R50 Billion Eskom BALLS UP!

Johannesburg - The National Energy Regulator of South Africa (Nersa) on Tuesday estimated the cost of the energy shortage to be about R50bn.

Speaking at a conference on the mining and metallurgical industry's response to the power crisis, Nersa CEO Smunda Mokoena said the economic impact of load shedding had been costed at R75 rand per kWh.

"The supply shortage caught South Africa by surprise," said Mokoena.

A Nersa inquiry found that Eskom had responded appropriately and speedily to the power supply shortage towards the end of 2007 and going into 2008.

But while Nersa was aware of low reserve margins, that the mothballed plant and low lead time open-cycle gas turbines were being commissioned, and that the low demand mid-summer period would be used for maintenance, the regulator was unaware of the increased unplanned outages and dwindling coal stocks leading up to the virtual blackout in January.

What Nersa has identified is a potential conflict of interest between the generator of electricity and the system operator, which is effectively responsible for ensuring system security.

"We are very sceptical that current procurement is being done by Eskom, not by government," said Mokoena.

Procurement of generation capacity, including that from independent power producers and co-generation, should be managed and coordinated by a professional agent independent of Eskom, he said.

"The sooner we establish an independent power procurer the better," Mokoena added.