SWARTLAND MUNICIPALITY

Transcription

1 SWARTLAND MUNICIPALITY PRESENTATION AT NERSA PUBLIC HEARING 3 JUNE /11 ELECTRICITY TARIFF APPLICATION R DU TOIT Pr Eng 1

2 2

3 ACKNOWLEDGEMENTS Extracts and copies from public documents included in presentation: Media Statements Policy Documents Tariff Books Tariff Spreadsheets Annual Reports Circulars 3

4 SWARTLAND 2010/11 TARIFF APPLICATION (BASED ON ESKOM TARIFF INCREASE: 28,9%) NOMINAL: 24% INDIGENT: 7% SPECIAL TIME OF USE TARIFF FOR BULK CONSUMERS BASED ON ESKOM 2009/10 TOU TARIFF RESTRUCTURING: ENERGY COMPONENTS: NOMINAL ESKOM + 8,58% 4

5 MOTIVATION RELATIVELY HIGHER PURCHASE COST TARIFF, VOLTAGE, REGIONAL DIFFERENTIATION ENVIRONMENTAL LEVY 2010/11 MUNICIPAL BUDGET ELECTRICITY TARIFFS TARIFF CATEGORIES PREVIOUS INCREASES MAJORITY TARIFFS WITHIN BENCHMARKS NETWORK STATUS & REFURBISHMENT 5

6

7 ELECTRICITY PRICING POLICY 7

8 ELECTRICITY PRICING POLICY 8

9 PURCHASE COST COMMENT ON EXTENT OF ESKOM INCREASES EFFECT OF DIFFERENT TARIFF STRUCTURES Megaflex Miniflex Nightsave Rural Landrate 9

10 ESKOM 2010/11 TARIFF INCREASES Megaflex, Miniflex, Nightsave Urban, Businessrate, Transflex, Public Lighting) 23.5% NON-MUNIC The introduction of inclining block tariffs resulted in an under-recovery of revenue of R1.32 billion, which as per Nersa is to be recovered from the above tariffs. EFFECT OF NERSA INCLINING BLOCK TARIFFS ON ESKOM DOMESTIC CONSUMERS ON AVERAGE: HOMEPOWER +7% HOMELIGHT -9% 10

11 EXTENT OF INCREASE FOR 2010/11 NERSA ANNOUNCEMENT (Extensive public participation) 24,8% INCLINING BLOCK (IBT) DOMESTIC TARIFFS ESKOM TO IMPLEMENT W.R.T. HOMEPOWER (+7%) & HOMELIGHT (-9%) ESKOM ANNOUNCEMENT FOR NON-MUNICS CERTAIN ESKOM TARIFFS Megaflex, Miniflex, Nightsave Urban, Businessrate, Transflex, Public Lighting) USED FOR CROSS SUBSIDY: 23,5% OTHER ESKOM TARIFFS Ruraflex, Nightsave Rural, Landrate, Landlight NOT USED FOR CROSS SUBSIDY: 18,7% ESKOM ANNOUNCEMENT FOR MUNICS 28,9% ATTRIBUTED TO CLAWBACK PRACTICE ESKOM 2009/10 INCREASE ALSO DELAYED TO JULY MUNICIPAL TARIFF INCREASE NOT PROPERLY SCRUTINISED AND ANALYSED. NETT RESULT UNACCEPTABLE: TARIFFS FOR MUNICIPALITIES NOW HIGHER THAN FOR ESKOM BULK END USERS. 11

12 SALGA Circular 05/2010 sets out details of the discussions and decisions of the meeting of 8 March In summary, the decisions are: Eskom tariffs to municipalities and the clawback practice: NERSA agreed to discuss the clawback practice whereby Eskom recovers its expected 12 month revenue stream from municipal bulk purchases over a 9 (nine) month period [1 July to 31 March]. It is expected that this would result in an average increase of 29% to municipalities with effect from 1 July 2010 compared with the 24.8% increase to other Eskom customers with effect from 1 April NERSA further agreed that: It will make a determination of this tariff increase to municipalities by 15 March 2010; and It will consider setting a specific tariff at which Eskom will sell bulk electricity to municipalities. SPECIFIC TARIFF REFERS TO WEPS: MUNICS TO PURCHASE ELECTRICITY AT WHOLESALE LEVELS AND NOT RETAIL 12

13 2010/11 ESKOM MEGAFLEX TARIFF FOR MUNICIPALITIES > 900km < 500V V & < 66kV kV & 132kV > 132kV /10 ESKOM MEGAFLEX TARIFF FOR MUNICIPALITIES < 500V V & < 66kV > 900km 66kV & 132kV > 132kV /11 ESKOM MEGAFLEX TARIFF FOR NON MUNICIPALITIES < 500V V & < 66kV > 900km 66kV & 132kV > 132kV /10 ESKOM MEGAFLEX TARIFF FOR NON MUNICIPALITIES < 500V V & < 66kV > 900km 66kV & 132kV > 132kV ,9% 4,9% 0,5% 23,5% 13

14 EFFECT ESKOM BULK ELECTRICITY TARIFFS FOR MUNICIPALITIES HIGHER THAN FOR ESKOM BULK END USERS MUNICIPALITIES ARE DISTRIBUTORS AND RESELLERS: PURCHASE TARIFFS TO BE AT WHOLESALE LEVEL. TARIFF DISPARITIES MUNIC & ESKOM BULK CONSUMERS INCREASING INCONSISTENT WITH PRICING POLICY & HARMONIZATION OF TARIFFS IRRESPECTIVE OF REASONING- END RESULT UNACCEPTABLE TARIFF DISPARITIES TO BE REVERSED THROUGH REGULATION 14

15 2010/11 ESKOM HOMEPOWER TARIFF FOR MUNICIPALITIES Homepower [local authorities] Homepower 1 Homepower 2 Homepower 3 Homepower 4 Homepower Bulk 500V * Homepower Bulk < 500V * Service Charge [R/POD/day] Network Charge [R/POD/day] Energy Charge [c/kwh] Environmental levy [c/kwh] VAT incl VAT incl VAT incl VAT incl R 3.16 R 3.60 R 3.94 R R 3.16 R 3.60 R 8.52 R R 3.16 R 3.60 R R R 3.16 R 3.60 R 2.02 R R 7.63 R 8.70 R 1.37 R R 7.63 R 8.70 R 1.51 R kWh/mnth BASIC=R213 ENERGY=R673 TOTAL= R /11 ESKOM HOMEPOWER TARIFF FOR NON MUNICIPALITIES 21.6% Homepower 1, 2, 3, 4 [non local authorities] Energy Charge [c/kwh] Environmental levy [c/kwh] Total 1000kWh/mnth Block 1 [ 50 kwh] Block 2 [ kwh] Block 3 [ kwh] Block 4 [> 600 kwh] VAT incl VAT incl VAT incl CONTRARY TO ELECTRICITY PRICING POLICY BASIC=R0 ENERGY BLK 1=R27.35 ENERGY BLK 2=R ENERGY BLK 3=R ENERGY BLK 4=R TOTAL= R

16 SIMULATION OF ESKOM CLAWBACK PRACTICE ESKOM NON-MUNIC CUSTOMERS APPLY UNIFORM TARIFF INCREASES EVERY APRIL ESKOM MUNIC CUSTOMERS OPTION 1- YEAR 1: APPLY INCREASED CLAWBACK TARIFF IN JULY TO ENSURE EQUAL CUMMULATIVE INCOME AT YEAR END. SUBSEQUENTLY APPLY EQUAL UNIFORM NON- MUNIC TARIFF INCREASES EVERY JULY OPTION 2- YEAR 1: APPLY INCREASED CLAWBACK TARIFF IN JULY TO ENSURE EQUAL CUMMULATIVE INCOME AT YEAR END. SUBSEQUENTLY APPLY CLAWBACK TARIFF EVERY JULY. 16

17 ANALYSIS OF ESKOM "CLAWBACK PRACTICE" Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 MNTH CUMMULATIVE INCOME NON-MUNIC (EQUAL INCREASES EVERY APRIL) CUMMULATIVE INCOME MUNIC "CLAWBACK" ONCE ONLY CUMMULATIVE INCOME MUNIC "CLAWBACK" EVERY YEAR 17 CUMMULATIVE INCOME PER UNIT Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11

18 ENVIRONMENTAL LEVY On 25 June 2009 NERSA approved an average tariff increase of 31,3% for Eskom effective 1 July ) The effective increases excluding the levy (1,97c) applied to the 2008/9 restructured rates are as follows: - Local authority tariffs: 23.23% LEVY INCLUDED IN TARIFF APPLICATION ADDITIONAL COST: R3,6 m IN 2009/10 R3,8m IN 2010/11 5,6% OF ELECTRICITY COST TOTAL R4,2 b (2009 Annual Eskom Electricity sales, GWh) SUPPORT DEVELOPMENTS IN RENEWABLE ENERGY PROJECTS To be made available for Power Purchase Agreements in terms of NERSA feed-in tariffs: Several major Wind Energy Projects being investigated- no PPA s

19 COMMENT ON EXTENT OF ESKOM INCREASES TARIFF INCREASES PASSED ONTO MUNICS NOT AFFORDABLE, NOT FAIR & EQUITABLE INCOMPATIBLE WITH PRICING POLICY ADDITIONAL (UNJUSTIFIABLE) COST DRIVERS IN EVIDENCE ENVIRONMENTAL LEVY (IF REVENUE IS NOT MADE AVAILABLE TO SUPPORT RENEWABLE ENERGY PROJECTS- LEVY TO BE ABANDONED) DISCREPANCIES BETWEEN NON-MUNIC AND MUNIC TARIFFS UNACCEPTABLE- WILL RENDER MUNICS UNVIABLE AS ELECTRICITY DISTRIBUTORS BULK TARIFFS FOR MUNICIPALITIES TO BE LOWER THAN FOR ESKOM END USERS- NOW OPPOSITE IN EVIDENCE. ESKOM REVENUE CLAWBACK PRACTICE TO BE ABANDONED HENCEFORTH

20 2010/11 ESKOM MEGAFLEX TARIFF FOR MUNICIPALITIES (UNBUNDLED AS PER PRICING POLICY) Megaflex [local authorities] Transmission zone 300km > 300km and 600km > 600km and 900km > 900km Voltage VAT incl VAT incl VAT incl VAT incl VAT incl VAT incl VAT incl < 500V R 3.84 R V & < 66kV R 3.51 R kV & 132kV R 3.42 R 3.90 > 132kV R 4.33 R 4.94 < 500V R 3.88 R V & < 66kV R 3.54 R kV & 132kV R 3.44 R % Peak > 132kV R 4.37 R ,7% High demand season [Jun - Aug] Standard Active energy charge [c/kwh] Off Peak Low demand season [Sep - May] Peak Standard Off Peak Transmission network charges [R/kVA/m] < 500V R 3.92 R V & < 66kV R 3.58 R kV & 132kV R 3.48 R 3.97 > 132kV R 4.43 R 5.05 < 500V R 3.94 R V & < 66kV R 3.62 R kV & 132kV R 3.49 R 3.98 > 132kV R 4.46 R 5.08 Electrification and rural subsidy [c/kwh] Environmental levy [c/kwh] All Seasons All Seasons High Season VAT incl VAT incl VAT incl VAT incl Voltage VAT incl VAT incl < 500V R 7.68 R 8.76 R R Monthly utilised capacity > 1 MVA Key customers Service charge [R/Account/day] VAT incl VAT incl R R R R R R R R Reactive energy charge [c/kvarh] Administration charge [R/POD/day] Low Season Distribution network charges Network access charge [R/kVA/m] Network demand charge [R/kVA/m] 500V & < 66kV R 7.04 R 8.03 R R kV & 132kV R 6.82 R 7.77 R R > 132kV R 0.00 R 0.00 R R

21 UNIT COST COMPARISON 2010/11 ESKOM MEGAFLEX TARIFF FOR MUNICIPALITIES (CITIES AND MAJOR TOWNS) UNIT PURCHASE COST = R0,44 PER kwh (ANNUAL AVERAGE) 45% 2010/11 ESKOM NIGHTSAVE RURAL & LANDRATE TARIFFS FOR MUNICIPALITIES (SMALL RURAL COMMUNITIES) UNIT PURCHASE COST = R0,64 PER kwh PURCHASE COST HIGHER THAN NERSA BENCHMARK 21

22 2010/11 MUNICIPAL BUDGET BUDGETTED DEFICIT ~R18m NOMINAL 24% REDUCE TO 22% ADDITIONAL SHORTFALL ~ R2 m. % NETT SURPLUS REDUCED TO ~ 18% LOW TOTAL ENERGY LOSS~ 8,4% EFFECTIVE PROGRAM TO CURTAIL NON- TECHNICAL LOSSES RENDER SERVICES IN 7 RURAL TOWNS IN ESKOM SUPPLY AREA, NO ELECTRICITY INCOME MYRIAD OF SERVICES SURPLUS ON ELECTRICITY SALES RECOGNISED AND ACCEPTABLE INCOME SOURCE- PRICING POLICY 22

23 ELECTRICITY PRICING POLICY 23

24 PREVIOUS ELECTRICITY TARIFF INCREASES Year Eskom Swartland Municipality 2008/ % 22 % 2009/ % 25 % Nersa 2008/09 price determination SWARTLAND MUNICIPALITY CONSISTENTLY PROTECTED ITS CONSUMERS AGAINST THE EXTREME TARIFF INCREASES, THEREBY REDUCING % ELECTRICITY REVENUE SURPLUS. 24

25 NERSA 2010/11 PRICE DETERMINATION FOR MUNICIPALITIES 1 25% % % % % % 1.53 SIMPLISTIC APPROACH NOT ALLOWING FOR EVALUATION CRITERIA TO BE BASED ON ACTUAL TARIFF LEVELS W.R.T BENCHMARKS, REGIONAL PURCHASE COSTS, NETWORK REFURBISHMENT REQUIREMENTS, ENVIRONMENTAL LEVY AND FINANCIAL STATUS OF MUNICIPALITY. MAJORITY OF TARIFFS ALREADY WITHIN BENCHMARKS, NOTWITHSTANDING A 24% INCREASE. 25

26 NERSA BENCHMARKS 2010/11 NO TARIFF STRUCTURE, TRANSMISSION, REGIONAL OR VOLTAGE DIFFERENTIATION IN EVIDENCE. BENCHMARK DIFFERENTIATION INCONSISTENT (E.G. INDUSTRIAL) 4 Pretoria Johannesburg Household income less than R15,000 per year District Ma nagement Areas (few customers) Large Industrial Customers 2 6 East Rand Gauteng area enlarged Cape Town 5 Calvinia Upington 1 Prieska RED 1 Cu sto mers (000 s) 857 Load (TWh) 14 Electrified (%) 81 RED 4 Customers (000 s) 720 Load (TWh) 31 Electrified (%) 70 Vryburg Victoria West 2 De Aar 4 Kimberley Graaf Reinet RED 6 Customers (000 s) 1008 Load (TWh) 28 Electrified (%) 60 3 Rustenburg Lichtenberg RED 2 Customers (000 s) 1006 Load (TWh) 29 Electrified (%) 73 Port Elizabeth Kroonstad Bloemfontein 6 Pretoria Pietersburg East Rand Witbank Johannesburg Newcastle Harrismith Umtata Ea st London Bergville 5 Lydenburg Nelspruit Pietermaritzburg Ulundi RED 3 Customers (000 s) 1400 Load (TWh) 29 Electrified (%) 56 Durban Richards Bay RED 5 Cu sto mers (000 s) 683 Load (TWh) 37 Electrified (%) 60 26

27 ELECTRICITY PRICING POLICY Policy Position: 27 NERSA must see within five years that cost reflective tariffs shall reflect all the following cost components as far as possible: - Energy costs in c/kwh; - Network demand charges in R/kVA/period covering; - Network capacity charges in R/kVA/month or R/Amp/month based on annual capacity; - Customer service charges in R/cust/months; - Point of supply costs RJPOS/month; and - Cost of poor power factor 27

28 ELECTRICITY PRICING POLICY DOMESTIC TARIFFS 8.14 Domestic (Residential) Tariffs Domestic customers present significant challenges for utilities because of their large numbers and the many different types of domestic customers with diverse needs. Utilities should start charging cost- reflective tariffs for domestic customers, but also cater for cross- subsidisation of some customers. 28

29 ELECTRICITY PRICING POLICY Policy Position: 36 Domestic tariffs to become more cost-reflective, offering a suite of supply options with progressive capacity-differentiated tariffs and connection fees: - At the one end a single energy rate tariff with no basic charge, limited to 20 Amps and nominal connection charge (details under section on cross-subsidies); - At the next level a tariff which could contain tariff charges to reflect a basic charge, customer service charge, capacity charge and energy charge with cost-reflective connection charges; and - At the final level TOU tariffs must be instituted on the same basis as above, but with TOU energy rates, NOTE INCLINING BLOCK TARIFF STRUCTURE NOT CATERED FOR SWARTLAND DOMESTIC TARIFF STRUCTURES IN COMPLIANCE WITH FIRST AND SECOND LEVELS 29

30 SALGA Circular 05/2010 sets out details of the discussions and decisions of the meeting of 8 March Implementation of Inclining Block Tariff (IBT): NERSA conceded that implementation challenges exist for municipalities and agreed:- The industry is not expected to implement IBT during the 2010/11 financial year. The 4 (four) block structure of the IBT and the energy rates per block detailed in the Media statement of 24 February 2010 are `mere guidelines and municipalities may deviate from it. 30

31 MUNICIPAL DOMESTIC TARIFFS (IN TERMS OF ELECTRICITY PRICING POLICY) HIGH CONSUMPTION (NO SPECIFIC BENCHMARK, BLOCKS 3-4) TARIFF 1: BASIC R82.56, R0,7469 PER kwh (R FOR 1000kWh = R0,829 PER kwh) TARIFF 12: R0,91 PER kwh (R910,00 FOR 1000kWh) IBT NOT IMPLEMENTED AT THIS STAGE FOR HIGH INCOME RESIDENTIAL CONSUMERS RATIONALE OF REDUCING HIGH CONSUMPTION DOMESTIC TARIFFS NOT CLEAR HIGHER ENERGY TARIFF FOR PREPAYMENT SINGLE ELEMENT COMPARED TO CONVENTIONAL BASIC AND ENERGY ELEMENTS TARIFFS TO CREATE BREAK EVEN POINT SUPPORTED. INDIGENT (SUBSIDIZED) BENCHMARK R0,55 - R0,60 PER kwh TARIFF 5: 50kWh FREE, R0,60 PER kwh >50kWh TARIFF 7: 50kWh FREE, R0,60 PER kwh >50kWh ACCORDING TO BENCHMARK 31

32 R R R 800 R 600 R 400 R 200 R 0 DOMESTIC TARIFFS 2010/ kwh TARIFF 1 TARIFF 12 TARIFF 7 32

33 INTEND TO INVESTIGATE DOMESTIC INCLINING BLOCK TARIFFS FOR FUTURE IMPLEMENTATION AGREE WITH MERITS IN PRINCIPLE ABANDONMENT OF BASIC CHARGES NOT SUPPORTED EXTENT OF LOSS OF REVENUE TO BE ANALISED REDUCTION OF RESIDENTIAL TARIFFS NOT SUPPORTED CROSS SUBSIDIZATION TO BE LIMITED PHASING IN OPTIONS TO BE CONSIDERED 33 ELECTRICITY PRICING POLICY

34 MUNICIPAL COMMERCIAL TARIFFS BENCHMARK CONV. METER R0,96 R1,01 PER kwh TARIFF 2: <20kVA BASIC R225.75, R0,7469 PER kwh (R FOR 4320kWh LOAD FACTOR 30% = R0,80 PER kwh) TARIFF 2: >40kVA BASIC R541.95, R0,7469 PER kwh (R FOR 8640kWh LOAD FACTOR 30% = R0,81 PER kwh) WELL BELOW BENCHMARK TARIFF 4: R1.09 PER kwh (VOLUNTARY) WELL BELOW CORRESPONDING ESKOM TARIFF NERSA BENCHMARK PREPAID METER R0,96 R1,01 PER kwh ESKOM BUSINESS RATE 4 R (ALREADY APPROVED BY NERSA) TARIFF 8: R1.058 PER kwh (VOLUNTARY) WELL BELOW CORRESPONDING ESKOM TARIFF 34

35 ESKOM 2010/11 NON MUNIC BUSINESS TARIFFS Businessrate [non local authorities] Service Charge [R/POD/day] Network Charge [R/POD/day] Energy Charge [c/kwh] Environmental levy [c/kwh] VAT incl VAT incl VAT incl VAT incl Businessrate 1 Businessrate 2 Businessrate 3 Businessrate 4 R 7.69 R 8.77 R 8.93 R R 7.69 R 8.77 R R R 7.69 R 8.77 R R Landrate [non local authorities] Landrate 1 Landrate 2 Landrate 3 Landrate 4 Service Charge [R/POD/day] Network Charge [R/POD/day] Energy Charge [c/kwh] Environmental levy [c/kwh] VAT incl VAT incl VAT incl VAT incl R 9.84 R R R R 9.84 R R R R 9.84 R R R R 9.57 R Landrate Dx * Landlight R R * Landrate Dx charge includes the Environmental levy

36 MUNICIPAL BULK TARIFF BENCHMARK R0,96 R1,01 PER kwh TARIFF 3: 50kVA BASIC R606.43, R0,2852 PER kwh, R PER kva (R9532 FOR 10800kWh, LOAD FACTOR 30% = R0,88 PER kwh) TARIFF 3: 500kVA BASIC R606.43, R0,2852 PER kwh, R PER kva (R FOR kWh, LOAD FACTOR 40% = R0,70 PER kwh) TARIFF 3: 1000kVA BASIC R606.43, R0,2852 PER kwh, R PER kva (R FOR kWh LOAD FACTOR 60% = R0,56 PER kwh) WELL BELOW BENCHMARK COSTS REDUCE SIGNIFICANTLY WITH IMPROVED LOAD FACTOR SUPPORT INDUSTRIAL & ECONOMIC DEVELOPMENT AND JOB CREATION. INDUSTRIAL & COMMERCIAL DEVELOPERS TO NOTE FAVOURABLE TARIFFS (TOU TARIFF EVEN LOWER) 36

37 TARIFF 10: TIME OF USE TARIFF FOR BULK CONSUMERS SPECIAL VOLUNTARY TARIFF BULK CONSUMERS WHO CAN SHIFT LOAD TO STANDARD AND OFF-PEAK PERIODS Introduced in support of the national effort to reduce peak demand and to shift load to off-peak periods Time of Use Tariffs ELECTRICITY PRICING POLICY. Eskom introduced TOU tariffs more than 15 years ago. Since then the majority of Eskom's large customer sales are at TOU. This is not the case with municipalities where only a very small percentage of sales in the municipalities are at TOU. For this reason the application of TOU tariffs to all customers in the industry should be promoted actively. 37

38 ELECTRICITY PRICING POLICY Policy Position: 31 Tariffs must include TOU energy rates as follows: - all customers supplied at MV or above within two years; - all customers above 100 kva within five years; - all cases where the metering provides such features within five years; and - all other customers where it is warranted. Retail tariffs restructuring plan NERSA approved the retail tariff restructuring plan on 11 December 2008 for implementation in 2009/10. 38

39 TOU APPROACH Tariff structure for energy consumption must correspond with that of Eskom. Essential to restructure the energy components of the TOU tariff structure. Tariff is specifically designed to encourage bulk consumers to shift load to standard and off-peak periods, thereby resulting in reduced revenue for the municipality, it is essential that the purchase cost of electricity also be reduced proportionally. 39

40 Bulk time of use tariff Tou Basic Extention Levy Tou Tou High Consumption Tou Low Consumption Peak (kwh) Standard (kwh) Off peak (kwh) Peak (kwh) Standard (kwh) Off peak (kwh) R R % R R % R R % R R % R R % R R % R R % Energy (kwh) Component Eskom 2010/2011 Megaflex Tariff (Connection at 11KV Transmission zone > 900km.) Swartland Municipality 2010/2011 TOU Tariff % Increase above Eskom High Demand Season Peak R 1,5384 R 1, Standard R 0,3995 R 0, Off Peak R 0,2132 R 0, Low Demand Season Peak R 0, 4292 R 0, Standard R 0, 2626 R 0, Off Peak R 0, 1837 R 0,

41 Example: Major Grocery/Convenient Chain Annual analysis essential- 9 low season months 3 high season months LOW SEASON TOU TARIFF 10 BULK TARIFF 3 TAR 3-10 FOR 9 MNTHS MWH R PEAK % R R STANDARD % R R OFF PEAK % R R MWH KVA R R R R R R R SUBTOTALS R R R R HIGH SEASON TOU TARIFF 10 BULK TARIFF 3 TAR 3-10 FOR 3 MNTHS MWH R PEAK % R R STANDARD % R R OFF PEAK % R R MWH KVA R R R R R R R SUBTOTALS R R R R ANNUAL INCOME R R R PER KWH R 0.55 R % IF THIS SPECIAL VOLUNTARY TOU TARIFF ADJUSTMENTS ARE NOT APPROVED IT WILL HAVE TO BE WITHDRAWN. 41

42 NETWORK STATUS AND UPGRADING 42

43 ASSET EVALUATION 2% 13% 7% 30% 49% 43

44 ELECTRICITY PRICING POLICY 8.2 Refurbishment / Maintenance backlog Policy Position: 24 a) Licensees must undertake the required analyses to determine the extent of backlog of maintenance / refurbishment and put strategies in place to catch up. b) NERSA must give due cognisance to requests for additional funds to provide for capital and operating expenditure, including staff to manage such projects and undertake the required work. SWARTLAND MUNICIPALITY CONSISTENTLY ALLOCATES 5% OF REVENUE TOWARDS RENEWAL OF EXISTING ELECTRICAL INFRASTRUCTURE TO MAINTAIN QUALITY OF SUPPLY.

45 IN CONCLUSION SUBMISSION Purchase electricity at relatively higher cost. Major Municipal Budgetted deficit. 2008/09 minimal nominal increase 22%, 25%, 24% Eskom 28,9% increase for munics unfair and unjustified Majority of Swartland tariff categories within benchmarks, several well below. Intend to investigate IBT for domestic tariffs while limiting levels of cross-subsidization, & phasing options. Continue renewal of derelict and obsolete networks. RESPECTFULLY REQUEST THAT OUR PROPOSED TARIFFS FOR 2010/11 BE APPROVED. 45

46 Electricity 2009/ / / / / /2015 R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R Households and Farming Consumers Basic Households and Farming Consumers per kwh Commerce / Non Standard. Basic Ampere Commerce / Non Standard.per kwh Commerce Basic < 20KVA Commerce Basic 20 to 40 KVA Commerce Basic >40 KVA Commerce Basic < 20KVA per kwh Commerce Basic 20 to 40 KVA per kwh Commerce Basic >40 KVA per kwh Bulk Consumers Basic Bulk Consumers - kwh Bulk Consumers - Max. Demand KVA Retail Consumers > 100 kwh Retail Consumers < 100 kwh Alternative - Households 20 Amp Street Lights Prepaid - Indigent ready bord Commercial Pre paid Sports Grounds Bulk time of use tariff Tou Basic Extention Levy Tou Tou High Consumption Tou Low Consumption Peak (kwh) Standard (kwh) Off peak (kwh) Peak (kwh) Standard (kwh) Off peak (kwh) Maksimum aanvraag KVA Prepaid - Households R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R R

47 47