Information required by the Public Finance
Management Act
Performance in terms of the shareholder compact
The performance of Eskom against the shareholder compact key
performance indicators is shown in the table in the
business and sustainability performance review.
The capital and financial efficiency targets in the compact
were not met due to the significant increase in the cost of
primary energy. This was mainly due to the increase in coal
costs and the increased use of the open cycle gas turbines.
Although the amount spent on capital was exceeded, two
targets of the capital expansion section were not achieved.
The operating efficiency and effectiveness targets were in
many cases not met for the following reasons:
- Generation experienced a reduction in energy availability,
reflecting a decline in plant performance due to an increase
in unit trips and increases of both planned and unplanned
maintenance
- equipment failure contributed to the many incidents on the
transmission network
- the distribution performance has not improved since the
previous year and the business plan target was not achieved
due to a higher number of planned interruptions for
maintenance and refurbishment and an increase in unplanned
interruptions, caused by an increase in conductor theft, energy
theft and bad weather. Load shedding also had a negative
impact on operational performance.
Losses through irregular or fruitless and wasteful expenditure
In terms of the materiality framework agreed with the shareholder,
any losses due to criminal conduct or irregular or fruitless and
wasteful expenditure, that individually (or collectively where
items are closely-related) exceed R10 million, must be reported.
No material irregular or fruitless and wasteful expenditure has
occured during the period.
Losses through criminal conduct – conductor theft
Losses due to conductor theft (including copper and cable)
totalled R25 million (2007: R16 million), and involved
1 832 incidents (2007: 1 142 incidents).
Actions to combat conductor theft are managed by the Eskom
conductor theft committee in collaboration with other affected
state-owned enterprises and the police. The combined effort
resulted in 520 arrests (2007: 372 arrests) and R5 million (2007:
R2,7 million) was recovered during the year.
Losses through criminal conduct – fraud
No significant incidents of fraud occurred during the financial
period. During the year an amount of R9,3 million was recovered
relating to a fraud that was reported during the previous financial
period.
Management of energy losses
Energy losses reflect the difference between the quantity
of energy sent out from the power stations and the quantity
metered as sold. Losses are categorised as technical or nontechnical
in nature:
- technical losses naturally occur when energy is transmitted
through the network power lines depending on the type of
power systems used and components being used
- non-technical losses are the difference between total losses
and technical losses. These are typically caused by
- electricity theft, for example illegal connections and meter- bypass
- errors in technical losses calculation or estimation
- data quality or errors that distort technical information
Actual losses compared to Nersa MYPD allowed losses are as
follows:
| |
2008 |
2007 |
| Energy losses |
GWh |
GWh |
| Nersa MYPD allowance |
21 428 |
21 401 |
| Actual achieved |
20 027 |
20 033 |
The distribution and transmission energy losses for 2008 totalled
12 195GWh (5,45% of the energy purchased) and 7 832GWh
(3,1% of the energy purchased) respectively. In total the line
losses decreased from 8,4% in 2007 to 8,0% in 2008.
We have also independently benchmarked the Eskom energy
loss percentage against other international utilities.
Based on the 2007 information, Eskom compared favourably
against the participating distribution utilities and the results were
within the first quartile of the best performing distribution utilities.
The Eskom result was within the international benchmarked
parameters of 5,6% to 12,07%
For internal evaluation purposes, we estimate distribution
technical losses range between 50% and 60% of total losses. The
actual percentage is influenced by factors such as load growth,
network design, network ageing and illegal connections.
For internal evaluation purposes, we estimate distribution
technical losses range between 50% and 60% of total losses. The
actual percentage is influenced by factors such as load growth,
network design, network ageing and illegal connections.
Eskom instituted the energy losses management programme to
manage total losses from a holistic, integrated and best practice
perspective. The implemented energy losses management
programme has realised positive results. The level of energy
losses has improved due to the increased interventions in the
management of energy losses. These actual results achieved are
better than the target energy losses allowed for by Nersa.
The programme incorporates the following key activities:
- audit, measure and repair faulty customer meter installations
- disconnect illegal connections and meter bypasses
- ring-fence electrical networks to balance energy delivered
with sales
- implement tested technologies to manage energy losses
- improve data accuracy
- stakeholder communication strategies
- introduction of pricing penalties for customers at both
transmission and distribution level who are in breach of
contractual/grid code requirements
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Click here for more detail of the investment in new technologies to reduce energy losses. |
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