File image: IOL.

DURBAN - Eskom coal and open cycle gas turbines (OCGT) costs are still within the budget approved by the National Energy Regulator of South Africa (Nersa), Eskom group executive of generation Thava Govender said last week. 

Faced with low stock-piles at six of its power stations, Eskom is diverting coal deliveries from other power stations to those experiencing shortages. This looks set to increase Eskom’s coal costs, which the power utility might seek to recover through a Regulatory Clearing Account (RCA) application to Nersa. 

The RCA, which is part of the multi-year price determination (MYPD) methodology, is a backward-looking mechanism that seeks to reconcile what Nersa awarded Eskom on the basis of what was forecast in the MYPD and what materialised, as reflected in the utility’s financial statements.

 Speaking on the sidelines of last week’s briefing on the state of the electricity system, Govender said that Nersa would ascertain if the coal was procured prudently and the reasons for the drop in stockpiles. 

“It depends on how the regulator will look into it when we put our RCA application. They will take into account that in the previous year we were actually below our budget. This year we may be over (budget),” said Govender. 

He said Eskom was within its OCGT budget. “I do not think there is any issue with that from a regulatory point of view,” he said. 

In its 2017 annual report, Eskom said it targeted to reduce coal spend by R43billion as part of efforts to reduce operating and capital costs. 

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- BUSINESS REPORT ONLINE