CEO: Eskom will restrict power cuts this winter

Eskom CEO André de Ruyter says the utility is aiming to restrict power cuts during the winter, the coldest to hit SA in a decade, to no more than three days.

In an online briefing hosted by the SA National Energy Association on Thursday, De Ruyter said Eskom would stick to the base case it had put forward in May even though SA’s power system remains unpredictable.

De Ruyter’s comments come as the power supply system begins to show signs of stress again after a period of relative calm when the country went into a national lockdown in March in a bid to slow the spread of Covid-19.

The company sparked concern that load-shedding was set to return when it said earlier in the week that consumers should reduce usage as unexpected plant breakdowns had placed strain on the system.

Prior to the Covid-19 outbreak, Eskom was consistently cited by economists and ratings companies as the biggest risk to the economy primarily due to its huge debt load and power failures that crippled industry.

With businesses coming back and the country desperate to boost economic activity, rotational power cuts would deliver a devastating blow.

De Ruyter said demand-side interventions to have the public reduce power usage had proved effective and taken between 100MW and 250MW of demand off the system at a time — 1MW is enough to power 650 average households.

“Demand is now back to normal. There is still a marked absence of a morning peak, but the evening peak is higher than it normally is.”

Eskom has been implementing “load reductions” in certain parts of Gauteng in recent weeks in order to prevent equipment failure in times of increased demand in areas with a high number of illegal connections. Such load reductions were by no means load-shedding, De Ruyter said.

The lower demand in the first weeks of lockdown afforded Eskom the opportunity to do more short-term maintenance, which has helped the utility recover an estimated 2,000MW in partial load losses.

The longer-term catch-up maintenance, so-called reliability maintenance, had to be deferred due to the restriction of movement and goods. This would recommence in earnest in July.

Even so, De Ruyter said Eskom’s power plant performance, as measured by the Energy Availability Factor, was

much improved and expected to exceed 70% for June as a whole.

Electricity sales also took a knock as a result of the lockdown, placing further strain on the cash-strapped utility.

While this was “less severe than we had initially anticipated”, the lockdown cut the company’s cash generation by between R3.5bn and R4.5bn, he said. This had given additional impetus to Eskom’s drive to reduce its cost base and it was targeting R16bn in savings.

The company had revenue of R179.9bn in the year to March 2019.

Commenting on finance minister Tito Mboweni’s budget speech this week and the need to stabilise SA’s spiralling debt,

De Ruyter said Eskom came to mind. Much of the utility’s debt is guaranteed by the state.

“We are cutting back on all expenses, including capex [capital expenditure], to ensure we are not a burden on SA tax payers. We don’t intend to approach Treasury for a cash injection for the remainder of this year.”