Eskom to charge solar users in South Africa to remain connected to the grid

[Mista_Mobsta]

The kak ANC country since 1994

US Petrol up = 268%
US Electricity up = 85%
US Median house income up = 144%
US Petrol price in 1994 = $0.29 per liter
So on your monthly salary you could buy = 9,271 liters of petrol a month


RSA Petrol up = 1185%
RSA Electricity up = 2204%
RSA Median house income up = 510%
RSA Petrol price in 1994 = R1.72 per liter
So on your monthly salary you could buy = 1,395 liters of petrol a month


Now you know why the Yanks drive big V8 cars!

Don't forget to factor in the +-409% Rand depreciation since 1994:

 

[The Trutherizer]

Actually the connection is part of the distribution. The transmission is between the supplier and the generator and has nothing to do with the user.

Well the reality is that there's reasonable indication that distribution must fall under NTCSA currently. It's designated lawfully as "the buyer". From Eskom Generation, as well as section 34 IPP energy projects. i.e. Then also the reseller to consumers.

For Eskom's budget to come into the story at the point of connection again, makes little sense. The reasoning for the increases thus far is a lowering in demand from consumers. i.e. For Eskom generation's product (supply). Though NTCSA is wholly owned by Eskom, it is also fully separate. Has it's own board. And one must assume, it's own budget.

NERSA shouldn't be looking at Eskom's budget to determine price increases. NERSA should be looking at NTCSA's budget.

 

[quovadis]

Well the reality is that there's reasonable indication that distribution must fall under NTCSA currently. It's designated lawfully as "the buyer". From Eskom Generation, as well as section 34 IPP energy projects. i.e. Then also the reseller to consumers.

For Eskom's budget to come into the story at the point of connection again, makes little sense. The reasoning for the increases thus far is a lowering in demand from consumers. i.e. For Eskom generation's product (supply). Though NTCSA is wholly owned by Eskom, it is also fully separate. Has it's own board. And one must assume, it's own budget.

NERSA shouldn't be looking at Eskom's budget to determine price increases. NERSA should be looking at NTCSA's budget.

Power stations/Hydro/Solar/Wind etc (Generation/Sources) -> Transmission (High Voltage) -> Distribution (Low Voltage)

 

[The Trutherizer]

Power stations/Hydro/Solar/Wind etc (Generation/Sources) -> Transmission (High Voltage) -> Distribution (Low Voltage)

What? So Eskom (generation, i.e. supply) -> NTCSA (legal buyer from Eskom Generation) -> Eskom distribution (wholesale buyer [again] and last mile reseller) ?

It definitely looks odd with Eskom at the start AND end of the process. The main question for me is one of which budget NERSA should be looking at when determining questions of supply and demand as they pertain to losses in demand from users. It should surely not be the Eskom holding company's budget. Where Supply and Demand considerations are concerned... One could say that there is an element of supply and demand at every step. However the rationale forwarded has thus far been concerned with the lack of demand of the supply on the Eskom Generation side. And how that affects their ability to maintain (including debt servicing) and expand generation capacity.

This should be a question of supply and demand considerations between Eskom Generation (a legal supplier) and NTCSA (the legal buyer). And the NERSA increases need to be focused there. Not at the individual connections. Which is confounding the discussion.

 

[quovadis]

What? So Eskom (generation, i.e. supply) -> NTCSA (legal buyer from Eskom Generation) -> Eskom distribution (wholesale buyer [again] and last mile reseller) ?

It definitely looks odd with Eskom at the start AND end of the process. The main question for me is one of which budget NERSA should be looking at when determining questions of supply and demand as they pertain to losses in demand from users. It should surely not be the Eskom holding company's budget. Where Supply and Demand considerations are concerned... One could say that there is an element of supply and demand at every step. However the rationale forwarded has thus far been concerned with the lack of demand of the supply on the Eskom Generation side. And how that affects their ability to maintain (including debt servicing) and expand generation capacity.

This should be a question of supply and demand considerations between Eskom Generation (a legal supplier) and NTCSA (the legal buyer). And the NERSA increases need to be focused there. Not at the individual connections. Which is confounding the discussion.

Eskom's tariffs have to show their costs/basis for their tariffs to their customers.

End of the day the cost is passed on regardless.

So Eskom generation will sell to City Power / City of Cape Town /Municipality or Eskom Direct/Distribution (whatever they call this) and it gets there via transmission which probably will be shared cost by those generating and those distributing.

 

[The Trutherizer]

Eskom's tariffs have to show their costs/basis for their tariffs to their customers.

End of the day the cost is passed on regardless.

So Eskom generation will sell to City Power / City of Cape Town /Municipality or Eskom Direct/Distribution (whatever they call this) and it gets there via transmission which probably will be shared cost by those generating and those distributing.

"End of the day" Is just-make-the-equation-work speak in this context. NERSA is obliged to look at the relevant budgets when considering supply and demand arguments. And NTCSA is the legal buyer [from Eskom generation). i.e. The "legal demand" if you will. And NTCSA sells on again to whatever distributor.

I don't mind if the tariffs increase between Eskom Generation and NTCSA. If it must be, then it must be. But worming the difference in directly on the individual end user connection fees cannot be legal within this new arrangement. The Eskom holding company can't just put punishing fees wherever it wants to, as convenient. Not when it comes with a supply-demand argument.

 

[quovadis]

"End of the day" Is just-make-the-equation-work speak in this context. NERSA is obliged to look at the relevant budgets when considering supply and demand arguments. And NTCSA is the legal buyer [from Eskom generation). i.e. The "legal demand" if you will. And NTCSA sells on again to whatever distributor.

I don't mind if the tariffs increase between Eskom Generation and NTCSA. If it must be, then it must be. But worming the difference in directly on the individual end user connection fees cannot be legal within this new arrangement. The Eskom holding company can't just put punishing fees wherever it wants to.

NERSA is evaluating Eskom's tariffs to its customers which needs to include all components. Transmission doesn't buy energy or resell it - it facilitates its transmission over the grid.

 

[The Trutherizer]

Eskom's tariffs have to show their costs/basis for their tariffs to their customers.

End of the day the cost is passed on regardless.

So Eskom generation will sell to City Power / City of Cape Town /Municipality or Eskom Direct/Distribution (whatever they call this) and it gets there via transmission which probably will be shared cost by those generating and those distributing.

Nono... NTCSA IS the legal buyer. By law.

Department of Public Enterprises, Eskom and the National Transmission Company South Africa announces commencement of trade by NTCSA - Eskom

Monday, 01 July 2024: The Department of Public Enterprises (DPE), Eskom SOC Holdings Limited and the National Transmission Company South Africa (NTCSA) are

www.eskom.co.za

In terms of current legislation, NTCSA will play the role of the Transmission System Operator and buyer. It will assume additional roles once the Electricity Regulation Amendment (ERA) Bill is passed into law. The NTCSA will trade with Eskom Generation and Independent Power Producers (IPPs) using the current industry framework. The transition to a competitive electricity market will only commence after the ERA is gazetted, and NTCSA will assume the additional role of Market Operator. In this capacity, it will provide a platform for generators, consumers, traders, and retailers to trade with one another, as is the case in leading countries around the world.

Cyril has already signed the ERA bill into law (August 16, 2024). For NTCSA to function as a trading platform, i.e. To serve as an electricity exchange marketplace. It must buy from generation (as the legal buyer) and sell on to resellers and consumers. Taking a fee in the process.

End of the day if the per unit costs are passed on, then that is fine. Per unit. The nature of this connection fee tariff is not simply a per unit pass-the-cost-on exercise. They are to extract extra profit for the Eskom holding company, through one of its subsidiary companies to make it's budget balance. Directly where end user demand has been lowered. Due to private solar installations. Without rocking the cross subsidization boat. It cannot be legal.

 

[quovadis]

Nono... NTCSA IS the legal buyer. By law.

Department of Public Enterprises, Eskom and the National Transmission Company South Africa announces commencement of trade by NTCSA - Eskom

Monday, 01 July 2024: The Department of Public Enterprises (DPE), Eskom SOC Holdings Limited and the National Transmission Company South Africa (NTCSA) are

www.eskom.co.za

Cyril has already signed the ERA bill into law (August 16, 2024). For NTCSA to function as a trading platform, i.e. To serve as an electricity exchange marketplace. It must buy from generation (as the legal buyer) and sell on to resellers and consumers. Taking a fee in the process.

End of the day if the per unit costs are passed on, then that is fine. Per unit. The nature of this connection fee tariff is not simply a per unit pass-the-cost-on exercise. They are to extract extra profit for the Eskom holding company, through one of its subsidiary companies to make it's budget balance. Directly where end user demand has been lowered. Due to private solar installations. Without rocking the cross subsidization boat. It cannot be legal.

NTCSA have licenses issued for Transmission, Trading and Export/Import. There may be arrangements for purchasing for Eskom themselves as part of the current status quo but IPP's are enabled to deal direct (subject to approvals) with end users in conjunction with licensed distributors.

 

[The Trutherizer]

NTCSA have licenses issued for Transmission, Trading and Export/Import. There may be arrangements for purchasing for Eskom themselves as part of the current status quo but IPP's are enabled to deal direct (subject to approvals) with end users in conjunction with licensed distributors.

The question IS around "arrangements for purchasing for Eskom themselves as part of the current status quo".

 

[W@P]

 

[quovadis]

The question IS around "arrangements for purchasing for Eskom themselves as part of the current status quo".

The current status quo is Eskoms own generation and the deals that government and eskom entered into with IPPs. I think they're being pretty transparent as the cost of transmission/distribution etc are being ringfenced. A kwh is a kwh after all (at the agreed rates) but the transmission and distribution costs will vary as we've seen with CoCT and CoJ and Eskom direct. The future will be that IPP's will not only be negotiating with Eskom.

 

[The Trutherizer]

The current status quo is Eskoms own generation and the deals that government and eskom entered into with IPPs. I think they're being pretty transparent as the cost of transmission/distribution etc are being ringfenced. A kwh is a kwh after all but the transmission and distribution costs will vary as we've seen with CoCT and CoJ and Eskom direct. The future will be that IPP's will not only be negotiating with Eskom.

This is about short circuiting a demand "problem", affecting Eskom generation supply profitability (past and present tense). That will only keep on lowering demand. By means of arbitrary punitive fees on end user connections. As opposed to per unit cost increases.

The whole point of unbundling Eskom is to make the electricity market competitive.

What happens if I, as an end user, make a deal with an IPP to buy electricity from them? The IPP is profitable. I get electricity at a good price. But "Muh... Eskom is losing demand, i.e. profitability. Increase the connection fee!" How is that different, in the end, from an end user lowering their own demand, by investing in their own privately owned generation capacity - From Eskom generation's perspective?

This is after all the type of marketplace SA wishes to emulate. Where end users can subscribe to a selection of electricity providers, via the central marketplace (NTCSA in our case). That's exactly what you do in, for example, the UK.

In the end. Even if the new arrangement requires connection fees to be increased. Regulatory approval for such should be done with consideration for the budget of the entity responsible for connections. Not that of the Eskom holding company as a whole. And certainly not Eskom generation. If an increase is decided to fit in between suppliers and NTCSA, then it must be per unit.

 

[rh1]

Eskom must first retrench the dead wood before they even talk about price increases. You cannot just pass on your bloat to consumers.

The problem with Eskom, is that the middle class consumers have jumped ship to partial or fully self provisioning and if they make it expensive enough, the middle class will go fully self providing.

I am not going to pay thousands of rands simply because Eskom feels entitled to my hard earned money.

 

[quovadis]

I think there's a few things at play from a variety of perspectives.

The first is the unbundling of Eskom into generation, transmission and distribution which arguably is performed by the very same company as per the status quo with even Eskom's IPPs and energy projects all being purchased and resold by Eskom. This is obviously necessary to enable competition at least at generation and distribution level.

The second is the impact of unbundling the energy cost with the cost of delivering the energy for the customers of Eskom. The end of the day the argument is sound in terms of paying for capacity and consumption separately.

This is about short circuiting a demand "problem", affecting Eskom generation supply profitability (past and present tense). That will only keep on lowering demand. By means of arbitrary punitive fees on end user connections. As opposed to per unit cost increases.

Sure but the flip side is that less demand either results in meeting Eskoms deteriorating supply issues and the price stays stagnant or an oversupply and the price should decrease or at least their costs reduce by less OCGT usage and less infrastructure to support.

The whole point of unbundling Eskom is to make the electricity market competitive.

Yes and allowing IPPs to deal with customers directly and wheel at transmission and distribution level it should since they no longer are exporting to Eskom for resale as per the previous model.

What happens if I, as an end user, make a deal with an IPP to buy electricity from them? The IPP is profitable. I get electricity at a good price. But "Muh... Eskom is losing demand, i.e. profitability. Increase the connection fee!" How is that different, in the end, from an end user lowering their own demand, by investing in their own privately owned generation capacity - From Eskom generation's perspective?

See my previous comments however I'll just add that currently nothing in the market matters - they've essentially said it costs us 'x' and we sell for 'y' - we need an increase - that's nothing new.

This is after all the type of marketplace SA wishes to emulate. Where end users can subscribe to a selection of electricity providers, via the central marketplace (NTCSA in our case). That's exactly what you do in, for example, the UK.

Sure, it's the model all over the world. For the short term we'll be stuck with Eskom direct and municipalities playing the distribution role. Heck we might even see private distribution enter to compete with Eskom direct and municipalities. I can think of a handful of estates that already have that infrastructure just needing a connection to transmission and a license.

In the end. Even if the new arrangement requires connection fees to be increased. Regulatory approval for such should be done with consideration for the budget of the entity responsible for connections. Not that of the Eskom holding company as a whole. And certainly not Eskom generation. If an increase is decided to fit in between suppliers and NTCSA, then it must be per unit.

Sure, I think for the most part NERSA needs to ensure that the components are priced correctly but we cannot have any component subsidizing another.

 

[The Trutherizer]

See my previous comments however I'll just add that currently nothing in the market matters - they've essentially said it costs us 'x' and we sell for 'y' - we need an increase - that's nothing new.

Yes. I hear you in all that. But this is not the "Eskom: we have less demand, so we want an increased per unit tariff" thread, nor article. It's the "Eskom: we have less demand, so we want an arbitrary fixed connection fee increase" thread, and article.

And BOTH are happening at the same time.

With cross subsidization I meant the cross subsidization that we've all always suffered to make electricity cheap for large industrial consumers, and free or very cheap for millions of people in SA. Not between components of Eskom. Which gets to the gist of the matter. The new arrangement is to make the market competitive in a bid to lower per unit costs. In the interest of all consumers.

This fixed line gambit is just exactly the same as Telkom's insistence on last mile access fees back in the day. And I think eventually, just like that was later identified as a remaining monopolistic obstacle to a competitive market, and struck from reality, just so Eskom is just aiming to waste our time and economic prosperity right now.

 

[quovadis]

Yes. I hear you in all that. But this is not the "Eskom: we have less demand, so we want an increased per unit tariff" thread, nor article. It's the "Eskom: we have less demand, so we want an arbitrary fixed connection fee increase" thread, and article.

And BOTH are happening at the same time.

With cross subsidization I meant the cross subsidization that we've all always suffered to make electricity cheap for large industrial consumers, and free or very cheap for millions of people in SA. Not between components of Eskom. Which gets to the gist of the matter. The new arrangement is to make the market competitive in a bid to lower per unit costs. In the interest of all consumers.

This fixed line gambit is just exactly the same as Telkom's insistence on last mile access fees back in the day. And I think eventually, just like that was later identified as a remaining monopolistic obstacle to a competitive market, and struck from reality, just so Eskom is just aiming to waste our time and economic prosperity right now.

Or it could simply be arguing correctly that energy cost shouldn't subsidize the cost of delivering the energy with a clickbait headline instead.

You're somewhat countering your argument with large industrial consumers too. There's arguably less cost servicing those large industrial consumers as they have less Eskom infrastructure in place compared to lets say a suburb using the same consumption. Heck most have their own in-house power infrastructure/switching/transformers etc. The energy cost isn't subsidized as much as a result.

As for the last Telkom argument - Telkom don't charge last mile or infrastructure costs to ISPs and their customers?

 

[The Trutherizer]

Or it could simply be arguing correctly that energy cost shouldn't subsidize the cost of delivering the energy with a clickbait headline instead.

You're somewhat countering your argument with large industrial consumers too. There's arguably less cost servicing those large industrial consumers as they have less infrastructure in place. Heck most have their own in-house power infrastructure/switching/transformers etc. The energy cost isn't subsidized as much as a result.

As for the last Telkom argument - Telkom don't charge last mile or infrastructure costs to ISPs and their customers?

You brought up your argument that the components must not subsidies one another. With no real rationale why you say that. I wanted to point out that this is not even the cross subsidization I was talking about (i.e. the subsidization you're talking about is entirely your concept). I don't even think it (your concept) qualifies as cross subsidization. It's merely an expense on a balance sheet for the entity responsible for administering connections.

The cost to connect an end user has not changed. Only the demand from the end users. I already said I don't mind if the connection fees increase. Simply that NERSA must consider the budget (i.e. profitability) of the entity responsible for administering connections when any such fee increase is considered. Per unit supply and demand profitability, a separate matter, already in consideration through lavish per unit tariff increases (and not the first ones in the last decade or so by a long shot), is between the suppliers (including Eskom generation) and NTSCA and NERSA, and only through that, the end user.

Per unit profitability from low demand (the trouble Eskom generation faces, and with consideration to their budget) must not factor into connection fees. Though it may factor directly into the profitability of the entity responsible for connections.

 

[quovadis]

You brought up your argument that the components must not subsidies one another. With no real rationale why you say that. I wanted to point out that this is not even the cross subsidization I was talking about (i.e. the subsidization you're talking about is entirely your concept). I don't even think it (your concept) qualifies as cross subsidization. It's merely an expense on a balance sheet for the entity responsible for administering connections.

The cost to connect an end user has not changed. Only the demand from the end users. I already said I don't mind if the connection fees increase. Simply that NERSA must consider the budget (i.e. profitability)( of the entity responsible for administering connections when any such fee increase is considered. Per unit supply and demand profitability, a separate matter, already in consideration through lavish per unit tariff increases (and not the first ones in the last decade or so by a long shot), is between the suppliers (including Eskom generation) and NTSCA.

No, the demand for energy has decreased but the demand for connection/capacity has remained constant as those who have gone off-grid retain these connections as backup or supplement their own generation. Eskom still has to cater for peak demand of these customers.

The result is that when ESKOM goes cap in hand to NERSA they show reduced demand but the same install base and requirements for capacity. Operational costs remain since they're still having to cater for peak demand of those customers, revenue decreases and the energy cost goes up.

 

[The Trutherizer]

No, the demand for energy has decreased but the demand for connection/capacity has remained constant as those who have gone off-grid retain these connections as backup or supplement their own generation. Eskom still has to cater for peak demand of these customers.

The result is that when ESKOM goes cap in hand to NERSA they show reduced demand but the same install base and requirements for capacity. Operational costs remain since they're still having to cater for peak demand of those customers, revenue decreases and the energy cost goes up.

As an aside: These fees will literally not apply for those who are "off-grid", i.e. without a connection, by definition. It applies for everybody with a connection. Including those with hybrid inverters in their systems.

Two increases are being considered, using the same underlying issue as motivation.

You get it?

ESKOM (speaking as the holding company) says:
A: We are selling less, and so making less overall, because private solar - So give us a per unit tariff increase.
B: We are selling less on some connections, and so making less per connection, because private solar - So give us a connection fee increase.

And I say that's not on. Not with respect to the holding company's budget.

IF both truly are appropriate, then each with consideration only for the relevant component entity's budget.

Consider this: Though the narrative is that solar installations are being punished by the connection fee increases. And sure - It pisses on some enthusiast batteries. And Eskom even uses it as part of their "Eskom backup battery" rationalization in their application to NERSA. Ostensibly making it "more fair". A promethean appeal - The reality is that it affects all paying end users. And the same for per unit increases.