Transcript MYPD2 - NERSA

MYPD2
SACCI VIEWS AND
RECOMMENDATIONS TO
NERSA
21 January 2010
Peggy Drodskie
Executive Advisor to the CEO
OVERVIEW
• Introduction
• Fundamentals of Generation
• Macro-economic Impact – Inflation, GDP and
Employment
• National Energy Policy
• Other Challenges
• Solutions
• Interim Actions
• Stakeholder Summit
INTRODUCTION
• SACCI constituents:
– Chambers across South Africa
– Uni-sectoral Associations
– Corporates
• Three pronged approach.
• NERSA Issues Paper
• Membership survey.
Fundamentals of Generation
• Availability and cost of water and coal.
• Environmental cost.
• True cost comparisons of alternative
energy sources.
• Political cooperation in the region,
particularly SADC.
MACRO-ECONOMIC IMPACT
• Tariff increases since 2005 – 91%
• Weighting in CPI – 1,87%
• Assumptions:
– Municipalities pass on full increase.
– Reserve Bank does not increase interest
rates too drastically.
IMPACT ON INFLATION
• Inflation: Producers and retailers increase
prices.
• Inflation increase of about 0,3% - above
3% - 6% SARB target.
• Reduced personal disposable income and
household consumption spending.
• Increased interest rates.
• Lower employment.
IMPACT ON GDP
• Assume about 15% of output is electricity
intensive.
• Some reduction in viability.
• Reduced competitiveness.
• Lower capital formation.
• Will ease over time.
• Loss to GDP over period: R200billion
IMPACT ON EMPLOYMENT
Lower GDP results in
• Failing companies and thus
• Lower employment levels.
• Approximately 500 000 job losses (In
addition to 1 000 000 in 2009.)
NATIONAL ENERGY POLICY
Prepare Eskom for competition:
• Restructure Eskom into 2 companies –
generation and transmission.
• Place power stations into a number of
companies to facilitate the introduction of
competition.
• Place power stations in private hands.
• Not implemented.
OTHER CHALLENGES
• South Africa’s competitive advantage lost.
• Profit from current tariffs must not be
applied to capex.
• Appears to be little hope of increased
borrowing.
• Raising tariffs runs counter to poverty
alleviation and job creation strategies.
SOLUTIONS
• Return to National Energy Policy
• Eskom to control transmission.
• Generation to be open to private
participation – PPPs, BOT schemes, IPPs.
• Rationalise distribution industry.
• Promulgate any necessary legislation and
regulations.
SOLUTIONS Cont.
• Introduce a charter based on
recommendations in White Paper on
Energy Policy.
• Reintroduce Electricity Policy Council.
• Ring fence tax revenue - low interest loan
to Eskom.
• Treasury to be responsible DSM.
• New generation introduced at
80c/kWh
PROPOSALS FOR IMMEDIATE
FUTURE (2010/2011)
• Grant inflation related tariff increase for 2010/11.
• Work through possibilities with all stakeholders
in 2010.
• Address local authority increases.
• Postpone introduction of 2c/kWh environmental
levy
• Eliminate import duties on energy
efficient consumables and equipment.
• New generation introduced at
80c/kWh
STAKEHOLDER SUMMIT
• All stakeholders.
• Determine a way forward – medium and
long term.
• Ongoing process.
• 02 February
• All invited.
THANK YOU