ESKOM S DEMAND EXEMPTION POLICY. This document may be updated from time to time, please refer to for the latest version.

Transcription

1 ESKOM S DEMAND EXEMPTION POLICY This document may be updated from time to time, please refer to for the latest version.

2 Eskom s Demand Exemption Policy Page 2 of Introduction Policy Types of demand exemptions Granting of exemptions Eskom-induced events and force majeure Demand exemptions for customer requests and demand side curtailment initiatives Plant commissioning A new customer without any previous electricity consumption record with Eskom requests a commissioning agreement An existing customer requests a concession due to testing of new plant and equipment An existing customer requests a concession due to refurbishment of existing plant and equipment An existing customer requests a concession during testing of new and existing plant and equipment exceeds the current NMD Exemptions for Eskom demand-side management products Demand-Side Management (DSM) Distributed Generation Participation (DGP) Demand Market Participation (DMP) and similar products Early reduction of the NMD for hardship cases Load management systems or provision of meter pulses Pro-rating methods for calculating exemption Pro-rating method for the chargeable demand Prorating method for an exemption of UC due to a temporary increase in the NMD Abbreviations Definitions... 15

3 Eskom s Demand Exemption Policy Page 3 of Introduction In 2005 Eskom introduced a two-part network charge for the Megaflex, Nightsave (Urban) and Miniflex tariffs to produce more cost reflective tariff structures. In support of the introduction of network charges, a set of rules, the Notified Maximum Demand (NMD) rules - were developed regarding: the notification of demand, changes in the notification of maximum demand, temporary increases in demand, NMD downgrades, and demand exemptions. The main objective in having the rules is to have customers notify their demand correctly, thereby enabling Eskom to: encourage customers to manage their demand within the stated NMD, calculate tariffs for the following year accurately, reduce revenue risk for Eskom, ensure fair charges to customers who use the capacity The current applicable set of rules was approved by the NERSA as part of the 2005 Eskom Retail Tariffs Restructuring plan and published on the Eskom website The Distribution Demand Charge Exemption policy supplements these NMD rules by catering for special circumstances not dealt with directly in the NMD rules as customers frequently request Eskom to waive demand (or part thereof) for a variety of reasons. The primary objective and scope of this document is to provide the policy under which demand exemptions for billing of the chargeable demand, annual utilised capacity (AUC) and/or monthly utilised capacity (MUC) impacting on the network demand, energy demand and network access charge (NAC), will be granted under special circumstances. This will facilitate fair and equitable decisions with customers and Eskom s interests being equally represented. 2. Policy The following is Eskom s policy on Demand exemptions; In addition to the NMD rules, Eskom will grant demand exemptions in accordance with the criteria, conditions and rules set out in this policy and the procedures contained in this document. In all cases exemptions must be requested in writing by the customer in line with the conditions stipulated in the NMD rules. Demand exemptions will be granted to ensure a fair and equitable revenue recovery for Eskom and to prevent unfair penalties to customers on demand-related tariff components as follows:

4 Eskom s Demand Exemption Policy Page 4 of The granting of energy demand and network demand exemptions is provided under the following conditions: Eskom-induced supply interruptions, Eskom forced outages and force majeure (uncontrollable events such as natural disasters) Customer requests when customers undertake plant commissioning or refurbishment under the following scenarios: A new customer without any previous electricity consumption record with Eskom requesting a commissioning agreement An existing customer requesting a concession due to testing of new plant and equipment An existing customer requesting a concession due to refurbishment of existing plant and equipment An existing customer requesting a concession during testing of new and existing plant and equipment exceeding the current NMD Customers voluntarily participating in Eskom s demand curtailment initiatives (i.e. Special Pricing Agreements for Demand Side Management) Customer requests for an early reduction of the NMD in cases of hardship experienced (i.e. severe downturn of economy, bankruptcy). 2.2 Exemptions on any billed component will not be granted in the following scenarios: Failure of metering pulse equipment provided to the customer by Eskom Operational decisions of the customer not agreed to in writing and in advance Closure of all or part of the customer s plant for a part of a billing month, unless the granting of the exemption would result in sales that would otherwise have been lost; or unless it is part of a dynamic pricing arrangement to manage capacity on the system. 2.3 Demand exemptions in line with this Policy are to be viewed on a case-by-case arrangement. 2.4 Eskom will grant exemptions on the following tariff components: If an exemption is granted on demand, the demand relating to any of the tariff components as set out below; will be adjusted to determine the resultant tariff component charges after exemption. The NMD Rules should be consulted to determine the resetting of NMD and/or UC Charges using the chargeable demand: Network demand charge (NDC) Energy demand charge (EDC) Charges using the annual utilised capacity (AUC): Network access charge (NAC) Charges using monthly utilised capacity (MUC): Service and administration charges

5 Eskom s Demand Exemption Policy Page 5 of 15 A customer may request an exemption for a network demand charge and/or energy demand charge and/or a resetting of the customer's UC, on the grounds of a chargeable demand exemption. A customer may apply for the exemption of each individual demand tariff component in isolation from the other demand components that have been affected by the incident that gave rise to the request. 3. Types of demand exemptions The following four scenarios will be discussed in this document: An interruption of the supply to the customer due to force majeure (see definitions) which leads to an excess demand higher than the customer's normal demand would have been; or an event on the Eskom network which leads to an excess demand which is higher than what the customer's normal demand would have been. Customers on a voluntary basis participate in Eskom initiatives or products (e.g. DSM, DGP and DMP) and as such, they request relief from paying any excessive demands created during testing periods and/or through normal participation in these products, on Eskom s instruction or on request. Customers request relief due to non-standard operational circumstances that result in, or will result in, excessive demand for short periods of time, as described in this procedure. Any request arising from other circumstances, e.g. hardship. Requests regarding the following are dealt with in the NMD rules and not this document: Failure of large items of customers plant, including their co-generation. Closure of customers plant for part of a month. Customers who have shifted loads between non-diversified points of delivery (customer s decision). Customers whose load management or power factor correction equipment, including the failure of metering pulses, all of which result in excess demands, will be granted relief under this procedure and / or the NMD rules. 4. Granting of exemptions The granting of energy and network demand exemptions (chargeable demand and UC) is dealt with under the following two sections, namely: Eskom-induced supply interruptions, Eskom-forced outages and force majeure uncontrollable events. Customer requests; and special pricing arrangements for Demand Side Management (DSM). In all cases exemptions must be requested in writing by the customer in line with the conditions set out in the NMD rules document.

6 Eskom s Demand Exemption Policy Page 6 of Eskom-induced events and force majeure These are covered in the NMD rules, but more details are in this section: Demand exemption will be evaluated for all Eskom-induced supply interruptions, forced outages and where Eskom requests customers to shift load between non diversified loads due to system constraints, or where network problems are experienced, including interruptions. In the event that Eskom interrupts supplies due to normal operations and maintenance and/or where a supply is interrupted due to normal operations and maintenance, the demand exemption would be favourably considered. If a customer s load has been restricted for part of a month because of limited available network capacity following a failure of Eskom s equipment, the customer s chargeable demand will be prorated upon written request, e.g. if supply is restricted for a few days while one of the two transformers in a substation is being exchanged due to failure. The prorating method will be used for these scenarios, as depicted in Section 5. Exemption will also be granted on all Eskom-induced events and force majeure - uncontrollable events such as natural disasters. Longer-term events arising from force majeure may qualify under a hardship exemption, subject to approval by Eskom. See section 4.5 for the early reduction of the NMD due to hardship. The energy consumed during the entire billing period of the event, which gives rise to a request for a chargeable demand exemption, will be charged at the normal tariff rates applicable to the customer, e.g. Nightsave, Megaflex. Where it has been agreed that a chargeable demand exemption and a utilised capacity (UC) exemption will be granted due to an Eskom-induced event or due to force majeure, the following is to be applied: The demand registered during the event, i.e. in the demand exemption period, will be ignored for the determination of the annual and monthly UC and the chargeable demand. The active energy consumed during and outside the event, as well as the energy demand and network demand for all chargeable demand periods outside the event, will be used to calculate the bill Demand exemptions for customer requests and demand side curtailment initiatives Chargeable demand exemption will be granted when customers undertake plant commissioning or voluntarily participate in Eskom s demand curtailment initiatives. Refer to 4.3 on plant commissioning. Chargeable demand exemptions will not be granted in the event of the following: Failure of metering pulses provided to the customer by Eskom. Operational decisions of the customer not agreed to in writing and in advance. Closure of all or part of the customer s plant for a part of a billing month, unless the granting of the exemption would result in sales that would otherwise have been lost, unless this is part of a dynamic pricing arrangement to manage capacity on the system.

7 Eskom s Demand Exemption Policy Page 7 of Plant commissioning Demand exemption for the AUC, the MUC and for the chargeable demand may be granted during the commissioning and recommissioning tests of new and existing plant, and where applicable will be done in the way prescribed in this document, once all the criteria and conditions have been met. Such exemptions will be provided on a prorated basis, based on the actual usage and the time period involved. Plant commissioning includes commissioning tests on new plant as well as recommissioning tests on plant which has been decommissioned for maintenance, refurbishment, testing of plant and mothballing purposes. The excess demand must lead to increased sales in the month following the commissioning/refurbishment period. Chargeable demand exemptions will not be granted for any events whatsoever which cause a customer to exceed the NMD on a regular (several times per annum) basis. The NMD rules address this situation. Eskom will grant plant commissioning concessions under the following four circumstances: A new customer requests a commissioning concession during testing of new plant and equipment. An existing customer requests a concession due to testing of new plant and equipment. An existing customer requests a concession due to the refurbishment of existing plant and equipment. An existing customer requests a temporary increase of the current NMD (and therefore UC) during testing of new and existing plant and equipment. If the commissioning load is greater than 50 MVA, the load must be negotiated as interruptible, before approval, unless the system operator is in agreement that the load should not be interrupted. However, if the nature of the customer s operation is such that it cannot tolerate an interruption, Eskom will relinquish its right to interrupt the load, upon satisfactory proof in this regard. In the case of commissioning, a concession in terms of this procedure will only be granted if the total difference of the commissioning load falls within the following limits: Lower load limit of 500 kva. Loads smaller than 500 kva do not qualify for a concession, since the cost to administer and manage the event does not make it financially viable. If there is however a case to be made that it would have a large percentage impact on the customer's bill, a concession may be considered. Upper load limit of 100 MVA. The complexities of deals involving commissioning loads higher than 100 MVA necessitates a customised, non-standard approach that can only be achieved through a separate special pricing agreement. Time limit of three months. Any commissioning event lasting longer than three months should be treated as a separate special pricing agreement due to the potential complexities surrounding commissioning deals over such a long time A new customer without any previous electricity consumption record with Eskom requests a commissioning agreement The chargeable demand, AUC and/or MUC impacting on the network demand, energy demand and NAC, will be prorated during the commissioning month(s) as per Section 5. The demand applied will be the difference between the applicable demand registered during

8 Eskom s Demand Exemption Policy Page 8 of 15 the month and the customer s NMD, prorated as per Section 5 and reset at the end of the commissioning period to the contractual NMD. It is possible that, if the commission period is extended, the NMD may have to be reset several times. After commissioning, changes to the NMD will be allowed as stated in the NMD rules. In Figure 1 below, the customer does the commissioning, and during the billing month the customer exceeds the NMD. In the following month the NMD / UC will be reset. Figure 1 - A new customer without any previous electricity consumption MVA Difference over NMD will be prorated. NMD TIME All kwh consumed at standard tariff rates An existing customer requests a concession due to testing of new plant and equipment The chargeable demand, AUC and/or MUC impacting the network demand, energy demand and NAC could be prorated during the commissioning month(s) as per Section 5. In Figure 2 the customer does commissioning for 10 days, so the NDC and EDC will be prorated. This concession will only be granted if the excess demand leads to increased sales in the month following the testing and the customer keeps all equipment on line in the month following the commissioning period. The NAC in the month of the commissioning/exemption will be based on the new increased NMD requested by the customer and be prorated if NMD or UC is exceeded as per Section 5. Figure 2 - Existing customer requests a concession for testing new plant 80 MVA 70 MVA NDC & EDC CALCULATED PRORATED P / S / O-PEAK ENERGY RATES 1 DAYS NEW BILLING MONTH

9 Eskom s Demand Exemption Policy Page 9 of An existing customer requests a concession due to refurbishment of existing plant and equipment Under this scenario, exemption will only be granted if: the load reduction is 25% or more of the UC, the load reduction is more than 30 MVA, and the load reduction endures for longer than two consecutive weeks. The excess demand must lead to increased sales in the following month after the commissioning period. When these conditions are met, customers will automatically qualify for exemption. All other cases that do not meet these three criteria will be evaluated by Eskom on a case-bycase basis. In Figure 3, the chargeable demand, AUC and/or MUC impacting on the network demand, energy demand and NAC will be prorated, based on the days left (10 days) in the month of commissioning as per Section 5. Figure 3 - Existing customer requests a concession. 80 MVA 50 MVA NDC, EDC & UC CALCLUATED PRORATED 1 P / S / O-PEAK ENERGY RATES DAYS 20 NEW BILLING MONTH It can also happen that a customer does commissioning over an extended period of time see Figure 4. Under this scenario the 15 days before the commissioning and the 10 days after the commissioning will be prorated as per section 4.5. Figure 4 - Existing customer requests a concession over 2 billing periods MVA 50 MVA COMMISSIONING / MAINTENANCE PREVIOUS BILLING PERIOD DAYS 20 CURRENT BILLING PERIOD 30

10 Eskom s Demand Exemption Policy Page 10 of An existing customer requests a concession during testing of new and existing plant and equipment exceeds the current NMD The chargeable demand, AUC and/or MUC impacting the network demand, energy demand and NAC could be prorated during the commissioning month(s) as per Section 5. In Figure 5 the customer does commissioning for 10 days, so the NDC and EDC will be prorated. This concession will only be granted if the excess demand leads to increased sales in the month following the testing and the customer keeps all equipment on line in the month following after the commissioning period. The NAC in the month of the commissioning/exemption will be based on the new increased NMD requested by the customer and be prorated if NMD or UC is exceeded as per Section 5. Figure 5 - An existing customer requests a concession - exceeds the current NMD 80 MVA 90 MVA UC NMD 70 MVA COMMISSIONING / MAINTENANCE 1 PREVIOUS BILLING PERIOD DAYS Exemptions for Eskom demand-side management products Customers participate on a voluntary basis in the DSM, DGP, DMP and other Eskom demand-side management initiatives, and as such request relief from paying any demands created during testing periods and periods when they use the product. The following scenarios may apply: Eskom, under the DSM product, requests customers to do these tests to curtail their demands and ultimately Eskom s system demand. Eskom, under the DGP product, requests customers to shut down their own generation and use more capacity from Eskom when Eskom has excess generating capacity. Eskom uses the DMP product contract with customers to reduce their consumption during periods of system and / or network constraints Demand-Side Management (DSM) All applicable demands for the NAC, NDC and EDC applicable during the commissioning of the product when customers are requested to test equipment, will be exempt (i.e. not prorated) during these testing periods. All kwh consumed during these testing periods have to be paid for at the standard tariff or the tariff as contracted in terms of the DSM agreement.

11 Eskom s Demand Exemption Policy Page 11 of 15 Demand overshoots due to the customer s load management equipment failure such as a ripple control system used for DSM, will be billed and exempted only in terms of the NMD rules Distributed Generation Participation (DGP) Eskom uses this product to contract with customers to displace their own generation in periods of surplus capacity. This could cause the customer to use capacity from Eskom that would have otherwise been provided by the customer s own generation. If the network charges (NDC and NAC) are charged on demand, including displaced capacity, this would not be viable for the customer and as such there would be a benefit to Eskom Generation. When this product is used, the NDC, EDC and NAC will not be applied to additional demand incurred to support this product. The NDC applied will be the actual load measured in any month, excluding DGP sales. This also includes capacity utilisation in excess of base load, except due to DGP sales. The NAC will be applied to the NMD excluding the DGP demand. All energy consumed will be charged at standard tariff rates, or at the tariff as contracted for in terms of the DGP product. This includes energy consumed above base load, due to contingencies. The figure below illustrates how the DGP product will function. Figure 6- Total plant capacity determined under DGP Total Plant Capacity/Load Maximum Contingency Plant Load Load that can be limited MVA = NMD = NAC Level DGP Own Generation Base Load = NNL Demand Market Participation (DMP) and similar products Demand market participation (DMP) and/or any related products to be developed from time to time, are offered where Eskom contracts with customers to reduce their consumption during periods of system and/or network constraints. These customers have short-term capacity requirements resulting from their participation in these products. Customers who meet one or more of the following criteria will be eligible for exemptions on short-term capacity requirements:

12 Eskom s Demand Exemption Policy Page 12 of 15 Customers entering into short-term surplus energy purchase contracts, where such energy sales have been approved by Eskom. Customers indicating a day ahead, their ability to reduce load on instruction, as well as their willingness to do so during each hour of the next day (price at which they are willing to reduce load/not consume). Customers who participate in these products and who have to exceed their normal reserved capacity (notified maximum demand) in order to make up production that had been lost due to being scheduled in the reserve market. Any one of the following situations may occur which might lead to an increase in chargeable demand or the UC. A customer might be unable to control its demand after extensive load reduction on instruction (e.g. ripple control being utilised for too long). Customers may have to run their plant harder/consume at higher levels for fairly long periods of time to make up their production losses incurred during DMP load reduction. It is important to note that DMP or similar products are dispatched by the Eskom National Control Centre and only the consequence of load reductions on instruction will be considered. As these products support the system's stability and security, prior negotiation and agreement can be reached with DMP customers that the NDC, EDC and NAC will be waived if incurred above the normal NMD as a result of load reduction on instruction from Eskom. The normal NMD must include an acceptable level of contingency (see NMD rules). Eskom and the customer shall agree upfront on the conditions under which and the amount that the customer would be allowed to exceed the normal NMD, which will be deducted from the actual load measured during the agreed periods. Such agreement will only be given if network capacity is available. The NAC will apply to the NMD, excluding the amount agreed upon with the customer (as described in the previous paragraph). All energy consumed, excluding the energy demand charge, will be charged at standard tariff hourly rates or the tariff as contracted for in terms of the DMP product. This short-term capacity can only be offered if and when Eskom has the network capacity available on its existing networks to meet the customer s additional short-term requirement. Eskom will therefore not incur any capital expenditure in order to support short-term network service. If the capacity being used becomes permanent, the normal NMD must be reviewed Early reduction of the NMD for hardship cases Eskom will provide on a case-by-case basis, exemptions on the notice period for a downgrade in NMD where a customer suffers hardship. Hardship may cover the following events, e.g. Fire that destroyed a customer's premises, drought, etc. The strength of the currency, e.g. Rand / Dollar exchange rate Changes in legislation. Severe downturn of a sector of the economy. Bankruptcy, etc.

13 Eskom s Demand Exemption Policy Page 13 of 15 These are one-off exceptional events and as noted above could cause the customer to close business, go into liquidation or cause a permanent reduction in production. All hardship cases should be referred to the RPC / DPC for a decision Load management systems or provision of meter pulses Many customers actively manage their load so that they can limit the chargeable demand and their UC. If the customer does not do any load management, the marginal cost of the energy for the additional demand above a preset target could be significant. Eskom is on occasion requested to provide meter pulses to customers who manage their load in accordance with the time-of-use (TOU) period as prescribed by Eskom. These meter pulses are at present provided as a service free of charge, but with no guarantees or liability for failure. Customers will be required to enter into the appropriate agreement with Eskom if they require Eskom to provide them with meter pulses. As Eskom does not guarantee the meter pulses, in the event of the failure or malfunction of the meter pulsing equipment and circuitry, Eskom will not exempt the demand recorded for billing purposes in the month the event occurred. In other words, all chargeable demands including the MUC created and applicable during the month when the pulses were incorrectly supplied will be charged at the applicable tariff rate for that month. The customer may, however, be granted exemption upon application for the resetting of the annual UC due to an error in the meter pulses. In the month following after this incident, if the UC was exceeded due to a meter pulse error, the UC will be reset and the customer will not be penalised for overshoot. 5. Pro-rating methods for calculating exemption 5.1. Pro-rating method for the chargeable demand This method will be used to prorate the chargeable demand components, where such an exemption has been agreed upon. The following information must be obtained: The demand for the point of delivery (POD) for all chargeable demand periods outside of the event under consideration = X. The chargeable demand for the POD registered during the event = Y. The number of days affected by abnormal demand = d, where a day is defined as any minimum period of 24 hours starting at the same time as the event giving rise to the claim. Off-peak days are ignored. (Increments of 1 day.) The actual number of days in the relevant billing month for which demand is measured = D. Note: With respect to Nightsave and Megaflex, D and d should count only for those days during which chargeable demand is applicable, i.e. should currently exclude Sundays and Public Holidays where days are deemed Sundays. In all other cases where an exemption is granted, the energy demand and network demand will be prorated, based on increments of one day. The energy demand and network demand for billing purposes will be calculated as follows: Chargeable demand = X + (Y-X) d/d

14 Eskom s Demand Exemption Policy Page 14 of 15 In the event of two incidents in one month, the formula can be extended as follows: Chargeable demand = X + {Y (i) -X} d(i)/d +{Y(ii) - X}d(ii)/D or, in general form: Chargeable demand = X + 1 i {Y(i) -X}d(i)/D Where Y(i) = the chargeable demand during the event. d(i) = the duration of the event Prorating method for an exemption of UC due to a temporary increase in the NMD Any approved temporary increase of the NMD will be applicable for the number of days agreed upon in terms of the NMD rules.

15 Eskom s Demand Exemption Policy Page 15 of Abbreviations AUC DGP DMP DSM EDC MUC NAC NDC NMD NNL POD UC Annual Utilised Capacity Distributed Generation Participation Demand Market Participation Demand-Side Management Energy Demand Charge Monthly Utilised Capacity Network Access Charge Network Demand Charge Notified Maximum Demand Notified Normal Load Point of delivery Utilised Capacity 7. Definitions Annual Utilised Capacity Demand Market Participation Demand Side Management Energy Demand Charge Force majeure incidents Monthly Utilised Capacity Network Access Charge Network Demand Charge Notified Maximum Demand Notified normal load Notice period Point of Delivery Pro-rating of bills Pro-rating of costs Utilised Capacity The higher of the customer s notified maximum demand (NMD) or maximum demand, measured in kva, registered during a rolling 12-month period. NOTE: This is inclusive of any contingency capacity required. An Eskom initiative through which customers (direct and indirect), contract to make capacity available for reduction upon instruction from the Eskom System Operator, in exchange for financial benefits. Technology or programme that encourages the customers to modify patterns of electricity usage including timing and level of consumption. This includes conservation, interruptability and load shifting. R/kVA or R/kW charge per premises which is seasonally differentiated and is based on the chargeable demand registered during the month in order to recover peak energy costs. Any act, event or circumstance which: (a) is beyond the reasonable control of the Affected Party; (b) is not the direct or indirect result of a breach or failure by the Affected Party to perform any of its obligations under this Agreement; (c) was not foreseeable or, if foreseeable, could not have been avoided or overcome by the Affected Party and (d) prevents, hinders or delays the Affected Party in its performance of all (or part) of its obligations under this Agreement. However, a Force Majeure incident does not include shortage of cash, any inability or failure to pay money, any inability to raise finance or any changes in price and market conditions. The higher of the customer s notified maximum demand or maximum demand and the actual maximum demand, measured in kva or kw, registered during the billing month. A tariff component that is fixed on an annual basis and is charged as a R/kVA on the annual utilised (reserved) capacity. A charge that is variable on a monthly basis and is charged on the actual demand measured in all peak and standard periods of the billing period. The maximum demand notified in writing by the customer and accepted by the utility. The maximum load that the customer expects to purchase from Eskom excluding all active load control or own generation. The period required as per the electricity supply agreement for cancellation/changes to the contract. A grouping of points of supply at the same electrical substation, for one customer and at the same voltage and same tariff. Calculation of a bill based upon proportionate usage in the applicable billing period. Where costs are apportioned based on capacity required/capacity available. The greater of the customer s NMD and actual maximum demand registered in all time periods during the previous 12 months. NOTE: Theoretically the UC should equal NMD, but at times customers under-notify, resulting in a UC > NMD.