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Print[Ferro-Alloys.com]Africa (Nersa) has confirmed that it will not allow national power utility Eskom to continue with its costly electricity "buyback" programme, as it expects the power utility to have excess capacity by 2019-20.
Thembani Bukula, regulatory member for electricity at Nersa, told Parliament’s portfolio committee on energy on Wednesday that buybacks were not allowed in the third multiyear price determination for the next five years. It only allows the utility to raise prices 8% a year during this period.
Eskom implements electricity buybacks by paying a large user, such as an aluminum smelter, to stop production so that it can supply energy to other users.
Going into June, many intensive users automatically reduce demand by shutting down heavy smelters and plants that consume the most electricity in response to higher winter tariffs, meaning Eskom does not have to rely on buybacks in peak winter months.
Industry experts said this week, however, that ending buybacks would put the utility under even more pressure to keep South Africa in power, given its thin reserve margin.
But Mr Bukula said the regulator believed these buyback schemes cost South Africa too much and were unnecessary.
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