distribution use of system charges (duos) policy · 2013-08-30 · eskom’s distribution use of...

DISTRIBUTIONUSE OF SYSTEM

CHARGES (DUoS) POLICY

Eskom’s Distribution use of system charges (DUoS) policy Page: 2 of 32

Content

Page 1 Introduction .......................................................................................................................... 4 2 Policy statement................................................................................................................... 4 3 Summary of DUoS charges................................................................................................. 6 3 Customers to which DUoS charges are applicable.......................................................... 8 3.1 Full-service .......................................................................................................................... 8 3.2 Partial-service Distribution connected customer ................................................................. 8 3.3 Embedded Distribution customer / direct Distribution connected customer........................ 8 3.4 Direct Transmission-connected customer ........................................................................... 8 3.5 Network service customers ................................................................................................. 8 3.6 Distribution generators ........................................................................................................ 8 4 Open access and obligation to supply .............................................................................. 9 4.1 UoS charges........................................................................................................................ 9 4.2 Purchasing tariff................................................................................................................... 9 5 The relationship between DUoS charges and retail tariffs for loads.............................. 9 6 DUoS charges....................................................................................................................... 10 6.1 Connection charges............................................................................................................. 11 6.2 DUoS charges for loads ...................................................................................................... 11 6.3 DUoS network charges for customers embedded in the distribution system...................... 12 6.4 DUoS network charges for partial-service customers ......................................................... 14 6.5 Exemptions for DUoS charges where demand is exceeded............................................... 14 6.6 DUoS charges for direct-Transmission-connected customers – the DNL .......................... 15 6.7 System losses for embedded Distribution customers ......................................................... 15 6.7.1 Distribution losses for embedded Distribution customers ................................................... 17 6.7.2 Transmission losses for embedded Distribution customers................................................ 17 6.7.3 Total cost of losses for embedded Distribution customers.................................................. 18 6.8 Calculation of losses for partial-service-Distribution-connected customers........................ 19 7 Embedded TUoS charges (ETUoS) .................................................................................... 19 7.1 Transmission reliability services charge for embedded Distribution-customers. ................ 21 8 Reactive energy charges..................................................................................................... 21 9 Rate-rebalancing levy (RRL) ............................................................................................... 21 10 Conversion/revenue neutral surcharges........................................................................... 22 11 Customer service and administration charges................................................................. 22 12 DUoS charges geographical differentiation –urban/rural split ....................................... 22 12.1 Urban................................................................................................................................... 23 12.2 Rural .................................................................................................................................... 23 13 Entry DUoS charges for embedded distribution generators........................................... 23 14 DUoS charges for flexible network capacity needs to accommodate Eskom initiated demand response programme.................................................................................................. 23 15 DUoS charges for contingency supplies........................................................................... 23 16 DUoS charges for inter-distributor wheeling .................................................................... 24 17 Operations, maintenance and refurbishment costs......................................................... 25 18 The notified maximum demand (NMD) rules..................................................................... 25 19 Diversity ................................................................................................................................ 25 20 Transaction voltage for partial-service Distribution connected customers.................. 26 21 Flow of energy...................................................................................................................... 26 22 Metering and billing of DUoS for partial-service Distribution-connected customers... 26


23 Definitions............................................................................................................................. 28 23.1 Abbreviations....................................................................................................................... 32 Table of Figures Figure 1 – DUoS charges and retail tariffs .................................................................. 10 Figure 2 – Determination of losses for embedded Distribution customers............. 16 Figure 3 – Determination of losses.............................................................................. 19 Figure 4– Inter-distributor wheeling of energy........................................................... 24


Charges for energy losses – for both Distribution and Transmission network losses.

1 Introduction

Distribution-use-of system (DUoS) charges are the unbundled regulated tariffs charged by the Eskom Distribution Division for making capacity available to and for the use of the Distribution system by embedded Distribution connected customers. For all customers connected to the Distribution network, the Distribution division must make available capacity on its networks and provide open non-discriminatory access for the use of this capacity to all its customers. In exchange for this service Distribution is entitled to a fair compensation, but within the context of existing cross-subsidisation, through distribution use-of-system (DUoS) charges or retail network charges that reflect its costs.

The DUoS charges referred to in the document for customers embedded in the Distribution network are as follows:

DUoS network charges.

Embedded TUoS network charge. Reliability services charge. Reactive energy charges. Rate-rebalancing levy - applicable to both direct Transmission and Distribution

embedded customers. Service charges - to partial-service Distribution network-service customers. Administration charges – to partial-service Distribution network-service

customers and potentially in future to KSACS customers when the services provided between the two groups are unbundled.

The DUoS charge referred to in the document for customers (loads) connected directly to the Transmission network or customers that the NERSA regards as direct Transmission customers, is the:

Distribution network levy (DNL).

This document does not deal with the following: Tariffs for retail customers. Retail tariffs may or may not be structured exactly as

the DUoS charges depending on the retail tariff. Charges for generators or loads directly connected to the transmission system,

except where applicable, DUoS levies. Energy purchases.

2 Policy statement

2.1 For all customers connected to the Distribution network, the Distribution

Division must make available capacity on its networks and provide open non-discriminatory access for the use of this capacity to all its customers. In exchange for this service Distribution is entitled to a fair compensation, but


within the context of the existing cross-subsidisation, through distribution use-of-system (DUOS) and retail network charges that reflect its costs.

2.2 Distribution network-service customers will:

be liable for DUoS charges by the Distribution Division, be provided with open access to Distribution’s network and, receive the same (according to the applicable standards) quality of supply

as Distribution Division’s retail customers.

2.3 The DUoS charges for customers (loads) embedded in the Distribution

network are:

DUoS network charges. Charges for energy losses – for both Distribution and Transmission

network losses. Embedded TUoS network charge. Reliability services charge. Reactive energy charges. Rate-rebalancing levy - applicable to both direct Transmission and

Distribution embedded customers. Service charges - to partial service Distribution network service customers. Administration charges – to partial service Distribution network service

customers and potentially in the future KSACS customers when services provided between the two groups are unbundled.

2.4 The DUoS charges for customers (loads) connected directly to Transmission

network or customers viewed by the NERSA as direct Transmission customers:

Distribution network levy (DNL). 2.5 Distribution will grant demand exemptions on DUoS network charges in

accordance with current policy on demand exemptions and the NMD rules.

2.6 DUoS charges are raised on the network capacity that is provided at the point of connection, and not the flow of energy or the point to point wheeling of power from a generator to a load.

2.7 All transmission-connected and network-service customers inside the boundaries of South Africa will be required to pay all explicit DUoS levies and implicit (averaged in the tariff rates) cross-subsidies, as a fair contribution towards subsidies. No customer will be allowed to bypass contributions to such subsidies, unless approved/instructed by the NERSA.

2.8 For Distribution retail loads, the DUoS charges will be bundled in the retail rates and for network service only loads, the retail network charges or DUoS charges as applicable, will be separately contracted for.

2.9 The principles for determining DUoS charges for loads and embedded distribution generators will be consistent and be on a cost-reflective basis. The DUoS charge may, however, not necessarily be the same for embedded


distribution generators connected to Distribution’s system (entry DUOS charges) and loads using the capacity (exit DUOS charges) on the distribution system.

2.10 Embedded distribution generators will face DUoS charges within a cross-reflective framework still to be developed.

2.11 DUoS charges will be differentiated into appropriate and justifiable voltage categories and loss factors.

2.12 DUOS charges may be deviated from to meet specific customer requirements – in terms of the delegation of authority for special pricing agreements and subject to approval by the NERSA.

2.13 Where Distribution Division wheels through another distributor’s network, Distribution will:

Enter into contracts with network owners to use their networks to transport power to other Eskom customers, where it is economic and to the benefit of all parties involved in the transaction.

Offer to contribute towards the reasonable costs of the network owner the impact of the transition to cost reflective wheeling charges for existing agreements as fair as possible.

Promote efficient system expansion and to utilise existing infrastructure optimally for the benefit of the national economy.

2.14 All loads and embedded distribution generators will pay connection charges to

be connected to the Distribution network in terms of current policy and may contract for a premium or higher quality of supply, at a price.

3 Summary of DUoS charges

A high level overview of the DUoS charges referred to in the document for customers (loads) embedded in the Distribution network, is as per the summary in the following table.


Table 1 – Summary of DUoS charges DUoS charge Voltage

differentiated Urban/Rural differentiated

Transmission zone surcharge

How is it raised? Who is liable for this charge

DUoS network demand charge NDC Refer to Section 6.3

Yes Yes No Monthly maximum demand x NDC for the voltage category

All embedded Distribution customers

DUoS network access charge NAC Refer to Section 6.3

Yes Yes No Utilised capacity x NAC for the voltage category


DUoS Distribution network levy (DNL) – NDC Refer to Section 6.6

No (expressed at the >132 kV level)

No No Monthly maximum demand x DNL NDC

Direct Transmission connected customers or NERSA approved

DUoS DNL – NDC Refer to Section 6.6

No (expressed at the >132 kV level)

No No Utilised capacity x DNL NAC

Direct Transmission connected customers or NERSA approved, but excluding international customers

Transmission (Tx) losses for direct Tx customers

NA NA NA NA Not a DUoS charge

Cost of Dx losses for embedded customers Refer to Section 6.7.3

Yes – On Dx loss factor

Yes – on Dx loss factor

Yes – on Tx loss factor

∑{Delivered Energyt x (distribution loss factorVU/R x transmission loss factorZ-1) x Pt} Where: VU/R = at the relevant voltage level and urban/rural differentiation and Z= transmission zone and t = the appropriate peak, standard or off peak time period and Pt= Purchase energy price (WEPS) for each PSO time period.

All embedded Distribution connected customers except international customers

Embedded TUoS (ETUoS) charge Refer to Section 7

Yes - on Dx loss factor

Yes – on Dx loss factor

Yes – on ETUoS network charge network

UC x distribution loss factorVU/R x transmission network charge ZP. Where:ZP = applicable zone price


Reliability services charge. Refer to Section 7.1



No Delivered energy x distribution loss factor x RS rate


Reactive energy charges. Refer to Section 8

No No No c/kvarh rate x excess kvarh


Rate-rebalancing levy Refer to Section 9

No No No Delivered Energy x DUoS RRL rate.

All customers (Distribution and Transmission connected) except international customers

Customer Service charges Refer to Section 11

No No No R/customer All embedded Distribution customers

Administration charges Refer to Section 9

No No No R/customer All embedded Distribution customers


3 Customers to which DUoS charges are applicable

To differentiate the different types of customers to which DUoS charges apply it is important to understand the terminology used in the context of this document. This is an extract from the definitions. 3.1 Full-service

A customer that is provided with a full retail service by Distribution Division i.e. Distribution purchases energy and transmission services on behalf of the customer and provides the customer with distribution and other retail services. 3.2 Partial-service Distribution connected customer

A customer that uses Distribution’s network to transport (wheel) all or only a portion of their energy from a generator to a load and may or may not be an Eskom retail customer. 3.3 Embedded Distribution customer / direct Distribution connected

customer

A customer whose supply is taken from the Distribution system or a customer not considered a direct Transmission customer. 3.4 Direct Transmission-connected customer

A customer whose supply is taken directly from the Transmission network, without utilising the Distribution’s network, i.e. nominal supply voltage normally >132 kV or a customer taking a supply at 132 kV but, due to the network configuration, is viewed by the NERSA as a direct Transmission customer. 3.5 Network service customers

A customer that receives only network services i.e. no energy or retail services are provided. Partial-service Distribution customers are the network service customers of Distribution. 3.6 Distribution generators

A generator embedded in the distribution network (distributed generator) is a generator that uses the Distribution system and not the Transmission system to transport energy from the generator to a load. An embedded distribution generator is a customer of Distribution for entry DUoS charges (when applicable). Where a distributed generator has load as well, the load and generation network requirements will be separated from each other and contracted as such. If a distributed generator uses its generator to offset its load requirements, the network-service requirements have to be taken into account for the standby capacity that Distribution will be required to supply, in case of failure of the its generators. This capacity must be notified in terms of the NMD rules (found at www.eskom.co.za/tariffs)


Note that where a generator uses the Transmission system to transport energy, this generator is a customer of the Transmission system and will pay the applicable entry TUoS charges. If the generator is connected to the Distribution system for any load requirements, retail tariffs and their rules will be applicable to that load. 4 Open access and obligation to supply

All full-service, network-service customers and embedded distribution generators that utilise Distribution’s network will be provided with open and non-discriminatory access to the network, provided that they pay the appropriate DUoS or network charges. 4.1 UoS charges

The use-of-system charges (UoS) are unbundled tariff structures and rates that recover the costs associated with making capacity available on an electricity network, plus the applicable levies. Use-of-system charges are payable by generators (entry UoS) and loads (exit UoS) connected to both the transmission system (TUoS charges) and Distribution’s network (DUoS charges). UoS charges together with connection charges provide the pricing signals to the users of the network for the investment required, the capacity required and the location of the supply. UoS charges are calculated on the basis of the capacity both used and reserved, and also on the location and the voltage of the supply. 4.2 Purchasing tariff

All purchases for Distribution are at the WEPS structure and rates. WEPS is a NERSA approved cost-reflective tariff structure that recovers the cost of energy (generation), network services (transmission and distribution) and other costs (losses, customer services, reactive energy) in an unbundled manner. In addition to unbundled cost, provision is also made in WEPS for levies that support national socio-economic programmes. Distribution purchases Distribution will purchase energy, transmission and distribution losses, transmission capacity and reliability services on behalf of its licensed customers and will purchase transmission capacity and losses and reliability services and provide Distribution network services on behalf of all network-service customers. 5 The relationship between DUoS charges and retail tariffs for loads

For loads there may be a difference between the retail tariff network charges and DUoS charges, even though they are based on the same underlying costs. DUoS and network charges are basically the same charge except that DUoS charges are the purest unbundled form of network charges, and network charges in retail tariffs may or may not be unbundled. A fully unbundled retail tariff will have a network charge structure that is exactly the same as the DUoS charge structure The DUoS charges are based on the unbundled network costs as allocated in NRS 058 to reflect as accurately as possible the true network cost in value and structure, but taking into account subsidies and levies. As mentioned above, network charges in retail tariffs may be unbundled and structured exactly like DUoS charges or may be


bundled in one way or another into retail tariff components. The DUoS rates are the source of the network charge components in the retail tariff structures, i.e. the standard tariffs charges are determined from the “pure” DUoS network charges. The following diagram shows the relationship between DUoS charges and retail tariffs:

DX Revenue•Network Capital Costs

•Network Operating costs•Transmission network costs

•Losses•Profit of Engineering

•Tax allocated to engineering•Engineering Overheads

Part of Existingtariff structures

R/kVA or c/kWh

DUOS Charges

R/kVAUtilised Capacity

Divide

DX Revenue•Network Capital Costs

•Network Operating costs•Transmission network costs

•Losses•Profit of Engineering

•Tax allocated to engineering•Engineering Overheads

Part of Existingtariff structures

R/kVA or c/kWh

DUOS Charges

R/kVAUtilised Capacity

Divide

Figure 1 – DUoS charges and retail tariffs For all of Eskom’s retail customers, the DUoS charges are currently passed to the end customer through the retail tariffs. 6 DUoS charges

DUoS charges recover the cost of Distribution’s network business for loads as well as embedded distribution generators through unbundled cost-reflective tariff components and structures. DUoS charges for load and embedded distribution generators may differ.

All network-service customers and embedded distribution generators making use of Distribution’s networks are required to contract with Distribution for connection to the network and where applicable, the relevant DUoS charges.

For loads embedded in the Distribution network, Distribution will contract with Transmission and will recover the cost of the use of the transmission system, either in the retail tariffs or as a DUoS charge called the embedded TUoS charge. (See Section 7.)

All direct Transmission-connected customers or customers considered by the NERSA as direct Transmission-connected customers will be required to pay the Distribution Network Levy.

The DUoS charges, together with the connection charges, make up the Distribution charges to be raised for the use of Distribution’s networks. This document deals with only with the (tariff) DUoS charges.


6.1 Connection charges

Connection charges will be raised in line with Eskom’s capital recovery policy. This policy is: a) It is Eskom’s policy to recover the cost of network capital through two

mechanisms:

The scheduled tariff rates or through DUoS charges, and,

Outside of the tariff rates by means of connection charges.

b) Customers will always be required to pay for dedicated connection assets.

c) Customers will be charged a connection charge for an appropriate share for new or already invested upstream costs.

d) The connection charge will be the allocated capital costs for dedicated and shared networks, reduced by a capital allowance based on the amount of capital that is recovered in the tariff.

e) The cost of unused capacity installed by Eskom for future growth or due to technical standards is shared by all customers through the tariff rates.

f) Eskom will assist customers with initial up-front financing of capital costs subject to the availability of funding. For premium power supplies, this funding is at the discretion of Eskom.

g) Rural lines are considered dedicated, unless it is established that they are shared.

h) Urban networks are considered shared, unless it is established that they are dedicated.

i) The connection boundary for embedded distribution generators and loads will be the same. The raising of connection charge for embedded distribution generators will calculated the same as for normal loads, except that embedded distribution generators will not receive a capital allowance as they currently do not pay network charges. Capital allowances will be applicable when network charges are raised.

6.2 DUoS charges for loads

The DUoS charges for loads plus connection charges recover Distribution’s allowed revenue requirement associated with network infrastructure, including capital interest and finance charges, depreciation, refurbishment costs, operations and maintenance, regulated return and taxes and transmission purchase costs for all standard supplies. Still within the revenue requirement, the DUoS charges also include the levies applicable to select customers, which support national socio-economic programmes for approved target groups. The unbundled DUoS charges for embedded Distribution network-service customers are made up of the following rate components, namely:


a) DUoS network charges. b) Charges for energy losses – for both Distribution and Transmission network

losses. c) Embedded TUoS network charge (ETUoS). d) Reliability services charge. e) Reactive energy charges. f) Rate-rebalancing levy - applicable to direct Transmission and to Distribution

embedded customers. g) Distribution network levy - applicable to direct Transmission-connected

customers. h) Administration charges – to partial-service Distribution network-connected

customers. The DUoS charges for customers (loads) connected directly to the Transmission’s network or customers viewed by the NERSA as direct Transmission customers are:

i) DUoS charge for direct Transmission connected customers - Distribution network levy (DNL).

The DUoS charges include explicit subsidies to specific categories of customers as approved by the NERSA, and implicit subsidies due to customer segmentation decisions and averaging of rates, where for historical and affordability reasons the tariff being subsidised is lower than cost. The ETUoS network charge applies where there is wheeling of energy within the distribution system or where there is distributor-to-distributor wheeling of energy, i.e. where a distributor-connected supply transports energy to another distributor-connected supply or where the transaction is restricted to a specific geographic area, without going through the transmission network. This charge is payable because standby capacity always has to be provided for the load requirements, unless it can be proven that the generator supplying the load is 100% reliable (improbable) or that the customer is prepared to be instantaneously limited. 6.3 DUoS network charges for customers embedded in the distribution

system

The DUoS network charges recover Distribution’s regulated costs associated with capital (interest and depreciation) operations and maintenance and return of the network business. The DUoS network charges are based on the cost per kVA. A large portion of Distribution’s revenue is fixed by the NERSA, which exposes Distribution to volume risk. To mitigate this risk, Distribution recovers a portion of its revenue through a fixed charge based on an annual utilised capacity and the rest through a variable charge based on the actual maximum demand in each month. The DUoS network charge for loads is therefore split into the fixed-charge DUoS network access charge based on the annual utilised capacity, and the variable-charge network demand charge based on the monthly maximum demand in specific time periods, as follows:


The DUoS network access charge is charged as a R/kVA on the highest utilised capacity, which is calculated as the highest actual demand measured over a rolling 12-month period or the notified maximum demand, and

the DUoS network demand charge is charged on the highest demand measured in a billing period during the specific time periods (referred to as the chargeable demand) as defined in the energy purchase tariff peak and standard time periods. (In future this may be differently defined in order to reflect the time relationship of network costs.) The network demand charge is only applied to the chargeable demand, i.e. the demand in peak and standard time periods to support a DSM signal.

The DUoS network access charge is based on 50% of the network costs / Σ annual utilised capacities and the network demand charge is based on 50% of the network cost / Σ monthly chargeable demands. Changes in the notified maximum demand after the determination of the DUoS charge will affect the revenue of Distribution for the following reasons:

As the DUoS network charges are based on the forecast demand, any deviation from this forecast will result in an over- or under-recovery of costs

The TUoS charges payable by Distribution are fixed charges based on the annual notified demand of all embedded customers at the MTS level.

The NMD rules were developed in order to mitigate the volume risk as a result of changes in the notified demand. The NMD rules can be found at www.eskom.co.za/tariffs DUoS charges are differentiated according to Distribution’s current voltage and geographic categories. The geographic (locational signal) is provided in the DUoS charges through a rural and urban differentiation and through connection charges. The voltage differentiation is based on the following categories:

Table 2 - Voltage level categories for DUoS charges VOLTAGE Urban

VOLTAGE Rural

< 500 V < 500 V ≥ 500 V and < 66 kV* ≥ 500 V and < 66 kV*

≥ 66 kV and ≤ 132 kV > 132 kV

Due to the definition of urban and rural (as per NRS 069) there are no rural networks above 22 kV (though, under special circumstances, also 33 kV)

The >132 kV category is applicable only to direct transmission-connected customers to recover the distribution network levy and the rate-rebalancing levy.


6.4 DUoS network charges for partial-service customers

Where Distribution customers purchase a portion of energy from another source (typically green power sources) the customer (load) will still be required to pay the full DUoS charges, including contingency or standby capacity (see Sections 15 and 16). Where a customer has an existing retail tariff with network charges, the retail network charges may be applied instead of the DUoS charges for reasons of billing practicality and simplicity. Only the green energy portion will be paid for by the customer at a different rate. 6.5 Exemptions for DUoS charges where demand is exceeded

Customers frequently request Eskom to waive demand (or part thereof) for a variety of reasons. Eskom will grant demand exemptions in accordance with the criteria, conditions and rules set out in the Demand Exemption Policy and Procedure for the following DUoS charges:

Administration Charge Service Charge Network Demand Charge Energy Demand Charge Network Access Charge

Under this demand exemption policy and procedure, customer requests for a demand exemption could be granted on their energy demand and or network demand (or part thereof) charges under the following three scenarios.

An interruption of the supply to the customer due to force majeure (see definitions document) or Eskom supply interruption, resulting in a “cold start” which leads to an excess of what the customers normal demand would have been.

Customers on a voluntary basis participate in Eskom initiatives (DSM, DMP)

and as such requests relieve from paying any excessive demands created during testing periods. Eskom requests customers to do these tests and to operate these products to curtail their demands and ultimately Eskom’s system demand.

Customers request relief due to non-standard operational

circumstances that result in, or will result in, excessive demand for short periods of time.

It is to be noted that requests for exemptions for the following is dealt with under the NMD rules (See Section 18).

Failure of large items of customers’ plant, including their co-generation. Closure of customers’ plant for part of a month. Where customers shift load between non-diversified points of delivery.


Failure of customers’ load management or power factor equipment, including the failure of metering pulses, which result in excess demands will be granted exemption under this procedure and / or the NMD Rules.

6.6 DUoS charges for direct-Transmission-connected customers – the DNL

Due to the historical current voltage differentials – both in the voltage categories and percentage differences between categories – Eskom’s retail tariffs contain cross subsidies from higher voltage customers to lower voltage customers. To ensure that the same or similar level of cross-subsidies remains when customers are supplied on an unbundled tariff, the NERSA Board approved the implementation of a Distribution network levy (DNL) in order to make the inherent and fair contribution to the subsidies of lower voltage customers by customers connected at voltages above 132 kV, more explicit and to preserve the previous contribution of these customers to the subsidisation, previously made in the retail tariffs. The DNL is also aimed at preventing uneconomic bypass of the Distribution networks. Subject to NERSA approval, qualifying direct Transmission connected customers are not liable to pay DUoS network charges but are liable for the Distribution network levy. The Distribution network levy is not an additional charge when compared to the retail tariffs, but merely an unbundling of the existing contribution to voltage subsidies. Customers that are classified as direct Transmission customers when they are

connected to the Transmission network directly. This could include customers connected at 132 kV or below who are then deemed to impose no cost on the Distribution division.

The total contribution to the subsidisation of lower voltage customers (DNL) of

customers connected at > 132kV and customers connected at 132 kV or below, but deemed to be “direct customers” will be determined each year and apportioned to the relevant customers in relation to their forecast UC and chargeable demand. This contribution takes the form of a fixed equal monthly payment but the methodology is subject to NERSA discretion. The contribution will be calculated on the basis of the published network charges of Distribution.

These customers have contributed historically to the network cost-pool of the distribution business and it is important to retain this contribution to subsidise lower voltage customers. Direct Transmission connected customers are also required to pay the rate-rebalancing levy (see 9) and any applicable conversion surcharges (see Section 10). 6.7 System losses for embedded Distribution customers

Electrical losses occur as a result of transporting electricity from the source (the generator) to the load (the customer). This means that more electricity is generated at the source than is supplied to the customer. Generation will expect to be paid for the energy produced, but the customer is only charged for the energy sold. This


difference results in a cost to Distribution for the “lost” energy which needs to be charged for, and is referred to as electrical losses. The cost of electrical losses associated with transporting energy from one point to another are unbundled and recovered as a function of (a) the appropriate loss factors for the relevant voltage level, and (b) the Distribution’s time-of-use cost of purchasing energy as follows.

Distribution “purchases” and recovers the cost of losses for embedded Distribution customers.

The DUoS charge loss factors will recover the cost of all associated losses. The loss factors are differentiated according to Distribution’s voltage and

geographic categories. Distribution will be responsible for all losses flowing through its system,

including losses for network-service customers.

To supply full-service and network-service customers, Distribution has to source the energy from Generation through the Transmission system. Distribution Division is liable for all embedded customers associated losses in the Transmission system calculated at the main transmission station (MTS) plus losses in the Distribution networks. The total losses charged to a customer are therefore made up of the

distribution system losses and, transmission system losses.

The following flow diagram summarises how energy losses and their associated cost is calculated.

PeakDelivered Energy (kWh)

Dx Loss factorx Tx

Loss factor - 1x =Total energy

losses in Peak period(kWh)

xWEPS Peak

energy rate=

Total cost ofPeak

energy losses (R)

+StdDelivered Energy (kWh)

Dx Loss factorx Tx


losses in Std period(kWh)

xWEPS

Stdenergy rate

=Total cost of

Standardenergy losses (R)

Off-peakDelivered Energy (kWh)

Dx Loss factorx Tx


losses in Off-peakperiod (kWh)

xWEPS

Off-peakenergy rate

=Total cost of

Off-peakenergy losses (R)

+

Total cost ofenergy losses (R)

=

Total losses Total cost of losses

Tx zonedifferentiated

Tx zonedifferentiated

Geographically differentiated

Differs for Voltageand Rural/ Urban categories

Differs for Voltageand Rural/ Urban categories

At each Tx zoneand Dx voltage level

Differs for Voltage and Rural/ Urban categories



Figure 2 – Determination of losses for embedded Distribution customers


6.7.1 Distribution losses for embedded Distribution customers

Distribution “purchases” losses for all embedded network-service and its own retail customers and therefore must recover the cost of losses. The energy losses in the distribution system are determined by measuring the energy used by the customer i.e. the delivered energy. This energy, multiplied by the distribution loss factor for the appropriate transaction voltage, will be the calculated energy losses in the distribution system. The formula to determine distribution losses is: Total distribution losses = Delivered energy x (distribution loss factor VU/R-1) Where VU/R = voltage level and urban/rural differentiation Distribution loss factors are based on estimated losses per voltage level and are also geographically differentiated as indicated in the next table:

Table 3 – Distribution loss factors Urban Rural

Voltage Loss Factor Loss Factor <500V 1.0912 1.1189 500V - <66kV 1.0560 1.0900 66 – 132 kV 1.0174 NA

> 132 kV 0.0000 NA

6.7.2 Transmission losses for embedded Distribution customers

The cost of losses in the Transmission system will be recovered on exactly the same basis as the cost of distribution losses as described above, except that the appropriate transmission loss factors will be used. In order to calculate only the transmission losses, the formula to be used is:

Total transmission losses = Delivered energy x (distribution loss factor VU/R x transmission loss factor Z -1) Where: VU/R = at the relevant voltage level and urban/rural differentiation and Z= transmission zone and

Note that losses for directly connected Transmission customers are not part of DUoS – they are contracted for by the KSACS Division. The Transmission loss factors are differentiated by zone. The table below sets out the current Transmission loss factors.


Table 4 – Transmission loss factors Distance from Johannesburg Zone Loss factor 0 to 300 km 1 1.0112 301 to 600 km 2 1.0213 601 to 900 km 3 1.0316 > 900 km 4 1.0419

6.7.3 Total cost of losses for embedded Distribution customers

The total losses for embedded Distribution customers will be priced at the energy purchase price for Distribution, for both Transmission and Distribution system losses Since the purchase rates are currently differentiated according to the time-of-use, the measurements and calculations of losses will follow the same time-of-use periods. In calculating the cost of these losses for embedded customers, both transmission and distribution loss factors have to be considered and will be charged at the purchase energy rates, as follows. Charge for total losses = ∑{Delivered Energyt x (distribution loss factorVU/R x transmission loss factorZ-1) x Pt} Where: VU/R = at the relevant voltage level and urban/rural differentiation and Z= transmission zone and t = the appropriate peak, standard or off peak time period and Pt= Purchase energy price (WEPS) for each PSO time period. Transmission loss factors are geographically differentiated whereas the distribution loss factors might be differentiated differently (by voltage or geographic location). The following diagram sets out a simplistic view on how losses are calculated (using fictitious values).


Figure 3 – Determination of losses

Note: Since losses are proportional to the square of the current, real loss factors will differ during different time periods, i.e. they will be higher in peak and standard periods. However, for the sake of simplicity, only the average loss factor in all time periods is used. 6.8 Calculation of losses for partial-service-Distribution-connected customers

If a customer takes energy from a non-Eskom generator that may have an operation which supplies and also purchases energy, it should be determined which of these energy flows contribute to losses: Where it can be shown that the injection of energy into Distribution’s system reduces the energy flow in the normal direction, the losses will be deemed to be zero. (An example would be a distributed generator injecting energy at the end of a rural reticulation line.) In time this will have to be changed, because these generators will demand a credit for the reduction in losses (as is applicable in TUoS, for Eskom’s generators). Where energy is not purchased by Distribution but transported on behalf of a partial-service Distribution customer, the distribution volumes flowing through Distribution’s metering point must be adjusted by the delivered energy (volume and profile) of the partial-service Distribution customer, with an adjustment for losses. This is part of the energy settlement/purchasing process and not a DUoS issue. 7 Embedded TUoS charges (ETUoS)

The embedded TUoS charges (ETUoS) apply to any embedded Distribution customer where the Transmission system is used to transport the energy being used

Generator

Netwo n rk TransmissioCompany

Distributor

Retailer/Customer

WEPS rates

Energy sent out = 120

Sold Energy = 100

100 * TX loss factor (10) x Distribution Loss factor (10) = 20

Customer purchases Distribution losses = 120 Generation connection

Load connection

Distributor pays for 100 +

Generator

Transmission Company

Distributor

Retailer/Customer

Energy sent out = 111.1 Total losses =100 x (1.1 x 1.01 -1) =100 x (0.111) =11.1

Energy delivered to customer = 100

Transmission losses =(100 x 1.1) x (1.01-1) = (100 x 1.1) x (0.01) = 1.1 Transmission loss factor = 1.01

Distribution losses 100 x 1.1 = 10

Distribution loss factor – 1.1


by the customer. The TUoS charges are adjusted by Distribution Division to take into account the diversified demand of all the embedded customers of Distribution. If TUoS charges at MTS level are applied to the undiversified demands of all

customers, the result would be that Distribution receives more revenue for transmission costs than the actual cost to Distribution for this service.

The embedded Transmission charges are calculated by dividing the TUoS charges that Distribution will pay to the Transmission Division at MTS level by the sum of the diversified demands of the downstream customers, adjusted for losses to reflect the demand at MTS level.

This gives a lower rate for the ETUoS charge than the TUoS network charge. The ETUoS charges applicable to the embedded customer are geographically differentiated charges aimed at recovering the cost of the transmission system, i.e. >132 kV. The geographic differentiation will be in accordance with the differentiation as set out in WEPS. The ETUoS charges and loss factors are geographically differentiated according to the zonal differentiated purchase tariff. The appropriate charges must therefore be applied, as determined by the distance of the embedded customer’s POD from Johannesburg. The table below gives the current zonal charges. This differentiation will apply until superseded by the zonal differentiation factors.

The ETUoS charges are calculated for network service customers as follows: ETUoS charge = UC (kVA) x distribution loss factor VU/R x transmission network charge (R/kVAZP) Where ZP = applicable zone price VU/R = at the relevant voltage level and urban/rural differentiation The effect of system losses increases the customer’s utilised capacity as seen at MTS level, where Distribution will purchase the transmission services on behalf of its customer. The customer’s utilised capacity must therefore be increased by the Distribution loss factor for the appropriate transaction voltage.

Table 5 – Geographic differentiation of Transmission charges

Distance from Johannesburg

Zone % Price Differential

0 to 300 km 1 0% 301 to 600 km 2 1% 601 to 900 km 3 2% > 900 km 4 3%

ETUoS charges are passed on to the customer on a R/kVA basis, determined by allocating the applicable transmission charges to all Distribution’s customers, based on their required annual utilised capacity. The applicable rate at the Distribution level and after taking the effect of diversity into account is determined.


The effect of system losses increases the customer’s utilised capacity as seen at MTS level, where Distribution will purchase the transmission services on behalf of its customer. The customer’s utilised capacity must therefore be increased by the Distribution loss factor for the appropriate transaction voltage. 7.1 Transmission reliability services charge for embedded Distribution-customers.

Transmission provides reliability services to ensure the short-term reliability of supply to customers. The Transmission System Operator buys ancillary services (mostly from Eskom Generation) to achieve this. Ancillary services are the services, functions and activities that are essential for the stable and efficient operation of the power system. They include regulation, voltage support, reserves and black-start capability. The cost of reliability services is recovered on a volumetric basis (c/kWh). Distribution purchases reliability services for all embedded Distribution connected customers but excluding international customers from Transmission at MTS level, based on the energy flow at that level. To recover this cost from embedded customers, the measured energy at the customer’s point of delivery will be increased by the loss percentage for the applicable transaction voltage. The cost of reliability services will be equal to the reliability services rate in the purchase tariff multiplied by the energy and increased for losses. Reliability service (RS) charge = delivered energy x distribution loss factor VU/R x RS rate Where VU/R = at the relevant voltage level and urban/rural differentiation For the purpose of this charge, only the energy delivered to the customer will be considered (i.e. exports from the customer into the Eskom system are ignored). 8 Reactive energy charges

All network-service customers will be charged for reactive energy applicable to the high-demand season. The charge in c/kvarh will apply to all reactive energy supplied in excess of 30% (0,96 power factor) of active energy recorded during peak and standard periods. The excess reactive energy is determined per 30-minute integrating period and is accumulated for the month. The excess Vars will be calculated on the absolute value (i.e. for both leading and lagging power factors). Leading and lagging Vars will not be added together. 9 Rate-rebalancing levy (RRL)

All customers inside the borders of South Africa – both direct Transmission or embedded Distribution customers but excluding international customers – will be required to make a contribution to Distribution network subsidies to selected customer groups (in terms of the NERSA’s subsidy framework) through the RRL.


The RRL recovers the network costs associated with the socio-economic programmes implemented in line with government-led initiatives such as the rural electrification programme in the 1980s and the electrification programme in the 1990s. The RRL is part of the DUoS charges and is raised on all energy delivered to direct Transmission and direct Distribution customers as a c/kWh charge. The RRL payable is: RRL Charge = Delivered Energy x DUoS RRL rate. Distribution will charge the levy at the exit point (the point at which load is taken / energy is delivered) as a c/kWh charge, differentiated by the applicable tariff. The charge applies to all energy delivered to loads for both transmission and distribution-connected customers. Levies will be adjusted from time to time, based on the latest cost-of-supply studies and as approved by the NERSA. 10 Conversion/revenue neutral surcharges

An existing customer will see a revenue effect when converting from one tariff to another. This is managed by conversion surcharges. These are not part of DUoS, they are part of the revenue management strategies of Eskom. 11 Customer service and administration charges

Customer services charges are retail charges raised to the end-use customer, and are not part of DUoS charges. Administration charges may be raised as part of DUoS where meter reading and billing services are provided. For partial-service Distribution network-service customers, customer service and administration charges are raised by the Distribution Division to the customer directly. If, however, for whatever reason the administration costs for a particular customer are excessive or the service being provided is non-standard, charges may be raised to recover these costs. 12 DUoS charges geographical differentiation –urban/rural split

As the costs associated with urban and rural networks in Eskom differ significantly, the DUoS network charges and losses have been determined based on a rural/urban split, in order to prevent greater cross-subsidisation than there is currently. The density criteria for rural/urban determination of customers are as per the principles set out in NRS 069. Generally urban and rural are described as:


12.1 Urban

Urban refers to supplies in proclaimed urban areas, or supplies at voltages greater than 22 kVA or supplies where the density is such that they are equal to an urban area. 12.2 Rural

Rural is broadly defined as areas where agricultural activity takes place and/or where the density (customers per km/customers per transformer) is low enough that they are considered to be in a rural area. 13 Entry DUoS charges for embedded distribution generators

Entry DUoS charges are currently not raised for embedded distribution generators – only for loads. In line with the Grid Code, DUoS charges may be raised for embedded distribution generators in the future. All contracts with embedded distribution generators are required to state this. The charging framework for embedded distribution generators for the use of the network is to be developed. 14 DUoS charges for flexible network capacity needs to accommodate Eskom

initiated demand response programme

Customers who require flexible network capacity due to any Eskom initiated, dispatched demand response or on instruction demand response program such as DMP or participation in the reserve market, are permitted to use Distribution’s existing available network capacity (i.e. no additional capacity will be created). They will pay DUoS charges based on the normal chargeable demand and the normal NMD. The normal NMD refers to the reserve capacity plus an acceptable level of contingency. Customers qualifying for flexible network capacity will not pay DUoS network charges for demand exceeding their normal chargeable demand and normal NMD, if this is incurred to make up for production that had been lost due to being scheduled in the reserve market. Eskom and the customer must agree upfront on the conditions and the amount the customer would be allowed to exceed the normal chargeable demand and NMD, which will be deducted from the actual load measured during the agreed periods. Such agreement will only be given if network capacity is available. 15 DUoS charges for contingency supplies

A customer that requires a contingency supply (as back-up in the event of a failure of customer-owned generation or load control equipment) will be provided with such a supply on the basis of continuous supply only, and not on a temporary standby basis. The charges applicable will be the DUoS charges for a credible notified maximum demand.


Contingency demand that is not fixed on a continuous basis will not be contracted for by Distribution as this capacity is always available and must therefore be charged accordingly. 16 DUoS charges for inter-distributor wheeling

Where there is wheeling of energy to a partial-service Distribution-connected customer through one distributor’s network to another, the customer will be required to pay the DUoS charges applicable to the end distributor, i.e. DUoS is raised on the capacity requirement where the energy is delivered. Each distributor in between will include the cost of wheeling in its DUoS charges and contract with the distributor “purchasing” the capacity. Energy purchases are separate from DUoS purchases and are contracted with the Generator supplying the service. The losses and charges that are recovered through the c/kWh unit charge and are related to the energy delivered by the Distributor are, however, relevant for determining the amount to be paid for network services. The following diagram shows the relationship:

Distributor 1 Distributor 2

Embedded Generator

Purchaser of Embedded Generator‘senergy

DUOS chargesinclude wheeled load

Distributor 2 contracts with Distributor 1For load “wheeled” through network and pays the DUOS

charges of Distributor 1

For Distributor 2Revenue requirement includes DUOS charges paid to

Distributor 1 as cost hence DUOS charges will include costs

Pays DUOS charges of Distributor 2for use of the network

Distributor 1 Distributor 2

Embedded Generator

Purchaser of Embedded Generator‘senergy

DUOS chargesinclude wheeled load

Distributor 2 contracts with Distributor 1For load “wheeled” through network and pays the DUOS

charges of Distributor 1

For Distributor 2Revenue requirement includes DUOS charges paid to

Distributor 1 as cost hence DUOS charges will include costs

Pays DUOS charges of Distributor 2for use of the network

Figure 4– Inter-distributor wheeling of energy

Where Distribution Division wheels through another distributor’s network, Distribution will:

enter into contracts with network owners to use their networks to transport power to other Eskom customers, where it is economic and to the benefit of all parties involved in the transaction;

offer to contribute towards the reasonable costs of the network owner for the impact of the transition to cost-reflective wheeling charges for existing agreements as fairly as possible;


promote the efficient expansion of the system and utilise the existing infrastructure optimally for the benefit of the national economy.

17 Operations, maintenance and refurbishment costs

In the absence of the Grid Code (for which the rules are currently being developed), the following applies to maintenance and refurbishment costs in Eskom.

For standard supplies, the cost of operations, maintenance and refurbishment of shared and connection assets are currently included in the DUoS charges.

Customers will be required to pay all refurbishment costs associated with dedicated premium assets. The refurbishment of shared premium assets will be shared / prorated between the customers who have premium supply contracts.

Eskom will raise a maintenance charge for premium equipment where these costs are identifiable. Where the costs cannot be easily identified, these costs will be recovered in the DUoS charges.

18 The notified maximum demand (NMD) rules

The notification of demand and utilised capacity for DUoS charges for all network-service customers (and for retail tariff network charges) will be subject to the NMD rules. These can be found at www.eskom.co/tariffs. 19 Diversity

Distribution may grant the benefit of diversity on the network demand charge (NDC) and the energy demand charge (EDC) to customers with more than one point of delivery (POD) on the same account, who apply for the benefit and comply with the rules and criteria set out in this document. The benefit of diversity will not apply to the network access charge (NAC) or the embedded TUoS charges. The following criteria apply to the end-consumer: The multiple points of delivery shall provide electricity to a single company,

incorporated in terms of the Companies Act. In terms of municipal distributors as licensed by the National Energy Regulator (NERSA), this would refer to a single licensee. This excludes situations where a single licensee contracts his right to another party.

All points of delivery shall be at the same tariff. The multiple points of delivery must be fed off the same Eskom ring or radial

feeder. The points of delivery shall be interconnected through a customer-owned

interconnector so that the customer can internally transfer loads between them, so that if any one of the points of delivery becomes disconnected, the interconnector must be capable of transferring the lesser of the full surplus capacity from any sending point of delivery, or 30% of the NMD from any sending point of delivery, or the full load of the receiving point of delivery.

Where more than two PODs receive the benefit of diversity, any one POD has to be inter-connected with at least one other POD.

http://www.eskom.co/tariffs


By definition, meter panels at feeders to the customer’s network at the same location but different voltages, constitute separate PODs. Meter panels at feeders to the customer’s network at the same location, at the same voltage but feeding "clean" and "dirty" supplies respectively, also constitute separate PODs. To qualify for the benefit of diversity, the customer must be able to transfer load between these different PODs.

The benefit of diversity does not apply to the DUoS network access charge. The allocation of costs already takes diversity into account and therefore cannot be again granted. Also the concept of applying diversity to the network access charge, which recovers capital costs, is not cost-reflective. If two points of supply can swing load between each point, this is irrelevant when determining the fixed cost of the network, since as mentioned the costs are allocated on the simultaneous demand of the networks and therefore already accounted for in the DUoS rates. Diversity may be granted on the DUoS network demand charge as the cost associated with this charge is considered to depend on the amount of capacity used. 20 Transaction voltage for partial-service Distribution connected customers

The transaction voltage is the lowest voltage at which the Distribution’s networks interface either with exit or entry to the network (i.e. the lowest voltage of either the take-off point or injection point). For loads it will be the take-off point, and for embedded distribution generators the injection point. 21 Flow of energy

Physical energy flow is relevant for losses, the RRL and RS charge. The provision of access (capacity) to the network is the basis of compensation to Distribution. 22 Metering and billing of DUoS for partial-service Distribution-connected

customers

Partial-service Distribution-connected customers that are supplied network services by Distribution will contract and be billed for the approved DUoS charges. The energy delivered to the partial-service Distribution-connected customer must be subtracted from the total amount of energy purchased by Distribution for delivery to all customers. Load-profile metering will be required at each point of delivery to the partial-service Distribution customer, as well as at each point where the energy is injected into Distribution’s network, in order to isolate the wheeling load from the partial-service Distribution customer’s other loads. The cost of the metering at the partial-service Distribution customer’s point of delivery as well as any special metering requirements at the injection point(s), that are required only because of the wheeling transaction, shall be debited to the partial-service Distribution customer’s account. Where the partial-service Distribution customer can both import and export metering, bi-directional 4-quadrant metering has to be provided.


All the parties to the transaction have to agree on the responsibility and procedures for meter reading and billing. The parties to such a transaction are as follows:

The Generator for the supply of energy. The Transmission Network Company for the provision of transmission

services, including reliability services. Distribution for the provision of transportation services. The end customer.


23 Definitions

Administration charge The administration charge covers the costs of the administration of the account. It is a contribution towards fixed costs such as meter reading, billing and meter capital. It is a fixed charge payable every month whether electricity is consumed or not.

Annual utilised capacity

Annual utilised capacity is the higher of the customer’s NMD or maximum demand, measured in KVA over a 30-minute integrating period, registered during a rolling 12-month period. The 12-month period covers the current month and the previous 11 months. This is inclusive of any contingency capacity required.

Chargeable demand The highest average demand, in kVA, measured over any demand-integrating period of 30 consecutive minutes (30-minute integrating periods) recorded during the chargeable time periods in a billing month.

Connection charge The connection charge is the charge allocated to the customer for the capital costs of new or additional capacity (irrespective of whether new investment is required or not) that is not covered by the tariff. It is payable in addition to the tariff charges as an up-front payment or as a monthly connection charge where Distribution finances the connection charge.

Consumption The energy used by a customer during a specific period, measured in kWh.

Contestable customers

Customers approved by the NERSA to select a retailer other than Distribution. This customer is considered a network-service customer of Distribution.

Contingency capacity The capacity required from Distribution under a credible scenario if own generation or load control mechanisms fail, i.e. the additional short-term capacity required to satisfy the capacity needed during the contingency.

Direct (Transmission) customer

A customer whose supply is taken directly from the Transmission network, without utilising the Distribution’s network, i.e. nominal supply voltage normally >132 kV or a customer taking a supply at 132 kV but, due to the network configuration, is viewed by the NERSA as a direct Transmission customer.

Distribution The regulated business that constructs, operates and maintains the Eskom distribution system.

Note: Distribution (capital D) will also purchase transmission network services and may provide retail services such as purchasing of energy and, meter reading, billing, customer service etc.

Distribution charges The charges applicable to the use of the distribution system (DUoS charges) and the connection to the system (connection charges).

Distributed Generation

A generator that uses the Distribution system and not the Transmission system to transport energy from the generator to a load. An embedded distributed generator is a customer of Distribution for entry DUoS charges. Where an embedded generator has load as well, the load and generation network requirements will be separated from each other and contracted as such.

Distribution network levy (DNL)

The network access charge and the network demand charge payable by direct Transmission-connected customers towards the historical cross subsidies associated with the current Distribution tariffs.


Distribution system The distribution system network infrastructure operating at nominal voltages

of <132 kV as defined in the SA Grid Code.

Distribution use of system charges (DUoS)

DUoS charges are the unbundled regulated tariffs charged for making capacity available to and for use of the Distribution system by network service customers.

Note: DUoS charges comprise unbundled DUoS network charges, embedded TUoS charges, charges for energy losses – for both distribution and transmission losses– reactive energy charges and levies to recover the subsidies paid to selected customers.

Diversity Diversity arises when two or more loads’ maximum demand do not necessarily occur simultaneously, resulting in the simultaneous maximum demand being < non-simultaneous maximum demand.

Embedded customer (direct Distribution-connected customer)

A customer whose supply is taken from the Distribution system or a customer not considered a direct Transmission customer.

Embedded Distribution generation

See Distributed Generator

Embedded TUoS (ETUoS)charges

The adjusted TUoS charges applicable to direct distribution customers, adjusted to take into account the diversified demand of the embedded Distribution customers.

Entry charges Use-of-system charges payable by generators.

Exit charges Use-of-system charges payable by loads.

Full-service customer A customer that is provided a full service by Distribution, i.e. Distribution purchases energy and transmission services on behalf of the customer and provides the customer with network, energy and other retail services. See also partial-service Distribution customer.

International customer A customer supplied outside the borders of South Africa

Levies Rate components that recover revenue to subsidise selected customers as approved by the NERSA. These include the rate-rebalancing levy and the distribution network levy.

Licensed area of supply

Licensed area of supply is a legally designated area where a particular supplier has the right to supply electricity to end-customers. Distribution’s regulated tariffs for the network business only apply within the supply area for network-service customers as per the distribution license issued by the NERSA. A retailer may also be granted a licence to service certain customers

Maximum demand The highest averaged demand, measured in 30-minute integration periods and in kVA during any time period within a designated billing period (usually one month).

Network access charges (NAC)

A tariff component that is fixed on an annual basis and is charged as a R/kVA on the annual utilised (reserved) capacity. . The NAC may be applied to DUoS charges as well as to retail tariffs.


Network charges A retail version of the DUoS charge. The network charges as do DUoS

charges, recover network costs (including capital, operations, maintenance and refurbishment) associated with the provision of network capacity required and reserved by the customer. The network charge in the retail tariff or in the DUoS charges may or may not be the same as in structure and value.

Network demand charges (NDC)

A charge that is variable on a monthly basis and is charged on the actual demand measured in all peak and standard periods of the billing period. The NDC may apply to DUoS charges as well as retail tariffs.

Network-service customer

A customer that receives only network services i.e. no energy or retail services are provided. Partial-service Distribution customers and KSACS customers are the network service customers of Distribution.

Non-technical losses Losses that arise from theft or unmetered sales

Notified maximum demand (NMD)

The notified maximum demand (NMD) is the maximum demand notified in writing by the customer and accepted by Distribution, that the customer requires Distribution to be in a position to supply on demand during all time periods. It is normally the capacity reserved for a customer in the short term, i.e. the following year and includes contingency capacity.

Partial service Distribution customer

A customer that uses Distribution’s network to transport (wheel) all or only a portion of their energy from a generator to a load and may or may not be an Eskom retail customer. This customer is also considered a network-service customer by Distribution

Point of delivery (POD)

See premise.

Point of supply (POS) A point of supply or POS is a physical point on the electrical network from which electricity is delivered to a customer.

Premise The premise or point of delivery, either a single point of supply or a specific group of points of supply, located within a single substation, at which electricity is supplied to the customer at the same declared voltage and same tariff, and can be a metering or summation point.

Premium supply Where the customer’s specifications result in equipment to be installed above the least-cost technological requirements needed to provide a standard supply and where the customer specifically contracts for a premium supply. (See also standard supply).

Rate-rebalancing levy The rate-rebalancing levy is a separate rate component, shown on the customers’ bills and transparently indicating the explicit levies.

Retail customer A customer that is provided with a retail service (purchasing energy and network services) by Distribution or KSACS.

Retail tariff The regulated tariff that Distribution or KSACS applies to its customers.

Retailer The entity that providers retail services to a customer. Distribution provides full network and full retail services to its customers and KSACS provides full retail services to its customers, purchasing both energy and network services on behalf of its customers.


Rural tariffs/areas Refers to all areas that are sparsely populated and not defined as urban.

Refer to NRS 069.

Service charge The service charge is the fixed charge payable every month. It is a contribution towards costs related to the retail service, e.g. customer service costs. The service charge is differentiated by size. The service charge does not recover any costs relating to network services.

Standard supply The least-cost economic investment required to provide an adequate supply in terms of NRS 048 and in future the Distribution Grid Code (see also premium supply).

Tariff A tariff is a combination of charging parameters applied to recover measured quantities such as consumption and capacity costs, as well as unmeasured quantities such as service costs. The tariff rate, multiplied by the measured service quantities, recover the cost of service.

Transmission system The network infrastructure operating at nominal voltages of >132 kV as defined in the transmission system, transports power to users at voltages of >132 kV as defined by the South African Grid Code.

Transmission use of system charges (TUoS)

TUoS charges are the unbundled regulated tariffs charged for making capacity available and for the use of the transmission system by network-service customers.

Urban areas Areas that are densely populated, proclaimed residential areas or areas designated by Eskom to be urban. Refer to NRS 069.

Use-of-system charges

Regulated unbundled charges for making capacity available and for the use of the system by network-service customers’ tariff charged for the use of the capacity on a network (see transmission and distribution use-of-system charges).

Utilised capacity Utilised capacity is the greater of the customer’s NMD and actual maximum demand registered in all time periods during the previous rolling 12-month window (current month plus previous 11 months). Theoretically the UC should equal NMD, but at times customers under-notify, resulting in a UC > NMD.

WEPS A totally unbundled cost-reflective tariff structure made up of energy rates, levies, service and administration charges, transmission network charges, loss factors, reliability service charges and distribution network charges and loss factors.

WEPS surcharge A charge levied to compensate for the loss of revenue for Distribution due to the conversion from a standard tariff to the WEPS tariff.


23.1 Abbreviations

DG Distributed generation DNL Distribution network levy DMP Demand market participation DUoS Distribution-use-of-system charges EDC Energy demand charge ETUoS Embedded TUoS charge MTS Main transmission station NAC Network access charge NDC Network demand charge NERSA National Energy Regulator of South

Africa NMD Notified maximum demand PSO Peak, standard and off-peak REDS Regional electricity distributors RRL Rate rebalancing levy RS Reliability services SCC Standard connection charge TUoS Transmission-use-of-system

charges UC Utilised capacity WEPS: Wholesale electricity pricing system

distribution use of system charges (duos) policy · 2013-08-30 · eskom’s distribution use of...

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