An investigation into the present tariff cost structure and a methodology to determine the tariff increase for Ethekwini electricity.

The outcome of this study resulted in the re-categorization of EE's customer base, changes in tariff structures and the gradual removal of non-cost-reflective tariffs. This study enabled the restructuring of the LPU TOU fee which was crucial for covering the cost of EE.

INTRODUCTION

Background
Research problem
Hypothesis
Objective of the research proposal
Outline of subsequent chapters

The research problem will be outlined and the structure of the dissertation will be presented. Figures and tables are extracted from the model to present and explain the results of the research.

LITERATURE SOURCES AND TARIFF COMPARISONS

NRS 058
DRAFT Regulatory Framework for Distribution and Retail
Distribution Tariff Code
Comparison of EE tariffs

Growth of Bulk customers
Growth of B&G customers
Energy trending – International prices

It was drafted with the intention of initiating and developing regulatory policies and moving the electricity industry out of the initial stages of restructuring, through the formation of Regional Electricity Distributors (REDs) and ultimately the formation of independent REDs and the demise of the EDI. Holdings Company' to the final situation [8]. It was realized that customer growth on bulk rates had declined by 1%.

Figure 2-1: NRS 058 Flowchart (source: NRS 058) [3]

Average Electricity Prices - 2009

Energy trending – Local prices

Energy Trends was carried out to investigate the position of eThekwini Electricity's tariffs compared to other local supply authorities to highlight the position of EE. The study was conducted to investigate the cost of eThekwini's new industrial time-of-use tariff compared to other municipalities.

Jun-09

The selection of the authorities for the comparison was based on the fact that they were the major municipal utility companies in South Africa. A simulation for time-of-use tariffs offered by EE and three separate utility authorities was carried out using four of eThekwini's largest loads.

May-09

Electricity pricing in South Africa

The MYPD limited the rate of Eskom price increases until March 2009. Unable to recover costs and earn a fair return during this period, Eskom has now introduced massive price increases in 2010 (next MYPD cycle) to make up for the under-recovery. To cushion the impact of a large price increase in 2010, Eskom proposed to spread this increase over two years, starting with the last year of the current MYPD.

ESKOM VS MUNICIPAL INCREASES

Advancement in technology

Most of these technical issues have now been resolved, which now allows the implementation of residential time-of-use tariffs and the use of additional features such as load management and control. The most cost-effective solution for load management with metering technology is the introduction of smart metering.

RESEARCH METHODOLOGY

Data collection

SCADA
Metering data
Statistical data
Financial information
Network data

References
Tariff Model

Stats and tariff structure
COS revenue recovery
Tariff design and risk analysis
Tariff increase calculation
Final Tariff Schedule 2009-2010

Tariff reports
Implementation of tariff increases

Agreements and Legal consultation
Stakeholder notification
Redundant tariffs
IT and IS
Metering and Billing

This showed the effectiveness of tariffs for different consumption levels. In the case of a shared tariff TOU, this information will be forecast using the previous year's actual information. When creating new tariffs, the structure of the tariff and consideration of practical implementation become important.

Once rates are approved, there is usually not much time left for implementation of the rate increases. In the case of the LV3-Part tariff, this can be done by extending the duration of the limited demand period.

ANALYSIS AND RESULTS

Customer categorization
Tariff structures
Load profile data
Cost of Supply study
Tariff restructure and design

RTOU tariff
CTOU tariff
ITOU tariff
LV3-Part tariff

Risk mitigation

A study on the impact of the tariff migration had to be done in these cases. The summary of the cost of provision financial statement used is shown in Table 4-7. The results according to the model used for the distributed units and the rates are shown in table 4-9 below.

There were two new time of use rates created which were for the residential and the commercial customers. Eskom's Megaflex tariff was used to determine the energy distribution and the structural composition of the different time-of-use tariffs. The second analysis conducted looked at the comparison of billing customers from the ITOU to the CTOU rate.

Since the ITOU rate was set for the 2008/2009 year, most of the data was available and only a few months had to be estimated.

Table 4-2: Re-categorization of customers

CONCLUSION

With the installation of smart meters, it becomes possible to manage a residence time tariff. Our primary intention is to get the high-consumption private customers (>1000kWh) onto this tariff. This tariff has been phased out over recent years and is now redundant.

There will be a peak, standard and off-peak load to match all our time of use tariffs and Eskom's Megaflex tariff. We have consulted with the customers of this tariff and are redirecting them to the remaining available tariffs.

RECOMMENDATIONS

First Schedule to the bylaws
Categorisation of customers
Cost of Supply study

To complete this model and use it for the 2009/2010 evaluation, a very basic supply cost study was carried out using ring-fenced costs. An in-depth study of the supply costs should be carried out, separating and grouping all costs of assets in the asset register, which allows the allocation of costs to be done more thoroughly. An asset management program is currently underway and the results of that program will allow a comprehensive review of the cost of the offering to be carried out.

ETHEKWINI ELECTRICITY

TARIFFS 2009/2010

South Africa's position as one of the cheapest suppliers of electricity internationally is rapidly diminishing. It is through innovative crisis management methodologies and economic slowdowns that the country has managed to avoid the occurrence of widespread load shedding, yet we continue to remain under this threat. There is little to cheer about with the burden of rising costs weighing on us.

I would like to pay special tribute to all the employees of e Thekwini Electricity for their loyalty, enthusiasm and dedication to their work at hand in the past and encourage them to continue in a similar manner as we move into the future . It is my sincere wish that Durban as a city will become an integral part of the solution to the challenges we face, and work hand in hand with eThekwini to solve these challenges.

SECTION C

These tariffs are only available to households operating on 230 V (single-phase) or 400 V (three-phase). Customers have the option of purchasing electricity at a credit-based tariff (ie scale 3 and 4) or alternatively at a pre-payment based tariff (scale 8 and 9).

I RTOU I

STATISTICAL DATA: RESIDENTIAL TARIFFS

The service costs are built into the energy costs. Therefore, no separate service charges apply. The service costs are built into the energy costs. A separate service charge therefore does not apply.

RESIDENTIAL PREPAYMENT TARIFFS

Please note: This rate is only available to customers who use less than 150 kWh per month. All customers with this rate are eligible for 65 kWh of free electricity every month. There is currently an online monitoring system that identifies customers eligible for FBE based on their electricity consumption over the past eleven months.

Customers who consume more than an average of 150kWh per month will not be eligible for FBE.

RESIDENTIAL TIME OF USE (RTOU)

These tariffs apply to commercial and business customers who consume electricity at voltages not exceeding 11kV. Commercial and business customers have the option of buying electricity via a credit-based tariff (Scale 1) or alternatively a pre-payment based tariff (Scale 10 & 11).

This rate is strict for customers with a registered maximum demand of 100 kVA and lower. This is a fixed amount charged per delivery point, regardless of whether electricity is used or not. The estimated costs are increased in months when no meter readings are taken and are reversed when actual consumption is charged.

A deposit is required as insurance against the cost 01 of replacing the meter in the event of damage to it. In the event that a meier is damaged or intentionally overlooked, the deposit required increases.

OBSOLETE BUSINESS TARIFFS SCALE 002/021

DISCONTINUED BUSINESS AND GENERAL TARIFFS

STATISTICAL DATA: LARGE POWER USER TARIFFS

It is a tariff component that is fixed on an annual basis and is charged as an oil RlkVA maximum notified demand. The maximum claim notified in writing by the customer that the customer wishes to be able to claim and remains in effect for one year. The Maximum Notified Demand may be reduced by giving one month's notice, the revised Maximum Notified Demand will remain in force for a further period of one year.

The notified peak demand is used to calculate the minimum price based on 70% of the notified peak demand. The minimum half-hourly demand that the customer communicates in writing for the purpose of claiming the discount and is accepted as the minimum value used to calculate the maximum demand. The notified minimum demand remains in force for one year and can be reduced by one month's notice. The modified notified minimum demand remains in force for another year.

PUBLIC HOLIDAYS

Is a charge that is variable on a monthly basis and is levied on actual demand. Limited demand The highest half-hourly demand in kVA is charged by the customer between 16hOO and 20hOO, Monday to Friday. The different times during the day, as shown in the graph below, during which varying energy and demand charges apply.

The highest half-hourly demand in kVA taken by the customer during peak and standard periods of the month. Measured in kWh during periods of peak load, periods of standard load and off-load between days of the month according to the graph below.

Customers opting for this tariff will benefit from being able to shift their energy loads from peak periods to standard/off-peak periods.

STRUCTURAL CHANGES

Customers are encouraged to periodically visit their NMO valves and adjust them accordingly to avoid unnecessary charges. Outdated tariffs attract higher than normal increases, customers are therefore encouraged to review their load profile and explore the possibility of migrating to alternative tariffs. Minimum rates for agreements signed before 1 January 2000 are based on 70% of the maximum notified claim; the minimum charge for agreements entered into after 1 January 2000 is based on the higher of: 70% of the notified maximum demand or 100 kVA.

DISCONTINUED BULK TARIFFS

Also note that the minimum requirement of 70% of notified demand will be removed and a 'Network Access Charge' will be introduced. The lV2·Part tariff is no longer available and customers on this tariff will be given the option to switch to one of our more COSI-reflective tariffs. The new structure and rates that will be applicable from 1 July 2009 are set out below:-.

Customers in Scale 5, Scale 6 and Scale 7 will be transferred to the Scale 1 rate. The rates that will apply from July 1, 2009 for this non-seasonal rate are listed below.'-.