IPPs agree to raise supply to Eskom

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Reuters

Eskom has budgeted about R1.2bn for power purchases from IPPs in winter. Photo: Reuters

Johannesburg - Some independent power producers (IPPs) contracted by Eskom have committed to sell more electricity to the state-owned power utility this winter.

The National Energy Regulator of SA (Nersa) this week told Business Report that eight IPPs and two municipal generators were contracted to deliver 851.2 megawatts (MW) of electricity to Eskom at specified contract values.

“The agreements are all extensions, although some IPPs [have] increased contracted capacity,” Nersa spokesman Charles Hlebela said.

The news comes after Nersa gave Eskom’s power purchase programme a green light for extension last week.

Eskom said it had budgeted approximately R1.2 billion for power purchases from IPPs for June, July and August. It said further to the IPPs participating in its short-term power purchase programme (STPPP) and municipal agreement extensions, there might be more extensions of agreements with other IPPs.

“As part of the Department of Energy procurement programmes, we will be entering into new long-term [20 year] PPAs [power purchase agreements],” the utility said.

Eskom has 60 signed PPAs with a total capacity of 4 280MW, although some of the capacity is not yet operational.

Eskom spent R3.266 million on power purchase programmes in the financial year to March, a significant increase from R2.94m spent in the last financial year, but almost comparable to R3.13m spent in 2012.

Asked whether the extension of the STPPP would be enough to prevent power supply shortages experienced at the beginning of this year, Eskom said: “Probably not, as most of the capacity signed is still in construction.”

Eskom’s STPPP was terminated in December as the utility did not have the financial means to extend the existing contracts.

Eskom had extended the STPPP in March, while seeking approval to do so in order to avoid the reoccurrence of supply constraints that plunged the country into rotational load shedding earlier that month.

Hlebela said the extension would have no impact on future tariffs, as the expenses associated with buying that power could be dealt with in the Regulatory Clearing Account (RCA).

The RCA is created at the beginning of each year and is used to debit or credit the difference between the primary energy costs approved in Eskom’s tariff application and the actual cost the utility incurred in that year.

On April 25, Eskom said it had submitted an RCA application to Nersa for the second multi-year price determination period, which ended in 2012 and the regulator was still reviewing the actual costs incurred during that period.

Although Eskom can continue to buy electricity from IPPs under the STPPP, Nersa has not made provision for the power buy-backs. It said Eskom’s application specifically asked for an extension of the STPPP.

Eskom said it was also not planning to fund any power buyback initiative from its balance sheet this winter. It said it would engage its customers in terms of demand reduction through the utility’s standard demand response programmes.

Meanwhile on electricity tariffs, Nersa wrapped up consultations on the proposed guidelines for electricity reseller tariffs yesterday.

Stakeholders had until yesterday to submit comments to the regulator about the proposed tariffs for electricity sellers whose tariffs were not approved by Nersa. - Business Report


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