1. Electricity Price Increase 2008/9

2. Introduction & Background
Multi-Year Price Determination 2005 allowed 6.2% increase for 2008/9.
Eskom applied for 18.7% increase in April 2007 for 2008/9.
Energy Regulator approved 14.2% increase on 20 December 2007 for 2008/9.
Eskom accepted the 14.2% increase on 18 January 2008.
Eskom applied for 53% increase in April 2008 for 2008/9.
Presidency 19 MAY 2008

3. 53% increase for 2008/9
Eskom lodged an application for a 53% increase for 2008/9 and 43% increase for 2009/10 on 18 March 2008, citing the following as reasons for the application:
Changes in the Primary Energy costs
(i.e. Coal and fuels)
Accelerated Demand Side Management costs.
Presidency 19 MAY 2008

4. Financial Modelling Assumptions
10% reduction in consumption (Power Conservation Program)
R60bn Shareholder loan phased in over 5 years
Maximum self-borrow amount R30bn per annum over the next 5 years
Pass through of primary energy costs
Total Capital expenditure over 5 years R343bn.
10% Return on Assets from 2009/10 onwards
Presidency 19 MAY 2008

5. Pricing Scenarios Presidency 19 MAY 2008 Scenarios
2008/9 Real Price increase
2008/9 Revenues
Additional revenues above MYPD
Eskom under recovery of PE over MYPD
Eskom under recovery of DSM over MYPD
Profit after interest before tax in 2008/9
2009/10 Real price increase (Estimate)
MYPD 1%
R44.5bn
R0bn
R15.4bn
R2.5bn
1. Rule Change 9%
R47.9bn
R13bn
-R7.9bn
98%
2. Primary energy 2008/9
28%
R53bn
R5.3bn
R7.5bn
-R0.3bn
69%
3. Primary energy full MYPD
47%
R61bn
R7.6bn
48%
4. Primary energy 2008/9 + DSM
33%
R55bn
R7.3bn
R0.5bn
R3.3bn
64%
5. Primary energy full + DSM full
53%
R63bn
R15.5bn
R12.7bn
43%
Presidency 19 MAY 2008

6. Timelines Presidency 19 MAY 2008
ITEM/ACTIVITY
ACTUAL/TARGET DATE
Eskom’s Application Received by the National Energy Regulator of
South Africa (NERSA)
18 March 2008
Energy Regulator approves process and timelines
28 March 20008
Electricity Subcommittee of the Energy Regulator considers
confidentiality request by Eskom and NERSA’s consultation paper
07 April 2008
Publication of NERSA consultation paper and Eskom’s application.
Invitation for written public comments will also be issued.
08 April 2008
Deadline for submitting written public comments to NERSA
29 April 2008
Closing date for registering to attend and/or present at the Public
Hearing
19 May 2008
Public Hearing
23 May 2008
Electricity Subcommittee meeting to consider recommendation to
the Energy Regulator
27 May 2008
Energy Regulator considers and decides on Eskom’s application for
price increase for 2008/09
06 June 2008
Presidency 19 MAY 2008

7. Consultation Paper 8 April 2008
Primary Energy costs restriction methods
Contributions by primary energy suppliers (especially coal mines)
Funding methods for the Demand Side Management program
Necessity and adequacy of the R12.7bn profit after tax due to the 53% increase
Other forms of Government assistance
Commitments from Eskom if increase is granted
Presidency 19 MAY 2008

8. 370 responses from Experts, consumer groups, Concerned citizens.
Responses such as:
No, No, No, No
Allow 100% increase now rather than 2009/10
Allow the 53% increase to stop the load shedding
Government must fund the shortfall.
Presidency 19 MAY 2008

9. Way Forward Analysis of the Eskom application.
Analysis and incorporation of the inputs from stakeholders, including 16 May 2008 summit resolution.
Evaluation of the coal and fuel contracts.
Evaluation of the Demand Side Management Plans.
Position Paper of the Energy Regulator will be issued before the Public Hearing
Conducting radio interviews in all regions to explain processes and clarify matters
Presidency 19 MAY 2008

10.                                                                       
Thank you
Presidency 19 MAY 2008