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Municipal involvement in the energy crisis

Select Committee on Labour & Public Enterprises. Municipal involvement in the energy crisis. The current response effort is being managed at various interfaces, these are:. DME. Treasury. Other Bodies. President. DTI. DPLG. Energy Supply Committee. IMC. DPE. DEAT. SACC. ESKOM. FEE.

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Municipal involvement in the energy crisis

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  1. Select Committee on Labour & Public Enterprises Municipal involvement in the energy crisis

  2. The current response effort is being managed at various interfaces, these are: DME Treasury Other Bodies President DTI DPLG Energy Supply Committee IMC DPE DEAT SACC ESKOM FEE Industry ESKOM Recovery Team NERT Industry Task Team NERSA (Regulator) Streams Work Groups Work Groups National Response to South Africa’s Electricity Situation

  3. There is municipal representation at key forums BUSA DEAT DPE GCIS NERSA ESKOM DME NEDLAC DoL DPW IndaloYethu National Treasury Chamber of Mines DPE City of JHB DoT EDI Holdings JHB City Power Presidency EIUG National Treasury COSATU DPLG ESKOM Gauteng Gov. RTMC AMEU Labour Unions CSIR DME FEDUSA NEEA DTI SALGA Specialist Groups NERT Industry Task Team Co-generation & Market Economic Impact Strategic Steering Committee Implementation of Power Conservation DSM Implementation Co-ordination Financing Development of Communication Protocols Regulatory & Intergovernmental Support Legal & Tariffs Comms Power Management Monitoring & Evaluation NERT = National Energy Response Team

  4. The overarching role that municipalites are playing in the enery crises is the implementation of demand side options to reduce energy consumption Security of Supply Supply-Side Options Demand-Side Options Security of Supply Levers Load Shedding Load Reduction Municipal Gen. Import DSM PCP Export New-Build Pricing Public Awareness OCGT / CCGT Primary Energy Energy Efficiency Existing UCLF Go-generation Economic Factors Regulatory Framework Availability of Skills Extraneous Factors Financial Constraints Legislative Environment Market Forces (Procurement) The primary levers to recover security of supply are demand and supply management. These options are however impacted by a number of other factors. 4

  5. Eskom/ Municipal Task team Eskom created a national task team with the metros and large municipalities to deal with the energy crisis • 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 Demand-Side Options Load Shedding Load Reduction DSM PCP Pricing Public Awareness Energy Efficiency Meeting frequency is every 2 weeks Objective: To drive rapid energy reductions to avoid load shedding 5

  6. Capital Expenditure and Funding

  7. Build 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) 7

  8. Capital Expenditure 2009~2013

  9. All projects

  10. 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

  11. 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

  12. 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

  13. Thank You

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