Personal View
Larger distribution centres key to ending power cuts
January 31, 2006
By Tino Espinheira
Electricity supply interruptions have become an increasingly regular occurrence in some areas of our country and, understandably, a hot topic of debate in the media.
Also a hot topic of discussion in the media is the fact that the surplus electricity generating capacity that South Africa has had for the past two decades is being eroded as the economy expands and demand for electricity grows.
No one can or is denying these two facts. Some areas in South Africa have experienced a decrease in the quality of the electricity supplied to them and demand for electricity will outstrip our current capacity to generate it in the next few years.
What is not always clearly understood is that these two facts are not linked and that the supply interruptions that some South Africans live with are not the result of too few power stations.
Although the increasing demand for power is eroding the surplus generating capacity, the government carefully monitors the country's demand and supply balances, and steps are being taken to expand the country's generating capacity.
However, simply adding to the country's generating capacity will not necessarily solve the supply interruptions. To understand why that is so, we need to consider how electricity is produced and supplied.
The electricity supply industry has three main sectors: the generation sector, which consists of the power stations that produce electricity; the transmission sector, which transports electricity from the power stations along high-voltage lines to bulk supply points close to the end user; and the distribution sector, which purchases electricity at these bulk supply points and distributes it locally at lower voltages to the end user.
Most power supply interruptions occur on the lower-voltage distribution lines, since these are most vulnerable to faults due to equipment failure or weather. However, when the higher-voltage transmission lines are interrupted (as in the recent power failures at Koeberg), large numbers of customers can be affected.
In South Africa, electricity generation and transmission are virtual monopolies and are predominantly owned and operated by Eskom.
But the distribution industry is highly fragmented. Although some distribution businesses are owned and operated by Eskom, there are also more than 180 distribution businesses that are owned and operated by local municipalities.
These range in size from the six large metros - Johannesburg, Cape Town, Tshwane, eThekwini, Ekurhuleni and Nelson Mandela - to many rural municipalities with just a few hundred customers.
The constitution guarantees these municipalities the right to reticulate electricity, and they are reluctant to relinquish control of this right as the income derived from electricity sales is often used to fund municipal expenditure.
This, together with the differences in scale of the businesses, accounts for much of the variation in prices between municipalities. All distribution systems are subject to failure and interruption of supply to customers.
In order to resolve this problem, the government formed Electricity
Distribution Industries Holdings in 2003 to restructure the distribution industry.
Although implementation has had teething problems, and the original plan to form six regional electricity distributors has required revision, it is hoped that 2006 will see progress.
The expectation is that through the creation of larger distribution entities, financial viability will be improved, skills shortages will be alleviated, delivery of electricity to those South Africans who still don't have it will be improved and supply interruptions will be resolved.
Tino Espinheira is director: energy at the department of public enterprises
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