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Electrification: An Integrated Implementation Approach [Eskom’s Overview] Presentation to the Parliamentary Select Committee on Finance 22 nd August 2006. Contents. Business Overview – An Integrated View.
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Electrification: An Integrated Implementation Approach [Eskom’s Overview] Presentation to the Parliamentary Select Committee on Finance 22nd August 2006
Business Overview – An Integrated View The Eskom Regulated Business is currently organised in a vertically integrated structure whereby electricity is produced, transported and delivered to end users. The functional outputs of these activities are managed by Generation, Transmission and Distribution Business Divisions. TRANSMISSION SUBSTATIONS MUNICIPALITIES 2 1 TRANSMISSION LINES 3 TRANSMISSION (400/275 kV) High Voltage electricity is carried between Generation and required Distribution through Transmission networks (or Transmission grids) DISTRIBUTION LINES POWER STATIONS DISTRIBUTION (132/33 kV) GENERATION Electricity is Generated by burning of fossil fuels (coal, oil, or natural gas), use of nuclear technology and hydro capability The distribution networks collect ‘stepped down’ electricity from the transmission networks and deliver it to Redistributors /End Users DISTRIBUTION SUBSTATIONS The voltage levels of electricity are further transformed to meet Distribution requirements RETICULATION HV LINE (11 & 22kV) SERVICE CONNECTION Customer consumption is measured at the point of supply in KWh. This information is used to measure and bill consumption levels utilised/sold RETICULATION LV LINE (380/220V)
Eskom Holdings : Divisional Mandates To assure regulatory compliance, ensure effective group wide governance, develop policies for compliance assurance and to provide strategic services. Corporate Generation To optimally operate and maintain the plant lifecycle of Eskom’s South African generation capacity assets. To optimally operate and maintain the lifecycle of the South African transmission network. Transmission Distribution To manage the retail business and optimally operate and maintain, the SA Distribution network, while playing an active role in the restructuring of the EDI. Key Customers To proactively manage contestable client relationships and to trade energy from Generation and international sources to contestable clients in SA (consumers of >100GWh) and customers abroad Key Customer Division Enterprises Division To design, build & refurbish Eskom’s assets, act as a catalyst for globalisation for the group and to be the custodian of Eskom’s non-regulated businesses. Eskom Enterprises will also offer strategic and commercial lifecycle services to the line divisions
Distribution Division : Business Model Customer Categories Retail Business (Customer Service) Wires Business (Engineering/Network) Residential Overall management of Purchase electricity from the network infrastructure in wholesale market and sell to Traction delivery of electricity to end end user/ Redistributors user Agriculture Functional Areas: Functional Areas: Commercial Construction of network Sales & Marketing • • infrastructure; Energy Trading • Redistributors Installation of meters; • Customer Service • Inspection, testing, upgrade & • Pricing & Tariff Planning • maintenance of equipment Prepaid Call Centre • Technical customer connections • & disconnections Billing • Mining & Industrial
Red 6 Red 4 Red 2 Red 5 Red 1 Red 3
Electrification - Energy White Paper Mentions the following key issues: • Electrification Planning Unit [INEP BPU] • National Electrification Fund [NEF] • Economic Development • Infrastructure creation • Economic Nodal Areas identified/priorotised • Integrated National Electrification Programme [INEP]
Eskom’s Electrification Programme 3,3m households have been electrified since 1994 Approx. R9b capital expenditure – average cost R3,900 per connection National Government subsidised INEP since 2001 R893m allocated for 2006/7 programme 110 000 connections to be realised in 2006/7 [after adjustments (target was 160 000 connections] Connections mainly in rural areas Capacity building programmes achieved through ESDEF Rural Development initiatives in Nodal areas
National Electrification Fund Allocation Principles The (INEP BPU) makes recommendations for the approval of the Integrated National Electrification Plan [INEP] to the National Electrification Advisory Committee (NEAC) comprising of inter alia DME, National Treasury, SALGA, AMEU, DWAF, IDT, DPLG and Eskom based on the following criteria: • Focus on backlog and apply a rural bias • Prioritise based on Integrated Sustainable Rural Development Strategy (ISRDS) Nodal Zones • Maximise on available infrastructure • Past performance taken into account • Government priorities and initiatives such as Integrated Infrastructure Development considered • Regional capacity e.g. resources
NEF Process for Allocation of Funding to Provinces • Use same criteria as in NEAC • Adjust programme as per DME requirements and in line with the change process • Provincial consultation done through: • Provincial IDP/MIG Forums chaired by Provincial Local Govt officials • Provincial Energy Forums [where applicable] • Final funding allocations to Municipalities are based on the approved budget by DME and are consistent with IDP agreements signed between Eskom and Municipalities • Project Life Cycle principles observed
Challenges Different challenges for current and proposed programme compared to the 1994 programme Limited Infrastructure [mostly in rural areas] Integration with Government priorities A phased process for step-up programme Step-up of programme – 18 months lead time required Average lead time for bulk infrastructure – 27 months Availability of resources, funding, material, suppliers etc. Ensure availability of adequate capacity Electrical infrastructure in former TBVC states and self governing territories requires major upgrading and strengthening
Challenges Harmonisation of electrification and housing programmes Balancing cost against social economic requirements e.g. job creation Ensure availability of data and structural information Cater for household growth as part of step-up programme Development of policies regarding implementation issues such as un-proclaimed areas, land usages etc. Ensure political support in ensuring the speeding-up of housing allocation/tender processes etc. Integration of supply technologies Finalisation of the EDI restructuring Availability of funding up front [R2,5 billion per annum]
National Backlog to date • A current backlog of electrification connections of 3.4 million households. • An estimated requirement of 5 million connections by 2012. If electrification continues at the current rate: • 43% of current backlog (excluding growth) will be electrified by 2012. • 29% of backlog (including growth) will be electrified by 2012.
Universal Access Consideration Step-up programme planning to be phased in (+/- 18 Months) Master plan needs to be in place Cost per connection (Based on existing Eskom trends) R4,970 from 2006/7 R5,522 from 2008 to 2010 R6,075 for 2011 to 2012 High cost per connection to be influenced by : Less infrastructure available Catering for higher supply technology e.g. 10A, integrated development programmes Low density/long line length
Universal Access Considerations Cost for social economic developments e.g. job creation, BEE should be made available separately (Community based construction -Department of Labour) Eskom needs to identify risks and consequences of step-up programme Focus Universal Access as follows [shifting target] Western Cape - 2007/8 Northern Cape, Free State - 2008/9 North West and Mpumalanga - 2009/10 Universal Access for the rest – target 2012 Once universal access is reached – business as usual
Context ………. Farm worker houses included as part of connections The following were not factored in Non grid concessions/connections Local economic development planning Land restitution issues Emerging farmers [electrification, support and development] Impact of Municipal Infrastructure Grants (MIG) Schools and clinics electrification Planning Targets should be negotiated with Municipalities to ensure alignment
FBE Approach FBE Approach • National Task Team, comprising of DPLG, DME, National Treasury, Eskom, NER, DPE and SALGA • Negotiated One National Contract, and one National Tariff country wide Criteria • As per “indigent policy ” of the specific Municipality/Metro • Prepaid < 20A circuit breaker or conventional < 150 KWhrs consumption per month • Funds flow directly to Municipality through equitable share fund • Eskom enters into Funding Agreements with Municipalities/Metros • Eskom claims monthly from Municipalities/Metros as per National Tariff. Excess to be claimed from National Government annually
Funding Agreement Status[Status end of June 2006] • FBE Customers across 242 Municipalities • Discussions to sign agreement still underway with 4 Munics • New contracts are being signed for the new municipal year, starting July 2006.
FBE Status[Status end of June 2006] “Customers approved by municipality” are as per Funding Agreements and received from municipalities. “Configured customers” are customers that can collect their tokens. The difference between “Approved Customers” and “Configured Customers” is mainly due to data quality.
FBE – Munics Have Not Rolled Out Munics that have signed agreement and have not rolled out
