ETHEKWINI ELECTRICITY
PORTFOLIO COMMITTEE ON MINERALS AND ENERGY-NATIONAL RED/ RED 7 COMMENTS FROM
ETHEKWINI MUNICIPALITY
eThekwini Municipality supports the need to restructure the Electricity
Distribution Industry and has played an active role in the many structures and
workgroups looking into this restructure over the past 10 years.
Following the Cabinet Resolution dated 14 September 2005 eThekwini Municipality
narrowed it's focus from the previous EDI blue print of six Wall to Wall" RED's
to concentrate on the establishment of the eThekwini Metro RED.
With respect to the invitation to comment specifically on the viability of the
proposed national or 7th RED eThekwini Municipality would like the
Portfolio Committee to take into account the following main issues, '
1 ) In the absence of a Government approved national policy on cross
subsidization within the Electricity Distribution Industry (ED I), the
financial viability of the proposed National RED must not be at the expense of
the end customers in the 6 Metro REDs. The six Metro REDS must be on a level
playing field with the National RED so that all electricity customers within SA
are treated fairly. For this to happen the input bulk tariff for the 6 Metro
RED's must be cost reflective and calculated using the same methodology as that
used for the proposed National or 7th RED. Substantial work has
already been done on this issue over many years by Eskom, the NER and a stake
holder task team for the Wholesale Electricity Pricing system (WEP's).
All proposed RED's, ie the 6 Metro RED's and the National or 7th RED
must pay the Wholesale price, free from any surcharges, as the bulk
input tariff from the Generation and Transmission components of the Electricity
Supply Industry. It is unacceptable if the 6 Metro REDS must become
"customers" of the National / 7th RED and be forced to
absorb distribution related costs of the national RED. Prolonged
cross-subsidies inevitable lead to inefficiency.
2) The issue of the so called “Contestable Customers" which consume more
than 100 GWh per annum on one contiguous site, must be treated fairly and
consistently in this EDI restructure. It is unacceptable to the proposed
eThekwini Metro RED for any “Contestable Customer" located within our municipal
area to remain with Eskom Key Sales or be transferred to the Proposed National
/ 7the RED. This would perpetuate the un level playing field for the
"Contestable Customers" already situated within the eThekwini
Municipal licensed electricity area of supply, where customers in competitive
industries have electricity price advantages of disadvantages. With the
creation of the 6 Metro RED's and the proposed National RED, all existing
“Eskom" customers inside the Metro area must be transferred to the Metro RED's.
If required I am available to attend the PCC hearings on the 21st
June 06. I would appreciate notification as early as possible to allow me to
make the necessary flight bookings.
Yours Faithfully
HR Whitehead: Head: Electricity Service Unit