2015/16 changes to the winter time-of-use peak periods and tariff charge name changes

Executive Summary On 26 February 2015, NERSA approved the following for implementation on the 2015/16 tariffs: Time-of-use period will change to the TOU tariffs – The morning winter peak period will be moved one hour earlier from 07:00 – 10:00 to 06:00 – 09:00. – The evening winter peak period will be moved one hour earlier from 18:00 – 20:00 to 17:00 – 19:00. – There are no changes to the summer time-of-use periods 5/4/2015 2

Motivation for the changes to the winter time-of-use peak periods in 2015/16 There is currently a challenge with the system ramp up in the winter months that is occurring just before the tariff peak periods. In order to assist with managing the winter system peak morning and evening ramp up, Eskom requested NERSA’s consideration of the implementation in the 2015/16 tariffs that the peak tariff signal should be aligned to the system peak by shifting the peak one hour earlier. There is a misalignment between the morning and evening tariff peak period and the actual system peak period. This misalignment is causing a significant problem in winter months, namely June, July and August. The System Operator has requested that the winter tariff peak periods (June, July, August) are reviewed to reflect the Eskom system peak profile. NERSA MYPD3 reasons for decision require that Eskom reviews the time-of-use structures.

Average winter system profile: 2013 and

2015/16 proposed changes to the winter time-of- use periods Eskom proposes to address the rapid increase in the level of the demand that currently occurs prior to the tariff peak in the winter months and hence align the TOU (peak) tariff signal to the system peak. This is a requirement specifically in the winter period as the system generally has a system peak prior to the tariff peak. This is to be achieved by shifting the morning and evening peak (winter) to one hour earlier. There will be no change to the total number of peak, standard and off-peak hours. There are no proposed changes to the summer months TOU (September to May) periods. Tariffs affected: WEPS, Megaflex, Miniflex Ruraflex and Transflex 5

Changes to the following tariff component names 6 Current tariff component name Proposed tariff component name Motivation for tariff component name changes Cost recovered by tariff charge Distribution network access charge Distribution network capacity charge Customers have confused network access charges with the charges paid upfront for prior to connection. The charge recovers the distribution network costs for operating and maintaining the networks. Network access charge Network capacity charge Customers have confused network access charges with the charges paid upfront for prior to connection. The charge recovers the network costs for operating and maintaining the networks. Network charge rebate Distribution losses charge Name is ambiguous- charge not directly related to network charges This is a production- based energy incentive to generators. Reliability service charge Ancillary service charge Customers who pay this charge have argued that they should exempted from load shedding. This charge recovers the costs of providing ancillary services by the system operator. The names of certain tariff components have resulted in ambiguity for both Eskom staff and customers. It is therefore proposed that the names of these tariff components are changed so as to provide clarity on the intended cost the tariff component is meant to recover. The Regulator has noted the tariff changes Motivation for tariff component name changes

Implementation dates Tariff structural changes 1 June non-local authority tariffs 1 July local authority tariffs Tariff charge name changes 1 April

Customer impact tool A tool is available for customers to use to understand the impact of the winter peak time-of-use change. Your customer executive assist with completing the analysis. 8

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