,
  OCGT/CCGT conversions, Co-Gen and DME IPP
• Demand savings calculation
• Annual energy is reduced by 5 or 10, and then
  the peak demand is calculated to derive the
  projected reserve margin

• 03

• 05

• 07

• 09

• 11

• 13

• 15

Source Team analysis
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A GWH APPROACH TO ROLL-OUT ECS IS PROPOSED,
STARTING WITH THOSE ACCOUNTS USING gt25 GWH
ANNUALLY
250

• ESKOM VIEW

Phase 1 (1 July 08)

• Phase 3

• Cumulative

• Account usage

gt2.5 GWh
gt250 MWh
gt25 GWh
gt100 MWh

• Account quantity

22 000
9 000
1 000

• Consumption covered
• TWh

89
94
98
100

• Consumption percentage

Regions without sufficient critical mass of
customers above threshold will select their top
20 customers to participate irrespective of
size coverage of total Eskom-related
consumption excluding internationals and users
lt100 MWh Source Team analysis
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Impact of PCP

• Requirement 10 or 21
• Price
• 90 100 250 c/kWh
• gt100 350 c/kWh
• Loss of Revenue R24m
• Process
• State Law Advisors
• Regulations
• Account

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Successes to date

• Load shedding terminated
• Substantial savings
• March 9,64
• May 10,52
• June 13,71
• July 8,16
• Participation on National level
• Development of RDS system
• Power Station private partner

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New Regulations

• GG 31250 18 Jul 2008
• Buildings
• Energy Efficient lighting
• Remote control HVAC
• Geyser control all elect geysers
• Smart meters gt 1000 kWh TOU
• Time frame - Jan 2012

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Way forward

• Implementation of PCP
• Implementation of Regulations
• Mind shift on use of electricity

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Questions

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Tariff structures

• One part
• all components combined in a unit cost
• Two part
• Fixed
• Variable cost
• Three part
• Fixed
• Variable
• Demand
• Time of Use Tariff structure
• As above but reflecting time variable of energy
  purchases

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What has CENTLEC proposed for 2008/9

• Consultant evaluated tariff levels and components
• TOU tariffs for all bulk customers
• All domestic customers gt 500 units moved to home
  power levels
• All PP customers lt 500 units lower increase (16
  increase)
• Introduced a new homeflex tariff to be used with
  Smart metering systems

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Basic tariffs- one part
Cost Rand
Units in kWh
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Basic tariffs- Two part
Variable cost
Cost Rand
One part
Fixed cost
Subsidized area
Units in kWh
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Three part

• Fixed cost per month
• Variable cost units consumed during a month
  c/unit
• Demand charge max half hour consumption per month
  - R/kVA
• Only measured in peak times

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Time of use time slots
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Principles for TOU tariffs

• Pricing signals to customers - demand and thus
  cost of electricity at different times of the
  day, week and year
• Modify consumption patterns by providing
  financial incentives to move or reduce power
  consumption
• Recover the true cost of electricity supply

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CENTLEC TOU implementation

• Installed advanced metering at 180 larger users
• Publish consumption data on website updated every
  24h
• Implemented supply contract with power quality
  clauses.
• Monthly consumption bill available on website
• Switch all MV bulk users as from 1st July 2008
  with NERSA approval
• LV bulk users to follow as metering is upgraded
• Design tariff structure to be revenue neutral

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TOU tariff summary

• Components of new tariff
• Basic charge - fixed charge/ month
• Access charge/ month - R/kVA
• Based on max kVA/12 month period
• Measured in all time slots
• Caters for network capacity
• Demand charge - R/kVA/month
• Measured in peak and std times during a month
• Energy - c/kWh
• Measured in peak, std and off peak time slots

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Domestic tariffs

• Pre-paid meters and Credit meters
• All domestic prepayment customers with an average
  annual monthly consumption of more than 500 units
  shall be supplied at the normal domestic
  Homepower tariffs applicable. Thus the same
  tariffs used for credit meters.
• Customers on pre-payment meters, using more than
  500 units for the last three months, were
  switched over to the new Homepower pre-paid
  meter. It is thus possible for customers to
  choose a credit or a prepayment meter at the same
  tariff level.
• Businesslight prepayment tariff have been
  discontinued and former users on prepayment
  systems will pay exactly the same tariff as
  businessrate customers on credit meters and will
  thus no longer be subsidized on prepayment
  lifeline tariffs. Thus, all the Businesslight
  customers (irrespective of the number of units
  used) will now be charged on the Business rate on
  pre-paid meters.
• The prepayment vending system will thus charge a
  daily fixed cost as is the case with Homepower
  tariffs (on a time between purchase transactions
  basis) plus a unit cost applicable to this
  category of customer.
• The applicable monthly fixed charge would
  therefore be reduced to a daily fixed cost. When
  purchasing electricity the system will calculate
  the number of days since the last purchase and
  use that as a norm to calculate the portion of
  the fixed cost payable with the current
  transaction. The net effect would be the same as
  the monthly charge on credit meters.

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Tariffs applicable to domestic and small business
customers for the 2008/9 financial years
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Typical prepayment purchase example
Homepower tariff (more than 500 units per
month) Days since previous purchase
10 Amount tendered R100
Minus the VAT R
12.28 Remainder after VAT R
87.72 Amount due for fixed cost 10 x R1,68 R
16,80 Remainder after fixed cost R 70.92 Units
supplied R 70.92/(R0.43175) 164.9
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Questions