Eskom takes advantage of low-demand period
ELECTRICITY demand has fallen 3,7% in the first six months of this year, giving Eskom an opportunity to fast-track its power-station maintenance programme.
The utility has a maintenance backlog that has been building up since 2010. A mounting maintenance backlog raises the risk of forced outages in future.
Public Enterprises Minister Malusi Gigaba said yesterday the utility's maintenance backlog had come down from 36 units by the end of March last year to 25 units in January this year.
Speaking at a breakfast meeting in Pretoria, Eskom CEO Brian Dames said Eskom was now, for the first time, conducting maintenance during winter. Eskom ususally services its plants during the summer months, when demand for electricity is traditionally lower. The utility would intensify its maintenance programme going into the summer months, Mr Dames said. That would put the electricity system under pressure, he said.
Mr Gigaba said the aim was to eliminate the backlog by December next year, which would require winter maintenance and thus increase risks to the system. "But," he said, "I must assure you that this is both absolutely necessary and will be done in the most careful manner."
Mr Gigaba said Eskom could no longer defer maintenance. "Eskom's system operator and generation operations have become extremely expert at balancing a tight system. But by deferring maintenance, outages can carry on for only so long before the backlog starts to pose significant risks to the safety of assets and of people. That point has been reached. Consequently, meeting demand by deferring maintenance is no longer an acceptable option."
Mr Dames said the balance between electricity output and demand remained tight and that the most critical period was between 5pm and 9pm, when demand could increase by as much as 3000MW. "We keep power stations available so as to meet this demand. After 9pm all stations go back to minimum power," Mr Dames said.
Eskom reportedly wants to raise electricity tariffs by at least 14,6% over each of the next five years. As required by law, Eskom has already submitted proposals for the next round of tariff hikes to the Treasury and the South African Local Government Association (Salga). "We have not determined our final application to the (National Energy Regulator of SA)," Mr Dames said.
He defended Eskom's recent above-inflation tariff hikes. The "endgame" was for the tariff increases to be at inflation level. But this was not possible now because coal - which accounted for half of Eskom's costs - was still costly. Coal costs have increased 18% a year, he said. "We cannot apply for inflation tariffs if our coal costs are high." If Eskom applied for inflation tariffs, it would be subsidising coal companies.
Mr Gigaba said that in its latest tariff proposal Eskom had taken into consideration a number of variables, including a slowing economy that was shedding jobs.
Responding to a question about profitability, Mr Dames said the profits serviced Eskom's debt, which stood at more than R182bn. "We fund our expansion (programme) not from tariffs but from debt." He said Eskom was not making enough money to pay interest. Mr Gigaba said "somebody" had to pay for Eskom's build programme.
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