Eskom: briefing

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Mineral Resources and Energy

12 November 1999
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Meeting report

MINERALS & ENERGY PORTFOLIO COMMITTEE
12 November 1999
PRESENTATION BY ESKOM

Documents Distributed
Briefing Note to the Parliamentary Portfolio Committee on Minerals and Energy Regarding the Pebble Bed Modular Reactor (Appendix 1)
Briefing Note to the Parliamentary Portfolio Committee on Minerals and Energy Regarding the Storage of Spent Fuel at Koeberg (Appendix 2)
Presentation to Portfolio Committee on Mineral and Energy
[e-mail linden@iafrica.com for the presentation to the committee]

SUMMARY
Eskom made a presentation to the Portfolio Committee on four different aspects of the company. This was followed by a presentation on the Pebble Bed Modular Reactor (PBMR) and the storage of spent fuel at Koeberg.

MINUTES
The presentation by Eskom was divided into five sections. Mr W Kok, Executive Director of the Finance Group, talked about the business of Eskom. Mr Khumalo talked about the restructuring and transformation in Eskom. Mr M Adam, General Manager of the Legal Department talked about the coporatisation and the shareholders compact. Mr T S Gcabashe, Deputy Chief Executive and Chairman of Eskom Enterprise, talked about Eskom enterprises. Finally, Mr Tony Stott discussed the Pebble Bed Modular Reactor (PBMR) and the storage of spent fuel at Koeberg. The floor was opened up to questions and points of clarity after each section of the presentation

Questions and answers:
One of the members asked how Eskom was planning to deal with the shift from a customer owned utility to a shareholder owned business. Mr Kok indicated that that would be dealt with later on in the presentation. The same Member asked whether corporatisation would effect the cost of electricity. Mr Kok explained that the price of electricity would rise at the same rate as inflation.

Mr Oliphant (ANC) referred to the last slide of the presentation dealing with stakeholder expectations. He asked if the new owners might impact on the reconstruction and development programme. Mr Kok answered that they had made a commitment to the reconstruction and development programme. In addition, they are in constant discussion with new shareholders. Mr Kok indicated that Eskom needed clarity on what the government wanted from them.

Mr Oliphant also asked what Mr Kok meant when he said that Eskom had met their target. Mr Kok answered that it meant that Eskom remains committed to its goal of not losing employment during the restructuring process. He indicated that if the management process goes well, they will not envisage a programme of entrenchment.

Finally Mr Oliphant asked why Eskom compared itself to other countries outside of Africa and made no comparisons to African countries.
This question was not directly dealt with.

Mr Davidson (DP) asked about the number of non-payments. Mr Kok told the Member that there had been a huge improvement in the number of non-payment cases. The figure has gone from millions to around 468 000, these numbers reflecting individual customers. Mr Kok recognised that there are still some problems, but it is improving with the use of prepaid meters.

Mr Lucas (IFP) asked what happens when they export across the boarder. He wondered if international customers are being charged more. Mr Kok explained that international customers are treated the same as South African customers.

Mr Bruce (DP) indicated that South Africa once had the lowest industrial electricity prices but now it is New Zealand. He wondered how South Africa lost that position. He also noted the question mark at the end of the graph and asked Mr Kok if they should be worried about the future. The question was not dealt with directly.

Mr Nel (NNP) asked how they were dealing with the pressure to cut greenhouse gas emission. Mr Kok told Mr Nel that the elimination of greenhouse gas emissions is dealt with at the board level and they subscribe to all of the rules and regulations. Mr Stott added that since South Africa is recognised as a developing country it has different targets. He explained that they are given more time to research new clean technologies and efficiency improvements.

Mr Mongwaketse (ANC) reminded Mr Kok that the question on why Eskom did not compare itself to other African countries had not been answered. Mr Kok told the committee that Eskom does not do the comparisons itself; but that they were done by a London based company.

Mr Mongwaketse also said that in 1997 he asked Eskom to come to his district to talk about implementing a plan but it was never dealt with. Eventually, the district council had to go and pay Eskom to come and implement an electricity plan. Eskom did not make the initiative itself. Mr Mongwaketse told Eskom that many times when they do set up electricity in small villages, the lines to not cover the whole area. Finally, the Member wanted some clarity as to why power stations are not being set up in small areas. Mr Kok told the Member that Eskom cannot go into villages without permission. Once they have permission they make a three to five year plan on what villages they should go to. He explained that they often have budget restraints that limit the amount of places they can visit.

Restructuring and Transformation & Corporation and Shareholders Compact
The committee then heard Mr Khumalo's presentation of the Restructuring and Transformation of Eskom and Mr Adam's presentation on the Corporatisation and the Shareholders Compact. The floor was opened up to questions and comments.

Questions and answers
Mr Mongwaketse (ANC) congratulated Eskom on helping so many people and he hoped that this would continue in the future. He then asked Mr Khumalo if he could give him an example of including big business in Black Economic Empowerment (BEE). Mr Khumalo told the Member that they had always intended to support small business but then they decided to do more, and support big businesses too. They spend more money on black businesses in order to facilitate black people into big businesses. They are still working with both big and small businesses.

Mr Mongwaketse asked if Eskom was trying to force people into leaving and taking packages. He asked whether individuals could go to another enterprise of Eskom rather than accept a leaving package. Mr Khumalo told the Member that Eskom reduced its staff from sixty-seven thousand to thirty-five thousand with no force. He admitted to using the incentive packages as an approach but that no one was forced to leave.

Mr Lucas (IFP) noted that the time for the meeting was running short and there were still several issues not sufficiently covered. Mr Lucas was not pleased with the answer given for cross boarder customers and he did not think that the issue of taxation was sufficiently covered. He requested another meeting in the near future with Eskom. Eskom welcomed another meeting and told the committee that they would make an effort for the committee to go and visit Eskom in Johannesburg. In addition, they added that since it is the first time that Eskom will be taxed they themselves do not yet know the impact it will have.

Mr Mongwaketse asked Mr Khumalo a follow up question regarding BEE. He wondered if they were only involved in big businesses in the coal mining industry. Mr Khumalo answered that coal mining is only one example, other examples include construction and consulting.

Mr Oliphant accepted the invitation from Eskom to go to Johannesburg. He also commented to Eskom that they have a very good human resource policy. Mr Oliphant also agreed with the other Members that they need to spend more time with Eskom with these and other issues.

Other presentations on Eskom
The chairperson noted that there was very little time left in the meeting but they would give Mr Gcabashe time to briefly give his presentation. The committee would not permit questions on this presentation because of the time restraints. In addition, Mr Stott was given time to briefly talk about the PBMR and the storage of spent fuel at Koeberg. The chairperson recognised that there were people from the public present to raise concerns but there would not be time to hear them.

Questions and answers
Mr Nash (ANC) asked Mr Stott how much money they spent on their research. He also wanted to know where the money came from. Finally, Mr Nash asked where the PBMR was tested. Mr Stott told the committee that Eskom has a 120 million rand research budget and in 1998 75% of that was spent on the PBMR. Now the PBMR is no longer part of the research budget; the money comes from investors. Mr Stott added that the design and modelling is still only on paper and they have asked Russian researches to aide them in ensuring that their calculations are correct. Mr Nash followed up by asking how the waste was dealt with. Mr Stott explained that the waste is kept on the PMBR for the life of the station. Mr Nash also asked if the PBMR is deemed so safe why are there many countries not building them. Mr Stott told the Member that Japan, China, Holland, the USA and Russia are working to build PBMRs.

Mr Nkosi (ANC) commented that the issue of safety is a very valid concern. He told the committee that he was raising the issue to be discussed further when they had more time.

Mr Mohamed (ANC) asked if the same fuel being used to test the PBMR is now being used in Koeberg and whether or not there are any implications of putting fuel elements together. Mr Stott explained that the fuel used in Russia was the same fuel that was being used in Germany for 22 years. However, it is not the same fuel being used in Koeberg now. Mr Mohamed wanted to continue this matter further but it was decided that since the time for the meeting had expired that they would end their discussion and meet again in the near future.

These Minutes have been supplied by Contact.

Appendix 1:

BRIEFING NOTE TO THE PARLIAMENTARY
PORTFOLIO COMMITTEE ON MINERALS & ENERGY
REGARDING THE PEBBLE BED MODULAR REACTOR
(PBMR)

Eskom's capacity to supply electricity is currently greater than the demand for electricity. This situation is expected to last until 2008, assuming moderate (2.7%) growth in the demand for electricity. There after South Africa will need to find new sources to generate electricity. In the longer term, after 2020 the older (coal-fired) power stations will reached the end of their economic life. Hence Eskom will have to invest in replacement power stations.

Electricity in South Africa (SA) has traditionally been supplied by means of coal with a limited amount of hydro. In the l970's the decision was made to build Koeberg. One of the advantages was to diversify the energy mix.

Today the same imperative applies and is embodied in the energy policy i.e. to diversify the energy mix. RSA is blessed with abundant supplies of coal and lots of uranium. We do not have extensive reserves of water or natural gas. It is therefore to be expected that, based on information currently available, our future electricity supplies will be predominately coal-based with nuclear as an alternative. Hydro and gas will take their place in specific niche applications and, as the research progresses, renewables (solar and wind) will also take a niche position.

In order to determine the optimum mix of these options it is clearly necessary to undertake an Integrated Electricity Planning (IEP) process and this is foreseen and emphasised in the energy policy. To do this there needs to be a considerable amount of information and data.

Eskom has, through the years gathered significant amounts of experience and information on generation by means of coal, hydro and large scale nuclear. It is actively researching renewables and natural gas.

Eskom recognised that while it might on the face of it be desirable to have nuclear as an option, there would need to be considerable improvement ill the levels of public and political acceptance of nuclear power if this was to be a reality. Accordingly Eskom has been searching for a technology that would be inherently even more safe, more flexible in application and more economic than the Koeberg type of power station.

Eskom developed the concept of the PBMR power station which has a solid technological foundation from Germany, the United Kingdom and the United States of America. The conceptual PBMR is an electricity-generating, commercially viable, high temperature gas cooled nuclear reactor power station. The most remarkable features of this kind of nuclear power station is that it is inherently safe, is small and modular, and is projected to be able to produce electricity at costs competitive with Eskom's coal-fired power stations.

What is also important is the fact that this technology could lend itself to application around the world and in so doing would present a wonderful opportunity for RSA to create jobs and earn export revenue.

It must be emphasised that there is still some way to go before this project has developed sufficiently for there to be enough information for Eskom to make recommendations to, and for the Government to make a decision as to whether this technology fits into the IEP plans and whether it is to be a significant player in our future energy mix.

It may be necessary to build and operate such a reactor on a demonstration basis in order to confirm the very promising data that is coming from all the modelling.

At this time Eskom is continuing with the design work and the modelling to provide the required technical and financial information. The Council for Nuclear Safety is reviewing the technical information to determine whether the PBMR concept is licensable in terms of their safety standards and criteria. An Environmental Impact Assessment (EIA) study has commenced as required by national legislation

All of these processes are essential to provide the information that is needed in order for decisions in the context of IEP to be made. In the absence of this information any IEP process will be incomplete and possibly even result in incorrect conclusions being drawn and incorrect decisions being made.

It is anticipated that, all being well sufficient information will have been gathered by the end of 2000 for Eskom to make recommendations to Government whether to proceed with the construction of a demonstration plant. This is clearly a decision that will have to be taken in the context of the energy policy as it is of national significance. If that decision is positive, then it will probably be another four years before the demonstration plant will have generated sufficient credible information for a decision to be made whether to proceed with large scale production and use of this technology.

Appendix 2

BRIEFING NOTE TO THE PARLIAMENTARY
PORTFOLIO COMMITTEE ON MINERALS & ENERGY
REGARDING THE STORAGE OF SPENT FUEL AT
KOEBERG

During refueling and maintenance "outages" at Koeberg, spent fuel in the reactors is replaced with fresh fuel - usually every 18 months. The two fuel pools (one per reactor) are used to store the spent fuel coming out of the reactors. International practice dictates that spent fuel, which is thermally hot and radioactive, and which is destined for off site storage, be kept in fuel pools for 10 years, during which time the thermal heat and 99% of the radioactivity is lost. Spent fuel for reprocessing is normally moved much earlier

When Koeberg was originally designed in the early 1970s, it was expected that the station's fuel would be processed. For that reason, the pools were designed to hold enough fuel for 5 years of operation, at which time the oldest fuel would be taken out of the pools to make way for more recently used fuel. For political and cost reasons, reprocessing of Koeberg's fuel was not feasible and Eskom re-racked the pools during the eighties to enable them to hold fuel for longer than 10 years

During the late eighties, new spent fuel storage technology became available - in the form of dry storage in concrete and iron casks. Having evaluated the advantages,the new technology would give Koeberg in terms of flexibility of storage options, Eskom acquired four such casks from a German manufacturer in April 1996. Shortly thereafter, advanced wet storage technology made even lighter density storage racks possible, and to eliminate the need to move spent fuel out of the pools at all, Eskom opted to re-rack the fuel pools in such a way as to accommodate on-site all of Koeberg's spent fuel for its entire 40 year operating life. A contract was placed in July 1996 to have the fuel pools re-racked

Koeberg's fuel pools are full now, and to make space for spent fuel leaving the reactors during the outages in 2000, the four casks will be used to store Koeberg's 14-and 13- year old fuel. Each of the four casks can hold twenty-eight fuel assemblies. Hence two casks have sufficient capacity to take the spent fuel discharge from one reactor during a refuelling. The installation of the new racks will be completed in 2001.

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