Question NW4139 to the Minister of Public Enterprises
08 January 2024 - NW4139
Mhlongo, Ms N to ask the Minister of Public Enterprises
Whether Eskom is steadfast in its commitment to a cost-reflective pricing structure; if not, why not; if so, (2) Whether the cost-reflective tariffs will consider the (a) socioeconomic situation, (b) issue of indigents and (c) monopolies that exist in the Republic; if not, why not; if so, what are the relevant details; (3) What has he found is the (a) efficiency, (b) cost-benefit and/or (c) even opportunity cost of using open cycle gas turbine?
Reply:
According to information received from Eskom:
(1)
Yes, Eskom is committed to a cost-reflective pricing structure, and it is still in the process of migrating towards cost-reflective pricing – recovering all efficient costs, as required in terms of the Electricity Regulation Act (ERA). The National Energy Regulator of South Africa (NERSA) makes all decisions on the pricing of electricity and Eskom implements these decisions.
(2)
These factors are considered by NERSA when NERSA undertakes revenue and tariff decisions in accordance with legislation (ERA) and policy (Electricity Pricing Policy). To deal with such matters, the government’s Electricity Pricing Policy and Electricity Regulation Act allow for targeted and transparent subsidies and cross-subsidies to particular consumer groups, as appropriate.
(3)(a)
The overall efficiency of the OCGTs is approximately 34% which is the norm for this type of technology.
(b) and (c)
The cost of running OCGTs is balanced against the cost of loadshedding (COLS) to the economy. The latest available estimate of the COLS is 12.61 R/kWh. This is significantly more expensive than the cost of running the OCGTs which varies depending on the price of diesel, which is typically in the range of 6.5 to 7.5 R/kWh.
Remarks: Approved / Not Approved
Ms Jacky Molisane PJ Gordhan, MP
Acting Director-General Minister
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