#JeSuisScrewed: Eskom's promise of load-shedding now, high electricity tariffs later

South Africa’s chief firefighter Cyril Ramaphosa was at the Eskom headquarters on Thursday morning, apparently to “experience” the process of managing the crisis at the energy utility. According to Eskom CEO Tshediso Matona, government technocrats have been at the utility’s headquarters since December when government announced its intervention, and have been working with the company on issues of capacity, co-generation and financial constraints hampering the purchase of diesel.

Ramaphosa apparently described Eskom as a “glorious company” during his visit. Considering Eskom’s management is openly admitting that its failure to maintain its plants is the reason the entire system is now under strain and necessitates nationwide load-shedding, one wonders what needs to happen for the deputy president to give the state-owned company a dressing down.

We do not know what else Ramaphosa might have said and what government’s response is to the fact that Eskom has to undertake emergency measures to prevent a national blackout. Matona said government was meant to issue communications on the matter and he was not at liberty to speak on behalf of the state. He said Eskom welcomed government’s support, as “we cannot get ourselves out of this situation”. This meant government “co-owned” the problem, he said.

However, “co-owning” the problem does not seem like something government is keen to do.

So far, we have had two direct messages on the power situation from the two people who call the shots. President Jacob Zuma said at the African National Congress (ANC) anniversary rally on Saturday that bad planning during the Apartheid era was to blame for the increased need for power outages. He did not announce any new measures and skimmed over what has already been pronounced by government.

Finance minister Nhlanhla Nene has said Eskom should sort out its problems as it was hurting the economy. According to Business Report, Nene said it was Eskom’s responsibility to manage its day-to-day operations and it would be inappropriate to bail out the utility.

In his Medium Term Budget Policy Statement in October, Nene announced that Eskom would get a direct allocation of R20-billion from the sale of “non-strategic state assets”, and subordinate loans could be converted into equity. He said Eskom was also expected to borrow about R50-billion within existing government guarantees.

Matona said the package of measures proposed by the state, including the sale of non-core assets, were on the table but had not been finalised.

But now Eskom needs an injection of R3-billion to buy diesel due to a shortfall in the budget. Matona said to his knowledge government has not rejected this. But it also does not seem that government is rushing over to Megawatt Park with its chequebook, despite the “glorious” state of the utility.

Photo: Eskom chief executive Tshediso Matona briefs media on the current state of the power system at Megawatt Park in Johannesburg on Thursday, 15 January 2015. Picture: Werner Beukes/SAPA

The current shortage of funds for diesel together with a decision by Eskom to resort to maintenance of its ageing plants to prevent their collapse means that daily load-shedding will begin next week. “It is not whether or not load-shedding will be part of our lives, but how we are going to cope with it, Matona said.

“We have arrived at a turning point where we can either continue to do the same things as in the past and make the problem bigger, and much longer to sort it out. Or we can do the right thing,” he said.

Eskom has been putting off maintenance and keeping the lights on by running open cycle gas turbines on diesel. “Our equipment is so unreliable and the risk of breakdown has become so high, and that has created havoc for us,” Matona said. He said the periodic failure of plants was “embarrassing”.

“We need space so that if you take units out for maintenance you still have headroom… You are not as vulnerable as we are.” Eskom needs at least 5,000MW in order to conduct the required maintenance without having to load-shed.

Most of the maintenance is done during summer, Matona said, as the reduced demand allows them to take down as many units as possible. However due to the constraints in supply, Eskom has exhausted its reserves and therefore maintenance needs to take place during rotational load-shedding.

It is not known why the maintenance was neglected but one reason put forward is the pressure to keep the lights on during the 2010 Fifa Soccer World Cup in South Africa. It beggars belief how this event, that took place four-and-a-half years ago, over the period of just a month, could result in such a severe maintenance backlog.

Eskom says in light of the emergency situation, it will prepare customers to deal with load-shedding. “We will create a load-shedding schedule that supports our people and our economy to the best of our ability,” Matona said. He said the company would also create transparency on what additional spend on diesel would do to the economy.

We still live in hope of reaching the Promised Land once the new Medupi and Kusile plants come online. But Eskom says while construction of Medupi is “virtually complete” it cannot give a definite date for when the much-delayed plant will start operating. Synchronisation is “weeks away” but there will be an extensive testing phase for up to six months. It is anticipated that commercial operations will begin before June.

The latest time given for Kusile to begin synchronisation is the first half of 2017, while the Ingula Pumped Storage Scheme project is scheduled for synchronisation some time in first half of next year.

While the delays in the build programmes continue, and the system will remain fragile during the maintenance operations, consumers are being placed under further pressure to achieve 10% electricity savings.

There is a worse case scenario than daily outages: a national blackout. This is when all generators trip and lose all capacity. If such a scenario should occur, and Eskom says it is working to ensure it never happens, it could take up to two weeks to get the system back up. The consequences of such an eventually is almost too ghastly to contemplate – a complete crippling of the economy and education and healthcare systems, as well as the prospect of civil unrest.

Therefore the motivation for consumers playing nicely, accepting load-shedding and reducing demand is that these will offset the prospect of unplanned outages and maybe the apocalypse.

A little blackmaily, isn’t it?

But perhaps there is one thing more distressing than rolling outages daily for several months. Matona says one of the reasons Eskom is under financial pressure is the “lack of cost-effective tariffs”. “Eskom’s financial health is dependent on whether we get the right tariff. The current tariff doesn't allow us to recover costs,” he said.

What this means is that consumers needs to pay more for the electricity we use more sparingly when we do get it. Matona said electricity prices are set by the regulator Nersa and not Eskom, but the understanding is that the “transition to cost reflectivity” would be phased in over time. He said the phased approach of higher tariffs would prevent a shock to an “already anaemic” economy.

Even more blackmaily, isn’t it?

The message, therefore, is adapt or deal with the darkness. Matona says South Africa has not adapted to the reality of reduced energy supply as many other countries have. The country is behind the curve in terms of energy efficiency, green energy and smart metering.

So it is time for South Africa to confront the new reality, and make contingency plans to live and work under conditions of rotational power outages. Embrace the darkness that might last four months or two years, and remember to applaud the glorious Eskom when you do see the light. DM

Here's little something to help you cope: Darkness, Darkness (Richie Havens)