supplementary and divisional report -...

Shift performance, grow sustainably

20

Supplementary and Divisional Report

2014

12014 Supplementary and Divisional Report

Contents

01

02

03

04

05

06

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About this report 3Structure of the report 3

Leadership and corporate governance 5Membership of the board 6 Membership of Exco 12

Line divisions 17Generation 17Transmission 39Distribution 42Group Customer Services 46

Service functions 53Group Capital 53Primary Energy 53Technology 53Commercial 54Human Resources 55Finance 55

Strategic functions 57Strategy and Risk Management 57Regulation and Legal 58Corporate Affairs 58Group Information Technology 59Sustainability 60

Subsidiary companies 65Eskom Enterprises SOC Limited group 65Escap SOC Limited 70Eskom Finance Company SOC Limited group 71Eskom Development Foundation NPC 72

Appendix A: Statistical tables 77

Navigation icons

Top: Employees who do live-line maintenance need to wear personal protective equipmentBottom: The dam wall of the Braamhoek dam at the Ingula pumped-storage scheme near Ladysmith, KwaZulu-Natal

Becoming a high-performance organisation

Leading and partnering to keep the lights on

Reducing Eskom’s environmental footprint and pursuing low-carbon growth

Securing future resource requirements

Implementing coal haulage and the road-to-rail migration plan

Pursuing private-sector participation

Transformation (including the business productivity programme)

Ensuring Eskom’s financial sustainability

Eskom Holdings SOC Limited

The navigation icons above are used throughout the report to link performance and key performance indicators to strategic objectives

Eskom Holdings SOC Limited2 32014 Supplementary and Divisional Report

This report acts as a supporting document to Eskom’s year end integrated report, which is also published in book format. It is advisable to read the integrated report first

About this report

The integrated report provides a concise analysis of Eskom’s technical, financial, social and environmental performance for the year ended 31 March 2014. It also examines the challenges and risks the company faces, and the steps it is taking to mitigate and manage these. The report explores the opportunities open to Eskom and how it can capitalise on them to create a technically, financially, socially and environmentally sustainable future for the company.

This supplementary and divisional report is not a stand alone report. It supports and expands on the information in the integrated report. It offers detail on the performance of Eskom’s line divisions, key strategic and support functions, and affiliated entities for the 2013/14 year. It is only available online.

The following key items are only available in the integrated report for the year ended 31 March 2014:• About the Eskom group, including Eskom’s business model, its legal and operating structure as

well as the strategic objectives – refer to page 31 in the integrated report• Eskom’s approach to integrated reporting, including defining the material items in partnership

with stakeholders and the key focus areas and risks – refer to page 51 in the integrated report• Eskom’s performance in terms of the shareholder’s compact – refer to page 26 in the integrated

report• The Eskom energy flow diagram – refer to page 41 in the integrated report• Complete key and other performance indicators tables – refer to appendix A and B (pages 170

to 177) in the integrated report

The annual financial statements are available online. Refer www.eskom.co.za/IR2014/01.html

Structure of the reportThis report focuses on certain aspects of Eskom’s performance during the year to 31 March 2014 and is structured as follows: Leadership and corporate governance: Reports on the composition of the board and the executive management committee. It reviews the board committees and initiatives designed to ensure good governance and statutory compliance. This section should be read in conjunction with the corporate governance section in the integrated report (refer page 65 of the integrated report).Line divisions: Discusses the performance of Eskom’s line divisions – Generation, Transmission, Distribution and Group Customer Services, for the year to 31 March 2014, including operating highlights, challenges and future focus areas. Service functions: Discusses the operating highlights, challenges and future focus areas of Eskom’s various service functions, including Group Capital, Group Technology and Commercial, Human Resources and Finance.Strategic functions: Presents an overview of Eskom’s strategic functions. Subsidiary companies: Presents a brief overview of the mandate and current role of Eskom’s subsidiaries – Eskom Enterprises SOC Limited group, Escap SOC Limited, Eskom Finance Company SOC Limited group and the Eskom Development Foundation NPC.Appendices: Provides a 10-year statistical overview, as well as information on Eskom’s electricity assets and customers.

01

The air-cooled condenser fans at Matimba power station in Lephalale


Eskom has a rigorous transformation programme in place and has put in place skills-development programmes to train engineers, technicians and artisans

Eskom needs strong leadership, governance structures and processes to effectively manage its operations in achieving its core mandate of ensuring that South Africa’s energy needs are met

Leadership and corporate governance

For information regarding Eskom’s corporate governance framework, leadership’s key focus areas, internal control and remuneration disclosure, refer to page 65 in the integrated report.

Board of directors Eskom has a unitary board structure comprised of a majority of independent, non-executive directors and two executive directors. The non-executive directors, including the chairperson of the board, and the chief executive are appointed by the shareholder. The finance director is appointed by the board after approval of the candidate by the shareholder.

The term of office of non-executive directors is three years, subject to review at the annual general meeting (AGM). Retiring directors are eligible for reappointment. The appointment of non-executive directors is reviewed annually at the AGM.

02


Leadership and corporate governance continued

Dr Boni Mehlomakulu (41)Independent non-executive director Appointed April 2010

BSc Chemistry and Applied Chemistry – University of Natal MSc Organic Chemistry – University of Natal PhD Chemical Engineering – University of Cape Town

Chief executive: South African Bureau of Standards

Ms Lily Zondo (45)Independent non-executive director Appointed October 2011

BSc (Hons) – University of South Africa BAcc – University of the Witwatersrand Chartered Accountant (South Africa)

Non-executive director: Humulani Investments (Pty) Ltd

Ms Neo Lesela (44)Independent non-executive director Appointed June 2011

BEng (Hons) Industrial Engineering – University of Salford (UK)

Executive director: Kahina Consulting CC

Ms Yasmin Masithela (40)Independent non-executive director Appointed June 2011

BA – University of Cape Town LLB – University of Cape TownHigher Diploma in Company Law – University of the Witwatersrand LLM Tax Law – University of the Witwatersrand

Non-executive director: Afrocentric Investment Corporation Ltd

Mr Mafika Mkwanazi (60) Independent non-executive director Appointed June 2011

BSc Mathematics and Applied Mathematics – University of Zululand BSc Electrical Engineering – University of Natal

Non-executive director: Transnet SOC Limited, Hulamin Ltd

Mr Phenyane Sedibe (44)Independent non-executive director Appointed June 2011

BA (Hons) Political Science/Sociology – University of Durban-Westville MA Social Policy – University of Durban-Westville

Non-executive director: Dicamila SA (Pty) Ltd

Ms Bajabulile Luthuli (41)Independent non-executive director Appointed August 2011

BCom Acc – University of KwaZulu-Natal Higher Diploma Acc – University of KwaZulu-Natal Chartered Accountant (South Africa)

Non-executive director: Airports Company of South Africa SOC Ltd

Ms Chwayita Mabude (44)Independent non-executive director Appointed June 2011

BCompt – University of South Africa

Non-executive director: Airports Company of South Africa SOC Ltd

Ms Queendy Gungubele (55) Independent non-executive director Appointed August 2011

BJuris – University of Limpopo LLM Labour Law – University of Johannesburg Advanced Diploma Labour Law – University of Johannesburg Certificate in Management in Minerals and Mining Policy – University of the Witwatersrand

Mr Zola Tsotsi (67)Independent non-executive directorChairperson of the boardAppointed June 2011

BSc Mathematics and Chemistry – University of Botswana, Lesotho and Swaziland (Lesotho) BSc (Hons) Chemical Engineering – University of Surrey (UK)

Ms Tsholofelo Molefe (45)Finance directorAppointed finance director 14 January 2014

BCompt (Hons) (Certificate in Theory of Accounting) – University of South AfricaBA (Hons) Accounting and Finance – University of East London (UK) Chartered Accountant (South Africa)

Mr Brian Dames (48)Chief executive Appointed June 2010Resigned 31 March 2014

BSc (Hons) – University of the Western Cape MBA – Samford University, United States of America Senior Management Programme – University of Stellenbosch Graduate Diploma in Utility Management – Samford University School of Business, USA

Non-executive director: Industrial Development Corporation, Electric Power Research Institute

Mr Collin Matjila (52)Independent non-executive directorAppointed June 2011Appointed interim chief executive on 1 April 2014

BA Law – National University of Lesotho LLB – University of the Witwatersrand Advanced Management Programme and Senior Executive Programme – Harvard Business School

Dr Bernie Fanaroff (66)Independent non-executive director Appointed May 2010

BSc (Hons) Physics – University of Witwatersrand PhD Radio Astronomy and Astro Physics – University of Cambridge (UK)

Non-executive director: SKA Organisation

Directors’ ages are as at 31 March 2014

Board of directors, company history, education and key directorships at 31 March 2014


Changes in board composition and the company secretaryPlease refer to page 68 in the integrated report for information on the changes in the 2013/14 financial year.

Governance structureThe diagram below sets out Eskom’s key governance structures:

Eskom board

Chief executive

Executive management committee

Audit and risk committee

Investment and finance committee

Tender committee

Social, ethics and

sustainability committee

People and governance committee

Build programme

review committee

Board and committee meetingsMeetings of the board and its committees are scheduled annually in advance. Ad hoc meetings are convened as and when required to address specific material issues.

Seven scheduled board meetings and four ad hoc meetings were held during the year under review.

Attendance of board and committee meetings for the year to 31 March 2014

Members BoardAudit

and riskInvestment

and finance Tender

Social, ethics and

sustaina-bility

People and

governance

Build programme

review

Total number of meetings 11 9 12 12 5 6 10

ZA Tsotsi 10 3 5 9

BA Dames1,2 10 6 2 5 5

BL Fanaroff 8 7 5

Q Gungubele 9 5 6

N Lesela 9 9 6

B Luthuli 9 9 8 8

C Mabude 9 9 10

Y Masithela 8 9 3

MC Matjila 10 8 12 7

B Mehlomakulu 9 12 5

TBL Molefe1,3 4 2 1

ME Mkwanazi 9 12 11 9

SPQ Sedibe 10 5 6

L Zondo 10 6 8

PS O’Flaherty1,4 4 2 4

1. Where executive directors attend meetings but are not members of the committee, their attendance is not reflected here.2. Resigned with effect from 31 March 2014.3. Appointed finance director on 14 January 2014.4. Attended meetings up to 10 July 2013, the effective date of his resignation.5. Caroline Henry, who was the acting chief financial officer from 10 July 2013 to 14 January 2014, is not reflected here, as she was not a director.

CommitteesThe effectiveness of the board is improved by the use of board sub-committees to which it delegates authority without diluting its own accountability.

Statutory and board committees comprise a majority of independent non-executive directors and exercise its powers in accordance with approved terms of reference that define its composition, role, responsibilities and authority. These terms of reference are aligned with the delegation of authority framework, legislative requirements and good governance practices and are reviewed by the committees and approved by the board each year.

Rotek Industries performs maintenance on a transformer which is used in Transmission substations



Audit and risk committee The committee comprises five independent, non-executive directors who are appointed by the shareholder in accordance with the Companies Act (2008). The members of the committee were reappointed at the annual general meeting held on 10 July 2013. Collectively, members have academic qualifications or experience in economics, law, corporate governance, finance, accounting, commerce, auditing, enterprise risk management, industry, public affairs and human resource management.

The committee’s roles and responsibilities include: • The statutory functions of the audit committee set out in the Companies Act and the Public

Finance Management Act (PFMA)• Risk management• Information technology governance• Serving as the audit committee for Eskom’s wholly owned subsidiaries

Six scheduled committee meetings and three ad hoc meetings were held during the year under review. These meetings were also attended by the external auditors, the chief executive, the finance director the acting chief financial officer, assurance and forensic representatives, and other relevant company officials. The assurance and forensic senior general manager and the external auditors have unrestricted access to the chairpersons of the board and this committee.

Investment and finance committee The committee comprises four independent, non-executive directors and two executive directors.

The committee’s responsibilities include: • Reviewing Eskom’s investment strategy and capital programme and making recommendations

to the board• Evaluating and approving business cases for new ventures, projects and investments within

policy frameworks approved by the board• Monitoring the performance of the major capital projects and investments• Approving policies relating to, and monitoring the performance of Eskom’s treasury function• Evaluating the company borrowing programme and financial budgets and making

recommendations to the board

Six scheduled committee meetings and six ad hoc meetings were held during the year under review.

Tender committee The committee comprises five independent, non-executive directors.

The committee’s responsibilities include:• Approving tenders and contracts within its delegated authority• Ensuring that Eskom’s procurement system is fair, equitable, transparent, competitive and cost

effective

Eight scheduled committee meetings and four ad hoc meetings were held during the year under under review.

Social, ethics and sustainability committee The committee comprises four independent, non-executive directors, which includes the chairperson of the board, and the chief executive.

The committee’s responsibilities include: • The statutory functions of the social and ethics committee set out in the Companies Act• Serving as the social and ethics committee for the Eskom’s wholly owned subsidiaries• Scrutinising safety practices at Eskom’s nuclear facility. The committee makes recommendations

on policies, strategies and guidelines relating to nuclear issues• Ensuring that the strategy of the Eskom group and the ethical implementation thereof promotes

the sustainability of the company• Recommending targets and key performance indicators on performance and components of

the operations sustainability index

Three scheduled committee meetings and two ad hoc meetings were held during the year under review.

People and governance committeeThe committee comprises five independent, non-executive directors, which includes the chairperson of the board, and the chief executive. The chief executive recuses himself when matters relating to his remuneration and benefits are discussed.

The committee’s responsibilities include: • Making recommendations on remuneration and other human resource-related policies• Making recommendations on succession planning• Making recommendations on board and committee composition, training and evaluation• Providing oversight on governance matters, including the ethics management programme

Five scheduled committee meetings and one ad hoc meeting were held during the year under review.

Build programme review committee The committee is an ad hoc committee of the board and has been established to provide governance, monitoring and oversight of the capacity expansion programme. The committee comprises four independent non-executive directors, which includes the chairperson of the board, and two executive directors.

The committee’s responsibilities include:• Risk management and mitigation plans relating to the capacity expansion programme• Delivery of the capacity expansion programme on time and within budget• Stakeholder engagement and public communication plans regarding the capacity expansion

programme

Nine scheduled committee meetings and one ad hoc meeting were held during the year under review.

Executive management committeeThe executive management committee (Exco) is established by the chief executive and assists the chief executive to guide the overall direction of the business and exercise executive control in managing day-to-day operations.

Exco comprises the chief executive, the finance director and nine group executives. The group executives, who are appointed by the board, are full-time employees.

Changes in ExcoPlease refer to page 71 in the integrated report for information on the changes in the 2013/14 financial year.



Mr Mongezi Ntsokolo (52)Group executive: TransmissionAppointed April 2011andActing group executive: Human ResourcesAppointed 1 February 2014

BSc Electrical Engineering – University of the WitwatersrandBA (Hons) – University of StellenboschMBA – University of StellenboschAdvanced Management Programme (Harvard) Senior Executive Programme (Wits/Harvard)Programme for Executive Development (IMD)

Chairman: Roshcon SOC Ltd, Rotek Industries SOC LtdDirector: Eskom Enterprises SOC Ltd

Mr Kannan Lakmeeharan (40)Acting group executive: Group Technology and CommercialAppointed July 2013Resigned with effect from 30 April 2014

BSc Electrical Engineering – University of the WitwatersrandMSc Electrical Engineering – University of the WitwatersrandProgramme for Executive Development (IMD)

Dr Steve Lennon (54)Group executive: SustainabilityAppointed September 2000

BSc Chemistry and Applied Chemistry – University of NatalMSc Engineering Physical Metallurgy – University of the Witwatersrand PhD Physical Metallurgy – University of the Witwatersrand

Director: National Advisory Council on Innovation

Ms Ayanda Noah (46)Group executive: DistributionAppointed April 2011

BSc Electrical Engineering – University of Cape TownMBA – International Management CentreExecutive Development Programme – University of the Witwatersrand

Director: Eskom Enterprises SOC Ltd, South African National Energy Association, Energy Access Partnership

Mr Dan Marokane (42)Appointed September 2010 Acting group executive: Group CapitalAppointed July 2013

BSc Chemical Engineering – University of Cape TownMSc Engineering Petroleum – Imperial College (UK)MBA – University of Cape Town

Chairman: Eskom Enterprises SOC Ltd External member: UK High Commission Board of Management

Mr Brian Dames (48)Executive director and chief executiveAppointed June 2010Resigned with effect from 31 March 2014

Refer to the board of directors for Brian’s qualifications and directorships

Ms Tsholofelo Molefe (45)Group executive: Group Customer Services Appointed April 2011 until 19 January 2014Finance directorAppointed 14 January 2014

Refer to the board of directors for Tsholofelo’s qualifications and directorships

Executive management committee, company history, education and key directorships at 31 March 2014

Mr Thava Govender (45)Group executive: Generation Appointed September 2010

BSc Chemistry and Biochemistry – University of Durban-WestvilleBSc (Hons) Energy Studies Nuclear and Fossil – University of JohannesburgManagement Development Programme – University of South AfricaReactor Technology Course for Utility Executives – Massachusetts Institute of Technology, USA

Director: Roshcon SOC Ltd, Rotek Industries SOC Ltd

Mr Collin Matjila (52) Independent non-executive director Appointed to the board in June 2011Appointed interim chief executive on 1 April 2014

Refer to the board of directors for Collin’s qualifications and directorships

Ms Erica Johnson (45)Group executive: Enterprise DevelopmentAppointed February 2008andActing group executive: Group Customer ServicesAppointed 20 January 2014

BSc Electrical Engineering – University of Cape Town MSc Electrical Engineering – University of Cape TownMBA – University of the Witwatersrand

Exco members’ ages are as at 31 March 2014



Executive management committee meeting attendance for the year to 31 March 2014

Total number of meetings 17

BA Dames1 17

BE Bulunga2 9

T Govender 16

C Henry3 6

E Johnson 16

K Lakmeeharan4 13

SJ Lennon 17

D Marokane5 16

TBL Molefe6 16

A Noah 12

MM Ntsokolo7 14

PS O’Flaherty8 4

1. Resigned with effect from 31 March 2014.2. Went on early retirement, effective 31 January 2014.3. Attended as acting chief financial officer between 10 July 2013 and 14 January 2014. 4. Attended as acting group executive: Group Technology and Commercial with effect from 10 July 2013. Resigned with effect from 30 April 2014.5. Attended as group executive: Group Technology and Commercial until 9 July 2013 and as acting group executive: Group Capital with effect

from 10 July 2013.6. Attended as group executive: Group Customer Services until 14 January 2014, and thereafter as the finance director.7. Attended as group executive: Transmission for the full year, and as acting group executive: Human Resources with effect from 1 February 2014. 8. Resigned with effect from 10 July 2013.

One of the units at the Ankerlig open-cycle gas turbine station in Atlantis near Cape Town



Line divisions

GenerationMandateTo optimally operate and maintain Eskom’s electricity generating assets for the duration of their economic life.

The Generation division operates 27 power stations with a total nominal capacity of 41 995MW, comprising 35 726MW of coal-fired stations, 1 860MW of nuclear, 2 409MW of gas-fired and 2 000MW hydro- and pumped-storage stations, as well as the 3MW wind farm at Klipheuwel.

Operating highlights • Safety performance has shown an improvement, with 28 lost-time injuries (LTIs) and a lost-time

incidence rate (LTIR) of 0.21 for the year to March 2014, compared to 0.37 for the same period in 2012/13

• The contractors’ safety performance also reflects an improvement, with LTIR improving from 0.41 in 2012/13 to 0.26 in 2013/14

• Eskom’s particulate-emissions performance for 2013/14 was 0.35 kg/MWhSO which was marginally better than the target of 0.36 kg/MWhSO (2012/13: 0.35 kg/MWhSO)

• Water usage for the financial year showed improvement at 1.35 L/kWhSO compared to the previous year (2012/13: 1.42 L/kWhSO) and against a target of 1.39 L/kWhSO)

• Environmental non-conformances identified in the pre-compliance notice issued to Lethabo power station were successfully resolved

• Koeberg Unit 2 ended its record run of 484 days when it was shut down for refuelling outage number 20 on 24 March 2014, improving on the Koeberg Unit 1 record of 454 days set in September 2001. This is Koeberg’s first continuous run from one scheduled refuelling outage to another

• On 23 October 2013, Koeberg Units 1 and 2 achieved a new record of 184 days with both units operating simultaneously. The units also sustained zero unplanned automatic grid separations (UAGS) trips during the year

Operating challenges • Regrettably, two contractor fatalities occurred at Lethabo and Duvha power stations • Rotational load shedding was implemented for 14 hours on 6 March 2014• On 30 March 2014, Eskom experienced an over-pressurisation incident in the boiler of Unit 3 at

Duvha power station, taking the 575MW unit out of service for a prolonged period• Continued system pressures and poor-quality coal limit opportunities for planned plant

maintenance and reduction of load losses • The challenge of sustainably improving Generation’s technical performance in the long term,

while minimising the impact on the security of supply

03Eskom’s line divisions – Generation, Transmission, Distribution and Group Customer Services – are responsible for operating the business on a day-to-day basis. This section contains the operational reports for these divisions for the year to 31 March 2014

Lethabo power station near Vereeniging burns some of the lowest grade coal in the world


• A decision on the request for a variation of Kriel power station’s atmospheric emission licence was received on 28 February 2014. The decision does not allow for continuous operation of the station at full-rated power on a sustainable basis

• The enforcement actions initiated by the Department of Environmental Affairs against Camden and Matimba power stations in 2012 for alleged non-compliance with environmental requirements, and to which Eskom responded in the same year, remain unresolved. Feedback from the authorities on the matter is outstanding

• Coal-related energy losses were experienced, mainly at Tutuka and Arnot power stations, due to poor coal quality and supply issues

• With the outage plan and the outage backlog being spread over five years, the turnaround in UCLF performance will not be seen immediately. In terms of the Generation sustainability plan, it is estimated that 18 months will be required to achieve stabilisation, whereafter an improvement in UCLF is expected to be observed

• While there is commitment to adhere to the maintenance outage plan, the unpredictable performance of power stations and tight reserve margins still require that some outages are deferred. The result is a further delay in the turnaround of power station performance

Future focus areas• There is a need to achieve a predictable and sustainable performance within the Generation

sustainability strategy of the “80:10:10 target performance base” over five years to 2017/18 (80% EAF, 10% PCLF and 10% combined UCLF and OCLF, with 9% UCLF and 1% OCLF). The 2013/14 financial year is the first full year on this strategy

• In 2014/15, a 10% PCLF level will be targeted. Of this target, 8% will be used for scheduled maintenance with limited flexibility and 2% will be utilised for short-term emergency maintenance including weekend maintenance

• Managing the risks regarding the extension of ashing facilities on additional land adjacent to power stations, and the implications of mining and prospecting rights limiting Eskom’s access to such land

• Eskom aims to achieve compliance to environmental requirements, specifically: atmospheric emission licences, waste management permits, water use licences, environmental authorisations and biodiversity related permits and will continue to implement the compliance programme1

• Eskom is seeking to obtain a five-year postponement for some power stations of the minimum emission standards in terms of section 6 of the Listed Activities and Associated Minimum Emission Standards1

• To achieve the minimum level of particulate emission discharge, Eskom will retrofit the fabric filter plant to at least five power stations up to and including 20171

• Continue implementing the programme to achieve Blue drop (water treatment) and Green drop (sewerage works) certification by March 2016

• Preparation and resource allocation is in progress to ensure adherence to the requirements of the promulgated construction regulations regarding monthly safety inspections for all contractors on site

Benchmarking Coal-fired stationsGeneration benchmarks the performance of its coal-fired power stations against those of the members of VGB (Vereinigung der Großkesselbesitzer e.V), a European-based technical association for electricity and heat generation industries. VGB’s objective is to provide support to and facilitate the improvement of operating safety, environmental compatibility and the availability and efficiency of power plants used for power and heat generation, either in operation or under construction.

When interpreting the results of the benchmark, it should be noted that the operating regimes of the other utilities contributing to the VGB database may not be the same as those of Eskom.

The graphs that follow illustrate the results of the benchmarking for the 2000 to 2012 calendar years (the VGB results for 2013 are not yet available). The VGB data for 2012 reflects information gathered from 123 VGB member generating units, but does not include data from Eskom’s units. The Eskom data on the graphs has been plotted to the end of the 2013 calendar year to show the trend. The trend in Eskom’s performance continues to be worse than the VGB benchmark.

The availability indicator of the top performing stations in the VGB benchmark has historically been consistent, with a slight decline in 2012. The availability of the stations in the median and worst quartiles has been declining. The benchmarking information indicates that Eskom units are on a par with the VGB benchmark with respect to planned maintenance in the median and low quartiles. The PCLF of Eskom’s best performing units was significantly better than that of VGB benchmark units. However, the UCLF trend is not at the same level. In the 2012 calendar year Eskom’s units’ performance was worse than the VGB benchmark on all quartiles, with the trend for 2013 indicating that Eskom units will perform even worse than the benchmark. With the very tight demand versus supply situation and the need to keep the lights on, Eskom has focused on risk-based and statutory maintenance rather than the reliability and design-based maintenance needed to improve the UCLF performance.

With respect to the use of available plant (energy utilisation factor (EUF)), all Eskom coal-fired units are performing at a level close to, and in many cases above the VGB best quartile. This indicates that Eskom is operating its power station units at much higher load factors than the VGB benchmark units, negatively impacting on plant performance.

Eskom’s use of available plant (EUF) is on the VGB best quartile, although the mix in the loading has changed with the European utilities no longer operating on coal base load. The trend is indicating that Eskom’s units have consistently maintained a high EUF. This said, Eskom units are trending significantly higher than VGB compared to the previous years, due to the need to load available plant more to meet demand.

Line divisions continued

1. For risks relating to atmospheric emission licences, please refer to the “Reducing Eskom’s environmental footprint and pursuing low-carbon growth” section (page 127) in the integrated report.


Benchmarking EAF % all coal sizes 2000-2012100

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5520012000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Eskom best quartile VGB best quartile VGB median Eskom median Eskom worst quartile VGB worst quartile

Ene

rgy

avai

labi

lity

fact

or (E

AF

%)

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20

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020012000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Benchmarking UCLF % all coal sizes 2000-2012

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lann

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apab

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loss

fact

or (U

CLF

%)


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020012000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Benchmarking PCLF % all coal sizes 2000-2012

Pla

nned

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abili

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ss fa

ctor

(PC

LF %

)


Benchmarking EUF % all coal sizes 2000-201295

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3520012000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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Koeberg nuclear power station Eskom is affiliated to the World Association of Nuclear Operators (WANO) and the Institute of Nuclear Power Operations (INPO), and South Africa is a member of the International Atomic Energy Agency (IAEA). These affiliations enable Eskom to benchmark performance, conduct periodic safety reviews, define standards, disseminate best practice and train personnel.

The last IAEA safety review was conducted during August 2011 with a follow-up review in April 2013. The last WANO peer review was conducted in November 2011, with a follow-up mid-cycle review conducted in April 2013, in preparation for the next WANO peer review scheduled for July 2014.

Through the INPO, Eskom has obtained accreditation from the National Nuclear Training Academy in the United States for its systematic approach to training of licensed and non-licensed nuclear operators at Koeberg. Eskom is the only utility outside the United States of America to receive such accreditation.

The WANO performance indicators provide a quantitative indication of plant performance in the areas of nuclear plant safety and reliability and personnel safety. There are currently 14 WANO performance indicators in use worldwide, as well as a performance indicator index that uses 10 of these 14 performance indicators.

A selection of WANO performance indicator graphs are shown below. Benchmark data is for 10 calendar years, with a Koeberg mean (the average of two units) to 31 March 2014.

Benchmark trends have remained fairly consistent, with the exception of collective radiation exposure, which has shown a gradual improvement for all quartiles over the period shown: • The Koeberg 12-month unit capability factor, previously in the third or worst quartiles, is on an

improving trend around the median value• The Koeberg 12-month unplanned capability loss factor has fluctuated between third and worst

quartiles, but is currently on an improving trend• The Koeberg 12-month unplanned automatic scrams per 7 000 hours has been in the third

quartile, but has improved to zero at 31 March 2014. Note that for the period shown, both median and best quartile values are zero

• The Koeberg 12-month collective radiation exposure has mostly been in the third quartile, but has now improved to the second quartile

• The Koeberg 36-month collective radiation exposure has mostly been in the third quartile, but has now improved to the second quartile

• The Koeberg 18-month (fuel cycle based composite) performance indicator (INPO) index has mostly been in the worst quartile, but has now improved to second quartile

Koeberg 12-month unit capability factor (UCF) vs the median, best and worst quartile for all pressurised water reactor (PWR) units worldwide

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Unit capability factor

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mar 2014

Koeberg mean Worldwide PWR worst quartile Worldwide PWR median Worldwide PWR best quartile

UC

F %

Koeberg 12-month unplanned capability loss factor (UCLF) vs the median, best and worst quartile for all pressurised water reactor (PWR) units worldwide

0

5

10

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Unplanned capability loss factor

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mar 2014

UC

LF %




Koeberg 12-month unplanned automatic scrams per 7 000 hours (UA7) vs the median, best and worst quartile for all pressurised water reactor (PWR) units worldwideThe worldwide best and worldwide mean graph lines are both close to zero on the graph below

Unplanned automatic scrams

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mar 2014

UA

7 ra

te p

er 7

000

hou

rs


1.6

1.4

1.2

1.0

0.8

0.6

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Koeberg 12-month collective radiation exposure (CRE) vs the median, best and worst quartile for all pressurised water reactor (PWR) units worldwide

Collective radiation exposure

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mar 2014

man

-Sie

verts

per

uni

t


1.6

1.4

1.2

1.0

0.8

0.6

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Koeberg 36-month collective radiation exposure (CRE) vs the median, best and worst quartile for all pressurised water reactor (PWR) units worldwideThe smoothing over a longer period than used in the benchmarks above takes into account the frequency of refuelling outages, of which three occur per two-year moving window

Collective radiation exposure

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mar 2014

man

-Sie

verts

per

uni

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1.2

1.0

0.8

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Koeberg INPO index vs the median, best and worst quartile for the units that are members of WANO Atlanta Centre. This sample includes various reactor types

60

65

70

75

80

85

90

95

100

105

INPO index

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mar 2014

Inde

x %

Koeberg mean WANO-AC worst quartile WANO-AC median WANO-AC best quartile



PerformanceKey financial statistics for the year ended 31 March 2014

R millionActual

2013/14Actual

2012/13Actual

2011/12

Operating maintenance costs1 7 763 5 945 4 936

Capital expenditure (excluding capitalised borrowing costs)2 10 200 8 512 6 590

Total property, plant and equipment3 93 465 85 169 73 728

1. This is after the capitalisation of costs which are included in capital expenditure. The gross maintenance for Generation, before capitalisation is R14.3 billion (2012/13: R10.6 billion).

2. Includes capitalised maintenance costs.3. Balances for property, plant and equipment represent the net book value.

Operating maintenance costsThe year-on-year maintenance cost has grown incrementally as a result of extensive planned and unplanned maintenance. The UCLF figure of 12.61% and the PCLF figure of 10.50% are indicative of the level of maintenance that was executed.

Capital expenditure (excluding capitalised borrowing costs)There has been extensive capital expenditure on general overhauls. This is in support of the Generation sustainability strategy.

Total property, plant and equipmentThe two factors that have contributed significantly to the growth in property, plant and equipment is the commissioning of Komati Unit 3 (transferred from Group Capital) and extensive capital expenditure on general overhauls.

Technical performance for the year ended 31 March 2014

Indicator and unitTarget

2013/14Actual

2013/14Actual

2012/13Actual

2011/12

EAF, %1 80.00 75.13 77.65 81.99

Normal UCLF, %2 9.00 12.61 12.12 7.97

Less: Constrained UCLF, %3 – 1.63 3.41 –

Underlying UCLF, %4 – 10.98 8.71 –

Normal PCLF, %5 10.00 10.50 9.10 9.07

Underlying PCLF, %6 – 10.77 – –

Normal OCLF, %7 1.00 1.75 1.13 0.97

Underlying OCLF, %8 – 3.11 – –

UAGS/7 000, ratio9 4.00 5.24 4.09 3.19

EUF, %10 80.41 83.55 81.87 79.43

1. EAF – measures plant availability, including planned and unplanned unavailability and energy losses not under plant management control.2. Normal UCLF – measures the lost energy due to unplanned energy losses resulting from equipment failures and other plant conditions.3. Constrained UCLF – is the UCLF that was a result of emissions and short-term related UCLF due to system constraints to meet the “Keeping

the lights on” objective. This is apportioned between PCLF and OCLF.4. Underlying UCLF – is the UCLF that is the difference between normal and constrained UCLF and that is still within Generation control.5. Normal PCLF – is energy loss during the period because of planned shutdowns.6. Underlying PCLF – is the sum of the normal PCLF and the constrained PCLF (the apportionment of the constrained UCLF (refer 3. above) that

is assigned to PCLF).7. Normal OCLF – is energy loss during the period because of unplanned shutdowns due to conditions that are outside Generation management

control.8. Underlying OCLF – is the sum of the normal OCLF and the constrained OCLF (the apportionment of the constrained UCLF (refer 3. above) that

is assigned to OCLF).9. UAGS/7 000 – indicates the ratio of unplanned unit trips per 7 000 operating hours.10. EUF – measures the degree to which energy was produced compared to the extent to which it could have been produced.

Generation capacityDespite the constrained system, more planned maintenance was done in 2013/14, including significantly more maintenance that was scheduled in the winter months. The power plant availability (EAF) of 75.1% for the year to 31 March 2014 (2012/13: 77.6%), against a target of 80%, reflects the increase in both unplanned unavailability, as well as the increased planned maintenance. Generation aspires to reach the 80% EAF target over five years as it increases its efforts and focus in driving sustainability of Generation’s assets. A total of nine maintenance outages were scheduled and completed – a good achievement to meet winter demand and do more maintenance than before. Refer to the maintenance backlog on page 32.

As generating units are taken off-load for maintenance during periods of constrained capacity, this necessitates increased usage of the open-cycle gas turbine (OCGT) stations when Eskom is unable to meet demand. The total production by the OCGT stations reached 3 621GWh against a budget of 1 284 GWh in 2013/14 (2012/13: 1 905GWh). The actual load factor on these plants for the year to March 2014 was 17.16%, against a budgeted factor of 6.08% (2012/13: 9.03%).

Damage to the coal conveyor at Duvha power station



The board approved an increase in the original 2013/14 budget for the diesel usage at the OCGT stations from R3.6 billion to R11.3 billion for the year, subject to shareholder support. The total OCGT stations spend for 2013/14 was R10.6 billion (2012/13: R5.0 billion), a significant over-expenditure on the original budget. This has a significant negative impact on Eskom’s financial health and ratios.

The following mechanisms, over and above the use of OCGTs, assisted Eskom to meet the daily peak demand during the year: • The support of customers with interruptible load agreements (i.e. the Bayside, Hillside and

Mozal aluminium smelters)• Demand-market participation (DMP) and emergency DMP• Independent power producers• Demand-side management (DSM)• Municipality assistance • More expensive tariffs during peak periods encouraging customers to reduce demand

Significant events during the yearCoal conveyor fire – disruption of normal coal supply to Duvha power stationOn 20 December 2013 a fire broke out at the overland coal conveyor transfer house outside the Duvha power station security fence, caused by a conveyor rubbing against the structure. Although the belt had tripped out, a fire had started. This incident negatively impacted coal stock days and coal cost for the power station.

The recovery of the one conveyor stream was completed at the end of March 2014. There are still some defects that need to be addressed but coal is being delivered via this conveyor. The recovery of the second stream is still in progress and is targeted for completion in the first quarter of the new financial year.

Rotational load shedding on 6 March 2014Rotational load shedding took place for 14 hours on 6 March 2014 from 08:00 to 22:00. Refer to the “Leading and partnering to keep the lights on” section (page 103) in the integrated report for more information.

Duvha Unit 3 over-pressurisation incidentOn 30 March 2014, Eskom experienced an over-pressurisation incident in the boiler of Unit 3 at Duvha power station, taking the 575 MW unit out of service. As the incident happened right at the end of the year, it has no material impact on the UCLF for the current year. However, as Unit 3 will be out of service for a prolonged period, it will have a material impact on UCLF going forward, until such time as the repairs have been completed. One person was treated for dust inhalation but no other injuries were reported. The incident is still under investigation.

Plant performanceEAFThe generating plant availability has decreased during the year to March 2014, compared to the same period in the previous year, as a result of an increase in unplanned unavailability as well as the increased planned maintenance. The overall availability (EAF) is below target.

UCLFThe unplanned capability loss factor (UCLF) for the year to March 2014 is slightly higher than previous years, indicative of ageing plant and related deteriorating plant health conditions as well as the impact of the increased utilisation of the plant. The UCLF for 2013/14 was 12.61% compared to 12.12% in 2012/13 and 7.97% in 2011/12.

Breakdown of system UCLF (%)1

Actual 2013/14

Actual2012/13

Normal UCLF 12.61 12.12

Less: Constrained UCLF 1.63 3.41

Underlying UCLF 10.98 8.71

Less: Total major/significant incidents 1.58 2.69

Underlying UCLF excluding major/significant events 9.40 6.02

Less: Outage slips 1.15 0.84

Underlying UCLF excluding major/significant events and outage slips 8.25 5.18

1. The breakdown of UCLF as shown above has only been tracked from 2012/13, thus comparatives prior to this are not available.

The main contributors to UCLF were:

Partial load lossesThe partial load losses continue to contribute significantly to the system total unplanned losses, and continue to increase. The unplanned capability loss factor attributable to these losses was 5.24%, contributing 42% of the system UCLF.

The main power stations that contributed to these energy losses to date were: • Duvha 24%• Kriel 15%• Majuba 13%• Arnot 12%

The main reasons for the partial load losses were problems at the draught plant (23%), mills (16%), turbine (14%), gas cleaning (10%) and feed water (10%).

Boiler tube failures Boiler tube failures are typically the result of welding repair damage, corrosion, fly ash erosion, etc. In the year to March 2014, there were 210 boiler tube failures, with a UCLF of 2.18%, contributing 17% to the system UCLF. This is higher in both number and UCLF contribution when compared to the previous year, when a total number of 191 failures and a UCLF contribution of 1.95% were recorded.



The main power stations that contributed in the current year were, in order of energy loss:• Kriel 19%• Duvha 13%• Matla 13%• Lethabo 11%• Majuba 10%

Major/significant load lossesThe unplanned capability loss factor against major/significant events was 1.58%. The table that follows lists the events that occurred:

Unit Cause UCLF%

Drakensberg Unit 4 Stator earth fault 0.270%

Hendrina Unit 3 Fabric filter plant fire 0.229%

Hendrina Unit 2 Turbine blade failure 0.206%

Majuba Unit 1 Turbine shaft bearing failure 0.166%

Kriel Incline conveyor fire 0.140%

Hendrina Unit 1 Low-pressure turbine blade failure 0.123%

Matla Unit 1 Boiler tube failures after the general overhaul 0.082%

Duvha Overland conveyor fire 0.069%

Lethabo Unit 5 Generator transformer failure 0.068%

Kriel Unit 5 Condenser tube leaks 0.045%

Tutuka Unit 1 Boiler tube failure 0.031%

Multiple unit trips 0.012%

Duvha Unit 3 Over-pressurisation incident 0.004%

Other 0.136%

Monthly UCLF % over the last three years

UCLF 2013/14 2012/13 2011/12

April 16.06 8.20 6.92

May 10.86 9.51 7.15

June 9.62 7.27 6.02

July 9.89 8.53 5.73

August 11.88 10.79 6.85

September 11.40 15.11 7.69

October 12.06 13.40 7.51

November 13.99 12.48 11.16

December 14.33 13.43 8.18

January 11.36 14.10 10.99

February 12.83 15.04 9.27

March 16.01 15.97 8.07

EUF The utilisation of available plant capacity (EUF) was significantly higher than target and higher than the previous four years due to the increased loading of available plant to meet the demand. The overall fleet EUF was at 83.55% (2012/13: 81.87%). The utilisation of the coal-fired units for the year to 31 March 2014 was 92.73%, nuclear at 99.52% and peaking stations (including the OCGT stations) achieved 20.72%.

UAGS/7 000Unplanned automatic grid separations (UAGS) per 7 000 operating hours is a reliability indicator. For the year to 31 March 2014, the UAGS/7 000 ratio is 5.24, with 527 UAGS trips (2012/13: UAGS/7 000 ratio of 4.09 and 409 UAGS trips).

OCLFThe unplanned unavailability percentage due to factors outside of management control (OCLF) for the year to 31 March 2014 was 3.11% (including constrained UCLF) and 1.75% (excluding constrained UCLF). This is mainly the result of coal-related load losses experienced mainly at Tutuka and Arnot power stations, due to coal supply and coal quality challenges.

PCLFAs of March 2014, PCLF (reflecting the energy loss during the year because of planned shutdowns) was 10.77% (including constrained UCLF) and 10.50% (excluding constrained UCLF) against a target of 10.00%. On average, more planned maintenance has been done this year than in the previous six years, resulting in a higher PCLF. Although the PCLF has increased, the bulk of the planned maintenance that was executed was risk-based unscheduled maintenance rather than design-based preventative maintenance.



As seen below, during the 2013/14 year the monthly PCLF has increased over the winter months when traditionally minimal planned maintenance was performed.

Monthly PCLF % over the last three years

PCLF 2013/14 2012/13 2011/12

April 7.94 13.81 8.66

May 10.48 10.36 6.44

June 9.79 7.41 4.59

July 7.98 5.45 2.90

August 6.96 5.44 6.01

September 9.58 5.27 7.99

October 11.87 8.74 9.48

November 12.04 9.63 7.70

December 13.50 13.06 15.62

January 14.69 13.07 12.57

February 13.69 9.70 13.10

March 9.81 8.85 13.51

Maintenance backlog reduction strategiesEskom’s coal-fired generating units require routine maintenance to ensure that they meet technical performance requirements, are safe to operate and do not violate environmental laws.

Refer to the “Leading and partnering to keep the lights on – decreasing the maintenance backlog” section (page 114) in the integrated report for more information.

The power station enhancement projectThe power station enhancement project quick-win actions have almost been completed:• All waves were rolled out by the end of June 2013, as per schedule• Majuba, Kendal, Matla and Matimba have implemented 100% of their quick-win actions• Kriel, Hendrina, Tutuka and Lethabo have completed between 80% and 96% of their quick-win

actions• Implementation of quick wins for wave four commenced as per schedule

Medium- and long-term actions are outage dependent and are therefore impacted by the deferment of outages. While this project operated as a standalone project in 2012/13, it has now been incorporated with the Generation sustainability strategy and implementation is continuing.

Energy-efficiency improvement programme The energy-efficiency improvement programme aims to improve the heat rate of the units at Eskom’s coal-fired stations. Heat rate measures the conversion rate of heat from the energy source (coal) to electricity generated. Improvements would indicate an improvement in plant performance and will help reduce Eskom’s environmental footprint, including its carbon emissions.

Routine maintenance is performed on a power station turbine blade



The heat rate gap analysis at each station has been converted into an equivalent MW electricity for units sent out (MWe USO) into the grid. Measurement and verification studies were conducted using the services of independent accredited SANS 50010 institutions by comparing MWe USO to a known baseline of performance.

Average annual station heat rate (MJ/kWh)

Station 2013/14 2012/13 2011/12

Arnot 12.09 12.35 2.58

Camden 13.25 12.64 13.38

Duvha 11.51 11.11 11.10

Grootvlei1 13.35 12.25 –

Hendrina 12.77 13.35 12.91

Kendal 11.72 11.30 10.36

Komati1 – – –

Kriel 12.01 11.34 11.73

Lethabo 10.32 10.44 10.55

Majuba 11.46 10.66 11.30

Matimba 11.14 11.19 10.94

Matla 10.83 10.69 11.15

Tutuka 10.97 11.05 11.75

Average coal-fired power station heat rate 11.49 11.25 11.46

1. Grootvlei and Komati are return-to-service stations and thus have less historic plant performance data compared to other stations.

While some stations have attained and sustained heat rate performance improvement gains, the overall heat rate (plant performance) improvements in 2012/13 have not been sustained, with a 2.1% deterioration in 2013/14 compared to 2012/13. This deterioration is attributed to the deferment of outages that have impacted the execution of technical projects as well as coal qualities at certain power stations.

Koeberg performanceUnit 1• Koeberg Unit 1 was returned to service on 22 April 2013, following the shutdown that occurred

on 20 February 2013 to repair an electrical switchboard fault• Unit 1 was taken off load for refuelling outage number 20 on 11 November 2013 and returned

to service after 49 days, on 29 December 2013. This was slightly later than planned

Unit 2• On 24 March 2014, Koeberg Unit 2 was shut down for refuelling outage number 20, having

been online for 484 days since 25 November 2012, when it was returned to operation after the previous outage. This is the first time in Koeberg’s history that one of the units completed an uninterrupted run from one scheduled refuelling outage to the next

• The unit operated at a load factor of 97.1% for this period, and sent out 10 490 917MWh to the grid. The production cycle included a two-month period of coast-down at the end of the cycle. This results in the unit output slowly reducing from 100% to about 60% prior to shutdown, and hence the final load factor was below 100%

On 23 October 2013 Koeberg Units 1 and 2 achieved a new record of 184 days with both units operating simultaneously.

Koeberg’s units sustained zero UAGS trips during the year.

Safety Regrettably, two contract employees lost their lives. Of these, one related to a fall from height and one related to an electrical contact incident.

Notwithstanding the fatalities, the safety performance for Generation has improved compared to the previous year. Generation experienced 28 lost-time injuries (LTIs) during the 2013/14 financial year compared to 55 for 2012/13. The 28 LTIs include eight noise-induced hearing losses. The 12-month moving average LTIR was 0.21 (target: 0.36), compared to 0.37 for the same period in 2012/13. The number of days to recuperate from injuries is also showing a decrease.

The 2012/13 LTIR for Generation is now reflected as 0.37 because of the late reporting of a noise-induced hearing loss incident.

The performance of Generation contractors is also showing an improvement. During the year, 34 LTIs (LTIR 0.26) were reported compared to 54 LTIs (LTIR of 0.41) in the 2012/13 financial year. The LTIs in 2013/14 include the two fatalities as well as a noise-induced hearing loss incident.


Koeberg Unit 2 completed an uninterrupted run from one scheduled refuelling outage to the next


Public exposure to radiationPublic exposure to radiation arising from Koeberg operations remains well within the limits set by the National Nuclear Regulator. Exposure to radiation is measured in units of milliSievert (mSv). The limit recommended by the International Atomic Energy Agency for public exposure to radiation is 1.0 mSv per year. However, the National Nuclear Regulator has set a stricter limit of 0.25 mSv per year for South Africa.

The following graph indicates that the average public exposure to radiation arising from Koeberg’s operations has been less than 0.005 mSv in recent years – less than 2% of the stricter limit imposed by the National Nuclear Regulator.

Public individual radiation exposure due to effluents from Koeberg

2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14

UC

F %

0.009

0.008

0.007

0.006

0.005

0.004

0.003

0.002

0.001

0

Environmental performance Particulate emissionsEskom’s particulate emissions performance for 2013/14 was 0.35 kg/MWh sent out, which was better than the target of 0.36 kg/MWhSO, and the same as the performance for 2012/13.

Power stations with fabric filter plants continue to sustain low emission levels. However, challenges are experienced with emissions at many of the stations with electrostatic precipitators. This is due to a range of factors, including capacity constraints and lack of access to plant for maintenance and repairs, as well as maintenance execution. At some stations, a combination of a decline in coal quality and the high load factors result in the dust-handling plant being over-burdened.

Compliance with National Emission StandardsRefer to the “Reducing Eskom’s environmental footprint and pursuing low-carbon growth” section (page 127) in the integrated report for more information regarding Eskom’s retrofit programme to reduce emissions as well as the impact of the new atmospheric emission licences on Eskom.

Emission offsetsThere is support from both the Department of Public Enterprises and the Department of Environmental Affairs for the implementation of household emission offset projects (for example, through insulating houses and subsidising liquid petroleum gas to replace the use of coal or wood for heating and cooking in houses). Though these offsets will not reduce Eskom’s emissions, it will improve ambient air quality and reduce human exposure to high levels of pollution at a fraction of the cost of emission abatement retrofits at power stations. Eskom is investigating options, and is currently initiating a household emission offsets pilot project to test the effectiveness of this approach.

Water performanceWater usage for all commissioned power stations for the year to 31 March 2014 was at 1.35 litres per kilowatt hour sent out (L/kWhSO), better than the target of 1.39 L/kWhSO (2012/13: 1.42 L/kWhSO).

The improved performance is due to an increase in the proportion of energy generated by dry-cooled stations, as well as increased opportunities for maintenance, implementation of initiatives identified by the water management task teams, good rains and the increased recovery of water compared to previous year.

Water management task teams at the power stations are addressing the reduction of water usage and legal contraventions, compiling comprehensive action plans to address all aspects of water management and water-use performance.

Significant progress has been achieved in terms of Eskom’s drive to obtain Blue and Green drop certification status for its water treatment and sewerage works management at power stations.

Environmental complianceThere were 24 environmental legal contraventions in the year to 31 March 2014 compared to 33 for the year to 31 March 2013. The nature of contraventions this year is summarised below and is broadly similar to previous years:• 10 air emissions contraventions, three of which relate directly to the new atmospheric emission

licences• Five water-release contraventions • Five land and biodiversity degradation (ash-line leaks) • Three sewerage spills • One oil spill

One environmental legal contravention was declared against Generation, in terms of the operational health dashboard, during the financial year. The contravention is associated with the failure of Hendrina power station to effectively and timeously manage water-related environmental legal contraventions that took place between October 2012 and October 2013. Generation has already implemented measures to address the deficiencies identified.

A pre-compliance notice issued to Lethabo power station in 2012 was successfully closed by the Department of Environmental Affairs. The department indicated that no further enforcement action will be taken against Lethabo power station.

The enforcement actions initiated by the Department of Environmental Affairs against Camden and Matimba power stations in 2012 (for alleged non-compliance with environmental requirements) and to which Eskom responded in 2012, remain unresolved. Feedback from the authorities is still outstanding. Eskom continues to implement the commitments made to the authorities to resolve the issues raised in these enforcement actions.



All Generation power stations have successfully maintained their ISO 14001 environmental management system certification status. There has been an overall increase in environmental skills within the division with the appointment of additional staff, as well as staff participation in focused interventions aimed at addressing increasing environmental legislative requirements and operational challenges.

Environmental performance indicators for Generation

Indicator and unitActual

2013/14Actual

2012/13Actual

2011/12

Environmental legal contraventions, number 24 33 34

Environmental legal contraventions reported in terms of Eskom’s operational health dashboard, number1 1 1 1

Relative particulate emissions, kg/MWh sent out 0.35 0.35 0.31

Specific water use, L/kWh sent out 1.35 1.42 1.34

Net raw water consumption, ML 317 052 334 275 319 772

Material containing polychlorinated biphenyls thermally destructed, tons – – –

Materials containing asbestos disposed of at registered waste sites, tons 276.1 – 308.3

Carbon-dioxide emissions (absolute), Mt 233.3 227.9 231.9

Carbon-dioxide emissions (relative), kg/kWh2 1.01 0.98 0.99

Nitrogen-oxide emissions, kt3 954 965 977

Sulphur-dioxide emissions, kt 1 975 1 843 1 849

Low-level radioactive waste generated (net), m3 180.8 183.1 184.7

Low-level radioactive waste disposed of at Vaalputs, m3 324.0 54.0 53.8

Intermediate-level radioactive waste generated (net), m3 28.7 34.7 25.4

Intermediate-level radioactive waste disposed of at Vaalputs, m3 178.0 – 128.0

Public individual radiation exposure due to effluents, mSv 0.0012 0.0019 0.0024

Ash produced, Mt 34.97 35.3 36.2

Ash sold, Mt 2.4 2.4 2.3

Ash recycled, % 7.0 6.8 6.4

Ash disposed of on Eskom ash dumps, Mt 32.4 32.9 33.8

1. Under certain conditions, contraventions of environmental legislation are classified in terms of the Eskom operational health dashboard index. These include instances where censure was received from authorities, non-reporting to authorities as may be legally required, non-reporting in Eskom, a repeat legal contravention, or when the contravention was not addressed adequately. Group or divisional executives can escalate any significant environmental legal contravention to the operational health dashboard.

2. Factor figures are calculated based on total energy generated by Eskom (but excluding electricity used by pumped-storage schemes).3. NOx reported as NO2 is calculated using station-specific emission factors, which have been measured intermittently between 1982 and 2006,

and tonnages of coal.

TransmissionMandateTransmission’s mandate is to optimally plan, operate and maintain Eskom’s transmission assets throughout its economic life, as well as to provide an integrative function for the reliable development, operation and risk management of the interconnected power system. This includes balancing supply and demand in real time, trading energy internationally, buying energy from independent power producers (IPPs) and operating the transmission grid.

The transmission grid comprises 157 substations and approximately 29 900km of transmission lines.

Operating highlights• There was no employee or contractor fatality during the year to 31 March 2014• Safety performance improved with an LTIR of 0.20 against the target of 0.36• No environmental contraventions have occurred• Good system technical performance was achieved with zero major incidents, system

minutes <1 performance at 3.05 compared to a target of 3.40, and a line fault performance of1.73 compared to a target of 2.45 faults/100km

• The first IPP was commissioned under the renewable energy programme on 15 November 2013• Eskom supported the government of South Africa to conclude an inter-governmental agreement

between South Africa and the Democratic Republic of the Congo (DRC) on the proposed Grand Inga project

Operating challenges• Motor vehicle accidents remain a challenge and a major contributor to lost-time incidents within

the division• The performance of Hidroelectrica de Cahora Bassa S.A. energy imports remains a risk due to

challenges regarding the reliability of the high-voltage direct-current transmission lines• Energy exports continue to exceed the planned level due to delays in the commissioning of new

generation assets in neighbouring countries and due to a drier than normal season affecting the availability of hydro generation in neighbouring countries

• The MYPD 3 decision for IPP purchases was R2 545 million. The actual cost was R3 266 millionwhich resulted in a cash flow shortfall of R721 million

Future focus areas• Risk management related to the balancing of supply and demand• Connection of independent power producers to the Eskom grid• Network strengthening to achieve grid code N–1 compliance, as well as the integration of new

generation sources• Sustaining business management system compliance (ISO 9001 and ISO 14001 certification)

and performance improvements• Zero harm to people and the environment



BenchmarkingTransmission took part in a benchmarking exercise with 27 other international transmission companies in 2012/13. The study focused on maintenance and plant performance and identified international best practices for the transmission industry. The study has been used to identify opportunities for the development of continual improvement objectives and strategies. The results of the 2012/13 study indicate that Eskom Transmission substation and line asset performance is marginally below average, although a significant improvement has been achieved with line asset performance over the previous two years.

PerformanceKey financial statistics for the year ended 31 March 2014

R millionActual

2013/14Actual

2012/13Actual

2011/12

International revenue 5 886 5 985 4 909

International energy purchases 3 311 2 086 1 858

Maintenance and refurbishment 688 634 290

Capital expenditure (excluding capitalised borrowing costs) 1 392 893 1 554


1. Balances for property, plant and equipment represent the net book value.



2013/14Actual

2013/14Actual

2012/13Actual

2011/12

Total system minutes lost for events <1 minute, minutes 3.40 3.05 3.52 4.73

Major incidents, number1 2 0 3 1

Interruptions, number2 34 35 35 48

Line faults, faults/100km 2.45 1.73 1.75 2.41

1. Records number of incidents with a severity greater than one system minute.2. Interruptions affecting the continuity of supply to the customer.

The good performance of the system minutes (<1) and major incidents has been underpinned by the sustained reduction of line faults and plant failures, as well as effective risk management. Performance vulnerabilities remain with ageing assets and unfirm networks.

System OperationsSupply-demand challenges Refer to the “Leading and partnering to keep the lights on” section (page 103) in the integrated report for more information.

Criminal incidents A sustained reduction in security incidents has meant that no major losses were incurred during the year to 31 March 2014. Nonetheless, theft remains a risk for Transmission as demonstrated earlier in the year, when the theft of copper at a substation resulted in a minor interruption to a rural supply point.

PFMA approval has been obtained for the Transmission national security refurbishment project. This project includes various initiatives to improve and upgrade the security systems at various critical and high-risk Transmission sites, in order to mitigate potential risks to the integrity of assets and continuity of supply.

Safety performance Transmission’s safety performance for both employees and contractors has improved substantially and no fatalities were recorded for the year ended March 2014. The LTIR for the year to March 2014 was 0.20 (2012/13: 0.41) which is a significant improvement on historical results and against the target of 0.36.

Motor vehicle accidents remain a high risk and have historically accounted for approximately 50% of all lost-time incidents.

Environmental performance Transmission environmental performance improved as no legal contraventions were reported during the year to March 2014 (2012/13: 2). Bird mortalities caused by power lines remains a focus area for improvement with support from the Endangered Wildlife Trust.

The division retained its ISO 14001 certification.

Independent power producers (IPPs)Eskom remains committed to facilitating the entry of independent power producers (IPPs) and acknowledges the role that IPPs must play in the South African electricity market.

Total energy procured from IPPs for the year to March 2014 was 3 671GWh. The expenditure on IPP programmes for the year was R3 266 million which is R721 million higher than the NERSA decision for 2013/14.

Refer to the “Pursuing private-sector participation” section (page 143) in the integrated report for more information.

Southern African Energy Like South Africa, most Southern African Development Community (SADC) countries are experiencing challenges regarding supply and demand and are bringing new capacity on line. Eskom is actively supporting the region in developing new supply options as these will improve the regional supply-demand balance, provide South Africa access to environmentally “cleaner” energy resources and diversify Southern Africa’s energy mix. South Africa’s electricity demand, which is considerably higher than any other country in the region, provides for the economies of scale required to make large infrastructure projects viable.

Refer to the “Leading and partnering to keep the lights on” section (page 103) in the integrated report for more information.



Distribution MandateDistribution’s mandate is to operate its network assets and provide reliable electricity by building, operating and maintaining distribution assets, while also acting in the national interest by actively partnering with the wider industry in resolving distribution industry issues and enhancing stakeholder relations.

Eskom’s distribution network is a critical conduit that delivers energy from the high-voltage transmission network to Eskom’s customers via the Distribution network infrastructure. Distribution’s network infrastructure consists of 46 093km of distribution lines, 276 027km of reticulation lines and 7 293km of underground cables. Distribution’s footprint spans the whole of South Africa, making it one of the largest power line systems on the African continent.

Since 1991, Eskom has connected over 4.5 million electrification households to the distribution network.

Operating highlights• A significant improvement in the SAIFI and SAIDI interruption performance in 2013/14

compared to 2012/13• Eskom achieved 201 788 electrification connections during 2013/14, the highest achieved since

2002. • A reduction in the lost-time incidence rate (LTIR) from 0.58 in 2012/13 to 0.39 for 2013/14• Seven independent power producers (IPPs) have been connected to the Distribution network

Operating challenges• Managing the risk of increased exposure of employees and contractors to crime-related assault

incidents• Achieving Eskom’s aspiration of zero harm with particular emphasis on employee and contractor

safety• Reducing the incidence of equipment theft, vandalism and energy theft (illegal connections)• Addressing the backlogs in maintenance, refurbishment and reliability with particular focus on

preventative maintenance for electrification (low-voltage) networks• Regrettably seven fatalities were recorded during the year. Of these, three were Eskom

contractors and four were Eskom employees

Future focus areas• Continue to reinforce safety practices to achieve zero harm for employees and contractors• Ongoing focus on energy protection initiatives to minimise energy losses• Continued focus on business sustainability through prioritised interventions towards

refurbishment, reliability improvements and addressing maintenance backlogs• Improving business productivity • Delivering electrification connections on the accelerated DoE universal access programme• Skills development within the business

BenchmarkingDistribution participated in a 2012 benchmarking study which was facilitated by an independent international consulting group that used North American utilities for comparative benchmarking. Distribution’s network interruption performance is historically impacted by its long radial overhead lines for rural electrification customers, with limited ring feeds in the event of supply interruptions, which limits the opportunity to build redundancy into the networks. In South Africa urban areas are largely supplied by municipalities, who are in turn supplied in bulk by Eskom.

The Distribution system average interruption duration index (SAIDI) and system average interruption frequency index (SAIFI) were categorised as fourth quartile performance (quartile one being the higher performing utilities). Since the 2012 benchmark exercise Distribution has improved its SAIDI performance by 22% and SAIFI performance by 17%.

Distribution is currently preparing for a new benchmarking cycle, comparing technical and operational performance with international utilities.

Performance Key financial statistics for the year ended 31 March 2014

R millionActual

2013/14Actual

2012/13Actual

2011/12

Grants received for electrification 1 878 1 649 1 784

Maintenance 4 297 4 006 3 851

Capital expenditure (excluding capitalised borrowing costs) 7 540 8 317 7 941


1. Balances for property, plant and equipment represent the net book value.



2013/14Actual

2013/14Actual

2012/13Actual

2011/12

System average interruption frequency index (SAIFI), index1 20.0 20.2 22.2 23.7

System average interruption duration index (SAIDI), index2 45.0 37.0 41.9 45.8

1. SAIFI is a reliability of supply index – how often on average (frequency) the customer connected would experience a sustained interruption per annum (number of times per annum).

2. SAIDI is an availability of supply index – the average duration (hours) of a sustained interruption the customer would experience per annum (number of hours per annum).



The improvement in SAIFI and SAIDI performance in 2013/14 compared to 2012/13 is attributed to: • The establishment of additional customer network centres to increase the operational footprint

and enable a quicker response to network interruptions• Reduced network down time by maximising live-line work for planned maintenance• The implementation of a revised network reliability planning standard to improve the reliability

of the network, in line with the regulatory requirements of the Distribution grid code • Increased network visibility, to enable remote monitoring and switching of network equipment

to reduce the outage time • Improving reliability-centred maintenance to reduce the risk of equipment failure• Focused management attention that ensures disciplined execution of all initiatives

The challenge going forward is to sustain this level of performance in a resource-constrained environment, in particular the financial pressures of the business productivity programme.

Electrification The government of South Africa through the Department of Energy (DoE) continues to fund the electrification of previously disadvantaged households and farm workers’ households in its licensed areas of supply. While the DoE funds the new connections and infrastructure development, Eskom carries the ongoing operating costs for these connections, and receives the revenue for electricity sold.

Refer to the “Transformation – electrification” section (page 149) in the integrated report for more information.

Safety performanceThe Distribution LTIR at 31 March 2014 was 0.39 (against the target of 0.36), a significant improvement from the 0.58 at 31 March 2013.

Regrettably seven fatalities were recorded during the year. Of these, three were Eskom contractors and four were Eskom employees. Of these, one was due to an electrical contact incident, three due to motor vehicle accidents, two as a result of criminal assaults and one from handling heavy equipment.

Distribution continues to strive for a zero harm safety culture. The results of these interventions are reflected in the LTIR improvement. Management controls are well entrenched but there are still challenges in terms of individual accountability for safety.

Distribution safety interventions are based on the following aspects:• Leadership• Policy• People • Physical world of work• Pre- and post- incident management• Contractor management

Environmental performanceFour legal contraventions were recorded in the year to March 2014, matching the number for the year to March 2013. These are detailed below: • An oil spill at Firgrove substation outside Somerset West in the Western Cape, in terms of

section 19 of the National Water Act• Marula trees were cut without a permit in the North West, in terms of section 16 of the National

Forest Act• Bush-clearing contractors did not adhere to the full requirements of a permit whilst conducting

bush clearing in KwaZulu-Natal• The Ruigtevalley-Dreunberg 132kV line in the Eastern Cape was built on the incorrect servitude

option that was not approved in the environmental authorisation

Zero harm to the environment is an important Eskom value. To this extent, Distribution has rolled out educational training and awareness initiatives to employees and contractors as a preventative strategy to improve environmental performance. For every violation of the environment, Distribution has adopted a practice of planting and donating trees within the provinces where the violation has occurred.

Routine line maintenance is performed in Cosmos, Johannesburg



Group Customer ServicesGroup Customer Services’ mandate is to place the customer at the centre of Eskom’s business and manage customer relations. In this way, it aims to achieve satisfied customers who consistently rate Eskom in the top quartile.

Other key responsibilities include managing revenue, managing the demand for power by means of integrated demand-management initiatives, as well as the end-to-end service relationship with generators and independent power producers.

Operating highlights • Customers responded admirably when Eskom declared four power system emergencies and

reduced demand by 600MW in November 2013, 340MW in February 2014 and 1 160MW during the load shedding event in March 2014

• The preparedness level of the contact centres and provincial customer service operations was enhanced to deal with the load shedding

• Integrated demand management (IDM) achieved a total of 410MW demand savings, exceeding the target of 379MW

• Numerous meetings were held with the Department of Public Enterprises (DPE) and National Treasury to discuss sustainable ways to address municipal debt and implement longer-term interventions to deal with challenges. Agreements with municipalities stipulate that all current bills are to be honoured and debt is to be paid off within 12 months

• Customer satisfaction scores for the key industrial customers as measured in the KeyCare surveys have continued to exceed target due to focused attention on managing relationships with these customers

• Customer satisfaction as measured in the enhanced MaxiCare surveys improved over the year to March 2014 for the industrial, residential billed and residential pre-paid segments and in the PreCare segment

• Continued month-on-month improvement in issuing quotations resulted in the performance as at 31 March 2014 exceeding the target

• The grid access unit has successfully facilitated the connection of 21 renewable energy independent power producer (RE-IPP) projects (1 076MW) to the grid

Operating challenges • The lost-time incidence rate (LTIR) at 0.73 for the year is of concern, as it is significantly above

the Eskom target of 0.36• Debt collection from municipalities and small power users remains a concern. Eskom is working

closely with the Department of Public Enterprises, the Cooperative Governance and Traditional Affairs (CoGTA) department and Treasury at both provincial and national level to address the systemic causes of the municipal arrear debt. At a local municipality level, Eskom has made available cross-functional teams to share best practices in managing electricity portfolios

• The total municipal arrear debt remains high at R2 593 million at 31 March 2014 • Active marketing of IDM to customers was stopped as a result of the reduction in IDM funding

in the MYPD 3 determination. As a result, the pipeline of projects is drying up and the outlook for the 2015 financial year is unfavourable

• The Distribution energy losses measured on a 12-month moving average basis has stabilised • MaxiCare customer satisfaction scores declined over the year ended March 2014 for the

agricultural and commercial segments, and despite year-on-year improvements in the other segments, MaxiCare did not meet the targets for the year

• The minor project connections score of 75.1% remained virtually unchanged from the previous year and is below the target of 93%. Actions for improvement include addressing material and contractor resource shortages

Future focus areas• Improve safety awareness by implementing specific programmes• Implement improved revenue-management processes to enhance energy-protection and

energy-loss programmes, and improve debt collection for municipal, Soweto, large and small power users

• Explore further options to manage power demand, including demand-response programmes• Continue to source alternative funding for Eskom’s IDM programme• Further development of the small and micro generator framework, to enable connections of less

than 1MW when policy and other supporting frameworks emerge

Residential revenue-management strategyThe residential revenue-management strategy, which includes Soweto, is critical in terms of enhancing energy protection and energy losses and to improve debt collection for Soweto, large and small power users. The strategy entails:• The installation of split metering with protective enclosures• Converting customers to pre-paid meters with new supply group codes to eliminate illegal pre-

paid vending• A focused credit management process for all businesses, which, together with disconnections,

should assist in recovering outstanding debt

The strategy has received PFMA approval and implementation of the strategy is planned for early in the new financial year.

Number of Eskom customersRefer to table 5 under appendix A: Statistical tables on page 88.

A mobile customer service vehicle has improved service to rural areas in KwaZulu-Natal



Key financial statistics for the year ended 31 March 2014

R millionActual

2013/14Actual

2012/13Actual

2011/12

External local revenue 130 966 120 678 108 260

Impairments 1 482 1 020 587

Electricity debtors less provisions 13 573 10 173 8 835

Provision for arrear debts 5 655 4 246 3 320

Integrated demand management – excluding demand market participation and power buybacks 1 345 3 001 1 913

Power buybacks1 87 2 808 1 750

Demand market participation1 262 283 414

1. Included in primary energy cost on the income statement.

Key performance indicators for the year ended 31 March 2014


2013/14Actual

2013/14Actual

2012/13Actual

2011/12

Arrear debt as % of external revenue, % 0.50 1.10 0.82 0.53

Debtors’ days – municipalities, average debtors’ days1 22.0 32.7 22.4 n/a

Debtors’ days – large power user debtors’ days (>100GWh p.a.), average debtors’ days 14.0 14.5 12.3 14.4

Other large power user debtors’ days (<100GWh p.a.), average debtors’ days1 16.0 16.9 18.3 n/a

Debtors’ days – small power users excluding Soweto, average debtors’ days 42.0 50.2 48.2 42.9

Customer service index 88.7 86.6 86.8 85.6

Eskom KeyCare, index 102.0 108.7 105.8 105.9

Top customer KeyCare, index 104.0 110.8 107.5 108.0

1. The previous KPI called debtors’ days (large power users – including municipalities) was replaced in 2013 by two KPIs: the municipalities debtors’ days KPI and other large power users debtors’ days (<100GWh per annum) KPI.

Arrear debtRefer to the “Becoming a high-performance organisation – managing electricity debtors” section (page 96) in the integrated report for more information.

Customer service performance A range of statistical perception and interaction-based customer surveys, conducted by independent research organisations, are used to measure customers’ satisfaction with Eskom’s service. These include:• KeyCare top customer, which measures the satisfaction of Eskom’s large industrial customers• MaxiCare, which measures the satisfaction of Eskom’s residential, small and medium customers

on a perception, rather than transactional, basis• CustomerCare, which measures the satisfaction of those customers who have had recent

contact with Eskom’s contact centres, as well as the resolution of service requests by the operating units

Results from these surveys help Eskom identify aspects of service that require improvement.

Customer perception surveys


2013/14Actual

2013/14Actual

2012/13Actual

2011/12

KeyCare, % 102.0 108.7 105.8 105.9

Top customer KeyCare, % 104.0 110.8 107.5 108.0

Enhanced MaxiCare, % 95.7 92.7 93.2 90.7

CustomerCare, % 8.2 8.3 8.4 8.2

Restoration time <7.5 hours, % 79.0 84.1 73.0 62.6

Minor projects quotations <30 days, % 93.0 93.3 91.0 91.0

Minor projects connections <90 days, % 93.0 75.1 75.0 85.0

Contact centre service level, % 85.0 84.6 86.9 85.1

Customer service index, % 88.7 86.6 86.8 85.6

Top customers The Eskom KeyCare perception survey is conducted by an external company. The questions in KeyCare cover various elements, including changes at board and Exco level. The survey weights are evenly distributed among all the elements.

The top customer KeyCare survey uses the KeyCare results, but applies different weights to the various elements, such that issues over which Group Customer Services has direct control carry a heavier weight. Examples are: accurate billing, knowledge of the customer business, quality of supply, etc.

The 12-month moving average top customer KeyCare service measure has improved from 107.16% at 30 April 2013 to 110.84% at 31 March 2014, against a target of 104%.



This improvement is attributable to Eskom meeting regularly with its top customers to share critical information on the system status and the capacity expansion programme. This was done with regular feedback from the chief executive to Eskom’s stakeholders, quarterly liaison meetings at plant level and customer forums. The regional key account managers and their teams also regularly visit the general managers of customers and municipal managers to share important information and to enquire about service-related issues requiring attention.

Despite the number of system emergencies, the proactive manner in which Eskom informs its customers of the system status, via twice daily reports, as well as the KeyAlert SMS messaging system, has made a difference in assisting Eskom’s top customers to plan their operational activities.

The three sub-measures for KeyCare performed well in the year under review: • The general management 12-month moving average has shown a gradual increase from

103.93% to 107.10%. During this period 56 general managers from top customers were interviewed

• The engineering 12-month moving average has shown a steady increase from 107.59% to 111.96%. A total of 133 engineers from top customers were interviewed

• The accounts 12-month moving average has also shown a steady increase from 109.97% to 113.45%. A total of 138 accounting staff from top customers were interviewed

Other customer perception surveysThe customer service index (CSI) is a composite index indicating the service to residential, small and medium customers. It combines two external customer service surveys (CustomerCare and Enhanced MaxiCare) and the four internal customer service process measures.

The score of 86.6% is below the year end target of 88.7% and its underperformance is attributable to: • The customer perception (Enhanced MaxiCare) score at 31 March 2014 of 92.7% was below

the target of 95.7% and declined compared to the March 2013 score of 93.2%. The main causes are: - Dissatisfaction with tariff increases- The continuous threat of load shedding- Dissatisfaction with metering accuracy (measurement and estimates)- The speed of connections- Quality of supply, outage management and restoration time

• The reduced satisfaction levels occurred in the agricultural and commercial segments. However, there were year-on-year improvements in satisfaction in the industrial, residential billed and residential pre-paid segments, as well as in PreCare- The minor project connections score remained virtually unchanged from the previous year

and ended the year at 75.1 %, below the target of 93%. Actions for improvement include addressing material and contractor resource shortages

- The contact centre service level performance of 84.6% was slightly below the target of 85%. The drop in performance was due to staff shortages from October to December 2013 and the rotational load shedding for 14 hours on 6 March 2014

• Other components of the customer service index performed well, notably:- Restoration time performance continued its positive trend and improved significantly this

year, reflecting Distribution’s commitment to improving performance. At 31 March 2014 the performance was 84.1% (2012/13: 73.0%), well above the target of 79.0%

- Minor project quotations experienced high volumes of requests, coupled with resource constraints in dealing with the work load. After a first quarter drop in performance, there has been a steady improvement during the year, with performance as at 31 March 2014 at 93.3%, above the target of 93%

- CustomerCare scores ended the year at 8.3, above the target of 8.2 but slightly down from the performance of 8.4 as at 31 March 2013

Safety performanceThe Group Customer Services safety performance for the year ended 31 March 2014 is of concern as the LTIR of 0.73 is well above both the Eskom target of 0.36, and the March 2013 figure of 0.28. The main causes are motor vehicle accidents and slips, trips and falls. The division regretfully had one sub-contractor fatality.

Integrated Demand Management (IDM) MandateThe integrated demand management business unit is mandated to design integrated solutions to create and mobilise a culture of energy efficiency to solve complex energy demand issues for a sustainable future. Integrated demand management is a key factor in managing the demand for electricity in light of the current electricity system constraints so as to support security of supply.

Refer to the “Leading and partnering to keep the lights on – demand-side management and energy efficiency” section (page 111) in the integrated report for more information.

Energy lossesEnergy losses continue to be a challenge for utilities globally, both in developed and developing economies. As a result of increasing production costs in the value chain, utilities have to manage these losses at acceptable levels.

Refer to the “Becoming a high-performance organisation – energy losses and theft” section (page 98) in the integrated report for more information.



Service functions

Group Capital MandateTo create a centre of excellence for the allocation of capital at group level and in the planning, development, monitoring and execution of mega projects.

Refer to the “Leading and partnering to keep the lights on – delivering capacity expansion” section (page 115) in the integrated report for more information.

Group Technology and Commercial

Primary EnergyPrimary Energy sources and procures the primary energy resources (coal, water, limestone and biomass) that Eskom’s power stations need to operate. These resources must be sufficient, delivered on time and at the minimum cost, and be of the required quality. These resources must at all times be managed in a way that strives to minimise the impact on the environment and ensures the safety of Eskom’s employees, contractors and the public.

Refer to the “Securing Eskom’s future resource requirements” and “Implementing coal haulage and the road-to-rail migration” sections (pages 135 and 141) in the integrated report for more information.

TechnologyMandateTechnology is mandated to assure the integrity of Eskom plant and contributes to the effective and safe operation of operating units by standardising and optimising asset maintenance, through robust outage management, asset management and design-base management through engineering expertise.

Operating highlights • The improved safety performance can be attributed to successful safety forums, safety pledges

by management, staff and partners, implementation of key safety deliverables and sustained commitment by safety officers and partners on sites

04Eskom’s service functions provide support to the line divisions. This section contains the operational reports for each of Eskom’s service functions for the year to 31 March 2014:• Group Capital• Group Technology and Commercial• Human Resources• Finance

The procurement, storage and transport of coal is a significant operation in Eskom


The finalists of the 2013 Eskom eta Awards, a competition that rewards excellence in energy efficiency

• Outage management executed a high number of outages. Various initiatives have been implemented to influence and improve outage performance, including:- Gold Standard – identified and codified best practices have been disseminated across the

fleet to change the way Eskom conducts its work. To date over 100 people across sites have been trained

- An outage performance improvement centre has successfully developed and run a number of elements such as daily calls, partner reviews, safety forums, daily deep-dive sessions and site support visits, amongst others. An increased onsite presence has resulted in better transparency and issue resolution

- Site visit teams provided targeted assistance at high risk stations, which included fire fighting and addressing strategic and systemic issues like contractor productivity, spares availability and interface issues

• Project Engineering has operationalised the registration of engineering work from the business partners (Group Capital and Generation) through a structured order book management process and an operational database

Operating challenges • Constraints in electricity capacity have compelled execution of high-risk outages over shorter

planned durations, thus increasing the likelihood of slips• Significant emergent scope: turbine plant maintenance is extremely prone to scope extensions

due to the difficulty of accurately determining the exact scope upfront while the system is still sealed

• Poor plant performance and reliability, as a significant number of power stations are operating beyond their design lives

Future focus areas • Safety practices• Improving quality controls around outage management• Monitoring the resolution of contractor defects reported at Medupi and Kusile power stations• Partnering between Project Engineering and Generation to address the unplanned outages

that occur after return from planned outages

Commercial (procurement other than primary energy)MandateTo optimally manage a single procurement entity, ensuring effective and efficient procurement, inventory management, warehousing and logistics. It is also responsible for supplier management and development, and contract negotiations and establishment.

Operational overviewRefer to the “Transformation – maximising Eskom’s socio-economic contribution” section (page 148) in the integrated report for more information.

Human Resources MandateBeing the custodian of people management within Eskom, Human Resources is mandated to partner with and empower Eskom divisions to recruit, develop, and retain skilled, committed, engaged and accountable employees. Human Resources is committed to building skills, not only internally to Eskom but also for the communities in which Eskom operates. This is done in support of Eskom’s aspiration and duty to grow the economy and improve the quality of life of people in South Africa and in the region.

Operational overviewRefer to the “Transformation – improving internal transformation” section (page 150) in the integrated report for more information.

FinanceMandateTo provide financial strategy, policies, assurance and strategic financial services (including treasury, corporate and regulatory reporting, taxation, as well as financial evaluation and advisory services) to the Eskom group. Eskom’s financial sustainability relies on being able to balance its revenue with its costs in a manner that allows for sustainable growth.

Operational overviewRefer to the “Ensuring Eskom’s financial sustainability” section (page 153) in the integrated report for more information. Eskom’s annual financial statements are available at www.eskom.co.za/IR2014/01.html

Service functions continued

Eskom Holdings SOC Limited56 572014 Supplementary and Divisional ReportSALGA

Strategic functions

Enterprise DevelopmentThe Enterprise Development division’s mandate is guiding, positioning, protecting, operating and enabling Eskom to be a top performing utility.

In executing its role to develop the enterprise, Enterprise Development brings together four specialised capabilities in the domains of Strategy and Risk, Regulatory and Legal, Corporate Affairs and Information Management to guide, position, protect and enable the Eskom group.

Strategy and Risk ManagementMandateTo lead an integrated approach to organisational strategy, risk management and corporate planning and to ensure sustainability and resilience.

Operational overviewFor an overview of Eskom’s strategy, refer to the “About the Eskom group” section (page 31) in the integrated report.

The division played an integral role in the development and review of various strategies, including, but not limited to, the following:• Long-term coal sourcing strategy – refer to the “Securing Eskom’s future resource

requirements” section (page 135) in the integrated report for more information• Residential revenue-management strategy – refer to the “Becoming a high-performance

organisation – being customer-centric” section (page 94) in the integrated report for more information

• Generation sustainability strategy – refer to the “Leading and partnering to keep the lights on – managing supply-and-demand constraints” section (page 106) in the integrated report for more information

For an overview of Eskom’s risk management process as well as key focus areas and associated risks refer to the “Eskom’s approach to integrated reporting” section (page 57) in the integrated report.

05Eskom’s strategic functions provide support to the line divisions. This section contains the operational reports for each of Eskom’s strategic functions for the year ending 31 March 2014:• Enterprise Development• Sustainability• Office of the Chief Executive

Corporate Affairs runs the Operation Khanyisa campaign to reduce electricity theft and non-payment


Regulation and LegalMandateTo ensure that Eskom conducts its business within its licence to operate by ensuring good governance and compliance with current policy, regulatory and legal frameworks, and to influence the policy, regulatory and legal frameworks required in terms of achieving Eskom’s strategic objectives.

Operational overviewFor information regarding Eskom’s corporate governance framework, refer to the “Leadership and corporate governance” section (page 65) in the integrated report.

The development of the compliance funtion has been in line with the milestones set three years ago.

The focus for the 2013/14 year was to finalise the regulatory clearing account (RCA) application for the MYPD 2 period and thereafter to address the issues that needed close engagement with the National Energy Regulator of South Africa (NERSA) as a result of the MYPD 3 determination. The electricity sub-committee has made a recommendation on the RCA to the NERSA board and a decision is awaited in the first quarter of the new financial year. It is anticipated that this adjustment is likely to commence no later than 1 April 2015.

Corporate AffairsMandateContributing to Eskom becoming a top global power company that is resilient, reputable, trusted, valued, and highly regarded by its stakeholders and peer group of companies in South Africa and elsewhere in the world.

Operational overviewEskom’s reputation and brand were positively enhanced during the year, as the company received a significant number of accolades, including the Sunday Times top brand award and the award for the most desired company to work for.

In an effort to reduce electricity demand, an integrated communication and stakeholder “keeping the lights on” programme was launched, to encourage South Africans to “beat the peak” in winter and to “live lightly” in summer. In this regard, bi-weekly status updates were issued to the media, and quarterly power system media briefings were held, along with regular national, regional, and local stakeholder engagements to provide open and transparent information on the state of the power system.

The New Build News, an electronic newsletter, was reintroduced and issued every second month to the media and key stakeholders. Eskom has seen an increase in media coverage around the capacity expansion programme, as highlights and milestones were communicated in national, local, and trade publications, as well as the social media space.

For information on Eskom’s stakeholder engagement process, refer to the “Eskom’s approach to integrated reporting” section (page 51) in the integrated report.

Group Information Technology MandateGroup IT is responsible for ensuring the effective delivery of IT systems, infrastructure and processes to support Eskom’s business objectives and business processes. From the safety of its people, to the experience of its customers and to the efficiency of its power stations, Group IT plays a vital role in achieving Eskom’s aspiration of becoming a high-performance organisation, and in the running of the day-to-day operations of the business.

Operational overviewGroup IT continued to implement its sourcing strategy, with all major software contracts now concluded. This will result in 85% of all Group IT spend being covered by enabling agreements, resulting in significant financial savings for Eskom.

The Agisana project, which is intended to support the National Infrastructure Development Plan, gathered pace during the year. Eskom was asked by the Department of Public Enterprises to assume the programme implementation, integration and coordination role for SIP 01 (strategic infrastructure project). Eskom leveraged its previous fit-for-purpose study and its relationship with Oracle to configure and pilot a project management and monitoring solution using the Primavera product. The solution was successfully demonstrated to the Presidential Infrastructure Coordinating Commission (PICC) management committee. Eskom will manage the new Primavera licences on behalf of all the state-owned entities.

There was a successful go-live of the new online vending system on 22 July 2013. The system performance has been good, where Eskom has witnessed a maximum of 131 transactions per second and more than 1 200 transactions per minute. A total of 807 052 transactions in a day was also recorded.

The mobility application has been rolled out to the Eskom business enabling Eskom employees to request and approve leave, and approve travel claims via a mobile device. This innovation will change the way Eskom works. By enabling these transactions on mobile devices, Eskom employees will be able to have quick and easy access from anywhere to day-to-day self-service functions, leading to an improvement in employee agility, efficiency and a better IT experience.

The piloted power management software has been rolled out to the full complement of Windows 7 users in Eskom and includes enhanced power management rules for both desktops and laptops.

The Megawatt Park data centre remains a priority one risk with unplanned failures of components and environment likely to occur, causing unavailability of major systems and processes. The risk is addressed through Eskom’s business continuity and disaster management procedures.

The information security programme is underway and will receive continued focus until completion. This programme will assist in mitigating two of Eskom’s priority one IT risk, namely cyber security threats and information security attacks resulting in electricity supply interruptions, productivity and data loss and damage to Eskom’s reputation, and confidential data leakage or data falling into the wrong hands, leading to tarnishing of Eskom’s image and reputation. The programme includes, but is not limited to, new software for data leakage prevention, new firewalls, laptop encryption and a security operations centre.

Strategic functions continued


SustainabilityMandate The Sustainability division’s mandate is to deliver effective and innovative solutions and decision support to enable sustainable business performance and increased stakeholder confidence, which will contribute to the transformation of Eskom and South Africa.

In order to diversify its energy mix, and in support of its strategic imperative of pursuing a low-carbon growth path, the renewables unit drives Eskom’s renewable generation capacity by developing and operating proven technologies to address government’s environmental commitments and aspirations, as well as to reduce Eskom’s environmental footprint. The division ensures that a holistic sustainable development approach is embedded in all Eskom’s activities.

Operational overviewEskom continued to actively participate in the government processes to develop carbon budgets, adaptation plans, measurement and evaluation protocols, greenhouse gas reporting procedures and mitigation plans for the country. Eskom was also instrumental in active negotiations supporting the government delegation to the international climate change negotiations at COP 19 during November 2013. Eskom is embarking on the development of a COP 21 strategy to ensure that the organisation is prepared for what is seen as a watershed meeting in the climate change negotiations. The expectation is that COP 21 will deliver commitments, whether legally binding or not, for all countries.

Eskom actively participates in the World Business Council for Sustainable Development (WBCSD). The WBCSD is focused on the Action 2020 project which is developing business solutions for implementation in 2020 to ensure a sustainable planet by 2050. Eskom is co-authoring the solution on remote electrification solutions and is actively engaged in the energy and climate work. The WBCSD also provides a valuable platform for Eskom to benchmark itself against best practice. Eskom is also a member of the Global Sustainable Electricity Partnership (GSEP). Through the GSEP, Eskom successfully hosted two workshops on financing electrification with the Southern African Power Pool (SAPP).

Refer to the “Reducing Eskom’s environmental footprint and pursuing low-carbon growth” section (page 127) in the integrated report for more information.

Occupational hygiene and safety Eskom’s safety performance remains a concern for the organisation, particularly in light of the number of tragic fatalities and serious injuries suffered by both employees and contractors. To this end, a number of safety improvement initiatives are being implemented, with a view to reducing the number of fatalities and injuries of contractors and employees to zero. The implementation of these safety improvement initiatives is aligned to the strategic elements in the Eskom occupational hygiene and safety strategy. These strategic elements seek to sustainably mitigate the occupational hygiene and safety risks, and in so doing improve safety performance.

Eskom believes that zero fatalities and injuries are possible, and will continue to strive towards its goal of zero harm. Leadership will continue working to embed safety into the hearts and minds of everyone at Eskom.

Detail on the line divisions’ safety performance is included in this report. Also refer to the “Becoming a high-performance organisation – safety” section (pages 85 to 87) in the integrated report for more information.

Research, testing and development Eskom’s Research, Testing and Development department has focused on enhancing its strengths through the establishment and promotion of centres of expertise in those areas of research that support Eskom’s priorities. This has ensured that it maintains a focus on the organisation’s operational needs and the strategic challenges it currently faces.

Eskom aims to become a highly innovative company recognised for its research and innovation. Focusing the research and development on product delivery is designed to achieve this aim.

Operational overviewThe unit has made good progress on its portfolio for the year, especially on the 18 high priority projects. Key amongst these are the online boiler monitor, Waterberg coal suitability analysis and high frequency electrostatic precipitator projects which are all on track. The focus on high impact, high value project identification and delivery will continue. This requires increased focus on project management systems and practices and alignment with the real needs of the business. The need to demonstrate, communicate and measure value-add is critical to future investment in research in the financially difficult times facing Eskom.

Eskom has maintained memberships, collaboration and partnerships with national and international research organisations to ensure that it remains up-to-date with the latest global technologies and trends. Continuing international collaboration includes organisations such as the Electric Power Research Institute, Doble, the International Energy Agency Clean Coal Centre and SolarPACES, and the Welding Institute. A new membership with the National Renewable Energy Laboratory in the United States is developing and has great potential to open up new knowledge sources in the renewable and energy efficiency spheres. A multi-year contract has been concluded with the majority of universities in South Africa for collaborative research. Those without agreed contracts to date will receive attention, especially those categorised as previously disadvantaged.



An amount of R156.2 million was spent on research for the year ending 31 March 2014 (2012/13: R195.3 million). The decline in spending is largely due to the savings measures enforced in the research environment, particularly on expenditure for external contract research work. A breakdown of this expenditure is shown below.

Expenditure per research focus area

Renewable and the environment

R million

34.12

5.32

34.03

22.73

9.05

2.49

12.86

10.99

14.98

9.63

Improving generation performance Health, safety and human factors Energy analytics and system dynamics

Power systems Innovation and future technologies Research membership

Asset management Primary energy Energy efficiency

The figure above indicates that research funding follows a similar pattern to the previous year, with a strong focus on the environment and plant performance.

Demonstration and pilot projectsThe demonstration and pilot programme provides for the production of scale assets that are used to assess technologies identified through the research process for its commercial potential for Eskom. The primary aim is to develop a business case for the commercial use of the applicable technology and to ensure that key technologies, that can improve performance and fundamentally change Eskom’s current and future technology path, are effectively appraised and the risks understood.

The capital expenditure on the demonstration and pilot projects was R161 million, the majority of which was invested in the underground coal gasification (UCG) pilot project. The expenditure was curtailed by the delay in obtaining water-use licences for the UCG project and the subsequent reduction in scope.

High frequency electrostatic precipitator (ESP) at LethaboThe tender has been awarded and the equipment is currently on site. Commissioning is planned for early in the new financial year, but is at risk given that it requires an outage, which must be managed within the current constrained power system. The option of installing these units at Kriel in the very near future is being explored.

Waterberg coal suitability analysisEskom is conducting an analysis of Waterberg coal samples to determine their suitability for use in the Mpumalanga power stations. A full suite of laboratory analyses as well as combustion tests are being performed on coal samples provided and conclusions made as to their application in power stations far away from the usual coal supply mines. This is of strategic importance as this knowledge will inform the procurement and transport strategies of primary energy in sourcing coal for Mpumalanga projects. The project is on track and the first samples are undergoing tests. Combustion tests were however delayed by rain and the outage schedule is being adjusted to accommodate other higher priorities.

Underground coal gasification The underground coal gasification project is currently awaiting environmental and water-use licences to proceed to the next phase, which will focus on increasing gas production volumes to prove energy content of the gas and potential commercial applications. Several meetings have been held with the Department of Environmental Affairs (DEA) and the Department of Water Affairs (DWA) in an attempt to expedite the process.


Some finalists from the Eskom Expo for Young Scientists qualified to participate in the international Intel competition in the United States of America


Subsidiary companies

Eskom Enterprises SOC Limited groupMandateEskom Enterprises (EE) provides life-cycle support, plant maintenance, network protection and support for the capital expansion programme for all Eskom’s divisions. This is done primarily through the operating divisions of EE and its two main subsidiaries, Rotek Industries SOC Limited (Rotek) and Roshcon SOC Limited (Roshcon).

Eskom Telecoms

Labs services

Aviation

PTM

Eskom Enterprises SOC Ltd

Targeted for disposal

TSI SOC Ltd (100%)

Eskom Energie Manantali s.a

(100%)

O&M concession

Eskom Uganda Limited (100%)

PBMR SOC Ltd (100%)

Investments

SDCT (16.67%)/Golang (66.67%)

TAP (South Africa &

Mauritius) (50%)

Roshcon SOC Ltd (100%)

Rotek Industries SOC Ltd (100%)

Rosherville Properties

(100%)

Technical support services (100%)

06Eskom Holdings SOC Limited has the following direct subsidiaries:• Eskom Enterprises SOC Limited• Escap SOC Limited• Eskom Finance Company SOC Limited• Eskom Development Foundation NPC

The Eskom Development Foundation is rolling out paediatric buses in a number of provinces to assist in child healthcare


Eskom Enterprises SOC Limited group structureEskom Enterprises SOC Limited has the following subsidiaries:• Rotek Industries SOC Limited• Roshcon SOC Limited• Eskom Uganda Limited• Eskom Energie Manantali s.a• Pebble Bed Modular Reactor SOC Limited• South Dunes Coal Terminal Company SOC Limited• Golang Coal SOC Limited • Technology Services International SOC Limited – this subsidiary is currently dormant, Eskom

has applied for PFMA approval to close this subsidiary• Rosherville Properties SOC Limited – dormant

Operating highlights• Improved alignment to ensure that the subsidiaries support Eskom’s main operating businesses

and its strategic intent• PFMA approval obtained for the sale of EE assets to Eskom and the integration of Rotek

and Roshcon into one company. The conditions attached to the approval have been met and preparation is in progress to effect the approvals received

Operating challenges• Declining safety performance in EE, Rotek and Roshcon• Balancing the outage programme and ensuring more optimal utilisation of assets and resources

Future focus areas• Safety improvement initiatives in Rotek and Roshcon by increasing behavioural safety

observations. Continuing the Rotek/Roshcon “zero tolerance, target zero” initiative as an activator for safety improvements

• Reposition the divisional assets of EE into Eskom• Integrate Rotek and Roshcon into a single company producing high-quality products and

focused on meeting Eskom’s needs in a cost-effective manner • Conclude the exit from Eskom Energie Manantali s.a (EEM) as per the guidance received from

the shareholder • Restructure South Dunes Coal Terminal (SDCT) and Golang Coal to simplify the group

structure• Finalise the long-term strategy for investments in Trans Africa Projects (Pty) Limited and Eskom

Uganda Limited to align with the Eskom Africa strategy

PerformanceDuring the 2014 financial year the group performed well, exceeding targets in most areas. The Eskom Enterprises holding company has separate shareholder’s compacts with its main operating subsidiaries. Similarly, Eskom Enterprises has a compact with Eskom (as depicted in the table below).

Eskom Enterprises SOC Limited shareholder’s compact (company only)


2013/14Actual

2013/14Actual

2012/13Actual

2011/12

Fatalities – employees, number 0 0 0 0

Fatalities – contractors, number 0 0 0 0

Lost-time incidence rate – employees, index 0.36 0.53 0 0.17

Lost-time incidence rate – contractors, index 0.36 0 0 0

Eskom Telecommunications backbone network availability, % 99.78 99.84 99.84 99.79

Use of rotary-wing fleet, hours 4 300 4 653 4 442 4 709

EBITDA, R million 179 372 282 181

Profit before tax, R million 96 354 264 163

Racial equity – senior management, % 69.70 66.67 68.00 67.13

Gender equity – senior management, % 35.10 33.33 25.00 25.00

Racial equity – professionals and middle management, % 57.50 56.25 50.60 n/a

Gender equity – professional and middle management, % 25.30 25.00 14.90 n/a

Procurement from B-BBEE compliant suppliers, % 75.00 69.31 96.00 n/a

Procurement from black women-owned suppliers, % 10.00 0.76 1.00 n/a

Procurement from people with disabilities suppliers, % 1.5 – – n/a

Subsidiary companies continued


Multi-axle logistics services at Eskom Rotek and Roshcon transport all abnormal loads for the Eskom group

The employees of Eskom Enterprises have been seconded from Eskom to manage the assets of Eskom Enterprises. The racial and gender targets above were set prior to the restructuring and have not been changed upon the centralisation of the support functions. The financial performance of Eskom Enterprises for the year ending March 2014 was driven mainly by increased volumes of work and improved cost control, and the anticipated sale of the assets to Eskom.

Rotek Industries SOC Limited and Roshcon SOC LimitedThe performance of Rotek and Roshcon was impacted by moving outages, lower transformer workshop utilisation, project delays, postponements and cancellations. Rotek and Roshcon’s technical performance varied, with most technical targets being met.

Eskom Uganda LimitedEskom Uganda operates under an operating and maintenance concession with the electricity utility in Uganda. The concession tenure spans 20 years, and Eskom Uganda is currently in the tenth year of the concession period.

Financial and safety performance has been good, whilst risk and environmental management was fair. Numerous challenges are receiving the required management attention – asset management, operational excellence, stakeholder and reputation management, as well as people and talent management. The plant is old and continues to deteriorate with age, requiring continual plant life-cycle management and equipment upgrades.

A Ugandan parliamentary probe committee draft report recommended the termination of Eskom Uganda Limited as the generation asset manager for the Kiira and Nalubale hydropower stations for the remainder of the 20-year concession (which is approximately 10 years). The Eskom chairperson, together with a delegation of Eskom and Department of Public Enterprises officials, visited Uganda in March 2014 and interacted with various stakeholders of the country in an attempt to enhance Eskom’s reputation in Uganda.

The Eskom investment and finance committee has approved that Eskom Enterprises and Eskom Uganda remain in the investment until the end of the concession and possibly look at options to expand the current concession arrangements.

Eskom Energie Manantali s.aEskom Energie Manantali s.a (EEM) operates under an operating and maintenance concession with Société de Gestion de l’Energie de Manantali (SOGEM), an energy-management company based in Mali. The agreement entails that EEM operates and maintains SOGEM’s electricity utility, which supplies energy to Mali, Senegal and Mauritania.

At a meeting on 31 January 2014 in Addis Ababa, there was agreement that one more attempt should be made by EEM and SOGEM to reach agreement on a 10-year operating and maintenance contract, through mediation. The mediation was to be completed by early March 2014, and if it was not successful EEM would exit from the Manantali project by 30 April 2014.

There was significant progress on certain issues, where the parties reached agreement through the assistance of the jointly-appointed mediators. However, there remained significant concerns and potential risks for EEM that prevented a 10-year contract being agreed upon and entered into by the end of April 2014. The Minister of Public Enterprises concurred with the decision to exit, and is currently corresponding with the chairperson of the Organisation pour la Mise en Valeur du fleuve Sénégal (OMVS) Council of Ministers on the decision to exit.

As at 31 March 2014, EEM was classified as a discontinued operation, with the financial results for the period reported as such. Comparatives were restated accordingly.

Pebble Bed Modular Reactor (PBMR) SOC LimitedThe original identified scope of intellectual property preservation performance figures stands at 98%. The cash balance remains closely controlled, and the available balance as at 31 March 2014 was R101.8 million, which is greater than the R50 million target set for the year. Risks that are managed to protect the cash relate to unplanned intellectual property preservation work, system configuration and other software maintenance and licences, hosting costs, and asset disposal costs.

South Dunes Coal Terminal SOC Limited and Golang Coal SOC LimitedDue to its investments in these two companies, Eskom is entitled to export three million tons of coal through the Richards Bay Coal Terminal. These export rights are being leased out by Eskom to other exporters while Eskom determines the long-term strategy for this investment.

The current lease arrangement expires in August 2014.



Escap SOC LimitedEscap SOC Limited (Escap) is a captive short-term insurance company, meaning it can only insure risks of its parent company Eskom and its subsidiaries. Escap provides cost-effective, customised short-term insurance products to the Eskom group (other than nuclear and aviation liabilities) through a combination of self-insurance and reinsurance with external insurance markets.

Operating highlights• Escap’s net assets amount to R920 million, exceeding the target solvency capital requirement in

terms of the Solvency Assessment and Management (SAM) interim measures of R634 million• Net operating expenses as a percentage of net earned premiums are 4.4% (target: <10%)• Money-market investment performance measured in comparison to the short-term fixed-

interest composite index (STEFI) is 5.7% (STEFI is 5.3%)

Operating challenges• Net claim expenses as a percentage of net earned premiums are 222% (shareholder’s compact

target: <90%). This is largely due to the over-pressurisation incident at Duvha power station (refer to page 28)

• Return on equity is negative 59.6% against a target of 6%. This is due to the impact of large claim losses on Escap’s profitability

• Listed share investment performance measured in comparison to the shareholder-weighted index (SWIX) of the Johannesburg Stock Exchange is 15.8%, against a target of 20.6%

Shareholder’s compact with Eskom


2013/14Actual

2013/14Actual

2012/13Actual

2011/12

Equity portfolio return (1 year) > SWIX, % 20.6 15.8 4.7 2.4

Money market portfolio return (1 year), > STEFI, % 5.3 5.7 5.8 5.8

Expense ratio, % 10.0 4.4 5.6 6.5

Incurred loss/claim ratio, % 90.0 222.0 100.1 89.0

Solvency assessment measure, R million 634 920 1 702 1 4931

Return on equity, > Eskom’s WACC, % 6.0 (59.6) 7.3 11.0

1. Reported as R1 193 million in 2012/13, as this represented Escap’s net assets less the solvency capital requirement. The measure has been updated to show Escap’s net assets.

STEFI Short-term fixed-interest composite index.SWIX Shareholder-weighted index.

Future focus areas• Implementing appropriate processes, procedures and systems to meet the Solvency

Assessment and Management (SAM) compliance requirements • Participating in regulatory quantitative impact studies and pioneering the interests and

perspectives of captive insurers • Ensuring optimal capital utilisation and demonstrating consistent value-add to the Eskom group

Eskom Finance Company SOC Limited group Eskom established the Eskom Finance Company (EFC) in 1990 primarily to enable its employees to have access to home loan finance whilst optimising home ownership costs to both Eskom and its employees. The company is mandated to:• Finance employee home loans at competitive rates• Educate its employees on responsible home ownership and financing• Administer interest rate and rental subsidies on behalf of Eskom• Assist Eskom to develop and implement its housing policy

Operating highlights• Successful refinancing of R597 million securitised debt. Bids of R1.69 billion were received,

representing 2.83 times the subscription rate• Lower than expected funding rates resulted in an improved financing margin

Operating challenges• In order to comply with the funding limits set by the ultimate shareholder, the company placed

restrictions on granting certain loans. This resulted in the loan growth falling short of the target• There is uncertainty about the future of the company in light of the shareholder’s expectation

that Eskom should continue to dispose of EFC in line with the previous Cabinet decision• Controlling reputational and financial risks in light of the liquidity challenges

Future focus areas• Finding and implementing an appropriate disposal solution that will mitigate the impact of the

disposal to EFC stakeholders• Managing the liquidity challenges whilst continuing to administer Eskom’s commitment to the

employees’ conditions of service

Rotek Industries performs a substantial portion of the maintenance to major power station and transmission components



EFC’s shareholder’s compact with Eskom


2013/14Actual

2013/14Actual

2012/13Actual

2011/12

Maximise shareholder value: Optimise home ownership cost to Eskom and its employees in the form of economic value added (EVA), R million 245.0 256.8 199.0 166.2

Achieve company operational efficiency: Cost-to-income ratio, % 33.2 30.3 32.3 38.1

Profitability: Finance margin, % 3.00 3.03 3.02 n/a

Arrears management: Loan loss ratio, % 0.09 0.09 0.08 n/a

Liquidity management: Treasury debt balance, R billion 7.4 6.5 6.1 n/a

Maintain discipline: No repeat or overdue audit findings, only housekeeping items on rating scale of 1 to 5 3.0 4.2 3.0 n/a

Maintain good customer satisfaction: Customer satisfaction rating, % 97.0 97.3 97.3 97.2

Maintain good macro customer relationship: Macro customer rating on scale of 1 to 5 3.0 4.0 4.3 4.3

Work allocated to B-BBEE attorneys, % 90.0 99.8 95.0 91.7

Controllable expenses to B-BBEE suppliers, % 65.0 76.68 82.9 78.0

Eskom Development Foundation NPCThe mandate of the Eskom Development Foundation (the Foundation) is to carry on the business of conducting and implementing the corporate social investment programme of Eskom Holdings SOC Limited.

Operating highlights• The Foundation has approved the commitment of R132.9 million for corporate social investment

(CSI) spend, impacting 357 443 beneficiaries in the financial year• Highlights in terms of corporate social investment projects include the following:

- The graduation of 214 learners who have successfully completed the contractor academy programme

- The launching of the telematics programme with the St Johns School in the Eastern Cape. The telematics technology enables students to benefit directly from the subject presenter based in Cape Town through a satellite connection. A total of 4 973 learners will benefit from this initiative and it encourages a culture of teaching and learning through technology

- The initiation of a corporate social investment impact study which is currently underway to determine the impact of corporate social investment projects implemented over the past three years

- The successful completion of six further education and training (FET) college projects, and five rural development projects:

Rural development projects FET colleges

Sthandimfundo High School Cape Town

Tiyane Magoro Pre-school Boland

Mqhokweni Primary School Vhembe

Nzimakwe Cooperative Sekhukhune

Phumalanga Primary School Umgungundlovu

Mnambithi

Operating challenges• Due to the revised CSI budget, no new initiatives have been approved as planned and the

completion dates for certain projects have been reviewed

PerformanceKey indicators – Performance for the year ended 31 March 2014


2013/14Actual

2013/14Actual

2012/13Actual

2011/12

Percentage of CSI budget committed on projects, % 95.0 99.9 97.0 97.0

CSI committed, R million 133.0 132.9 194.3 87.9

Reduce opex against budget, % reduction 5 8 17 8

Beneficiaries, number 100 000 357 443 652 347 531 762

FET college projects completed, number 6 6 n/a 4

Rural development projects completed, number 6 5 6 5

Projects approved around strategic sites, number 30 42 30 14

Learners graduated from the Eskom contractor academy, number 180 214 n/a n/a

Learners and teachers impacted through maths and science programmes, number 10 000 22 810 n/a n/a

Citizenship dimension of the South African Global Rep Track Pulse Score, survey 46.7 49.0 46.7 n/a



The Eskom contractor academy trained more than 200 people in various technical skills over the past year

Operational review• The CSI budget committed to projects for the year ended 31 March 2014 almost achieved

target due more projects with both higher value and impact being committed in line with the new approved CSI strategy

• The operating expenditure against target was exceeded due to the achievement of savings on operational costs

• The target for the number of rural development projects completed was not achieved due to construction delays as a result of the bad weather experienced during February 2014. The rest of the project is expected to be completed in the first quarter of the new financial year

• The target for number of projects approved around strategic sites was exceeded due to an increased number of high impact projects in geographic areas that are deemed to be of strategic importance, such as Eskom capital expansion sites

• Philanthropic donations, together with high impact programmes such as the Eskom Expo for Young Scientists, the energy and sustainability programme, the mobile health bus and the telematics programmes contributed to the relatively higher number of beneficiaries compared to the target

• The number of graduates from the contractor academy exceeded the target due to more students successfully completing the programme

Eskom Development Foundation investments

Programme 31 March 2014 31 March 2013 31 March 2012

ProjectsNumber

ApprovedRm

Benefi-ciaries

NumberProjectsNumber

ApprovedRm

Benefi-ciaries

NumberProjectsNumber

ApprovedRm

Benefi-ciaries

Number

Contractor academy1 – – – 9 19.1 225 – – –

Business incubators 2 9.0 135 7 29.1 3 188 5 3.4 229

Enterprise development – – – – – – 3 1.1 26

Business investment competition 1 13.1 84 1 6.0 26 1 6.0 195

Business opportunities and franchise expo 1 7.8 63 1 6.0 36 1 5.6 56

Energy and sustainability programme 1 2.5 197 183 1 4.9 227 154 1 4.6 125 894

Rural infrastructure development 5 23.0 1 232 6 11.3 4 507 8 17.2 12 271

Health 2 16.9 28 080 2 16.8 28 080 – – –

Education2 5 16.6 1 140 14 38.7 15 024 4 18.5 1 935

Further education and training colleges 6 – – 10 17.2 6 986 4 6.2 2 918

Food security 1 0.1 – 2 0.3 – 4 4.7 480

Philanthropy and welfare 211 43.9 129 526 290 44.9 367 121 233 20.6 387 758

Total 235 132.9 357 443 343 194.3 652 347 264 87.9 531 762

1. Contractor academies were executed by the Eskom Development Foundation but were funded by the Eskom Distribution division in the 2012 financial year.

2. Education projects managed by Eskom Human Resources division have been included.



Appendix A: Statistical tables07

One of the main access tunnels into the underground Ingula pumped-storage scheme

Table 1: 10-year statistical overview 78

Table 2: Power station commercial capacities 84

Table 3: Transmission and distribution equipment in service 86

Table 4: Environmental implications of electricity usage or saving 87

Table 5: Sale of electricity and revenue per category of customer 88


Appendix A: Statistical tables continued

Table 1: 10-year statistical overview

2013/14 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/062004/05

(15 months)2004

(12 months)

Sales

Total sold, GWh1 217 903 216 561 224 785 224 446 218 591 214 850 224 366 218 120 207 921 256 453 206 799

Growth/(reduction) in GWh sales, % 0.6 (3.7) 0.2 2.7 1.7 (4.2) 2.9 4.9 (18.9)2 30.5 5.0

Electricity output

Power sent out by Eskom stations, GWh (net) 231 129 232 749 237 289 237 430 232 812 228 944 239 109 232 445 221 988 273 404 220 152

Coal-fired stations, GWh (net) 209 483 214 807 218 210 220 219 215 940 211 941 222 908 215 211 206 606 251 914 202 171

Hydroelectric stations, GWh (net) 1 036 1 077 1 904 1 960 1 274 1 082 751 2 443 1 141 903 720

Pumped storage stations, GWh (net) 2 881 3 006 2 962 2 953 2 742 2 772 2 979 2 947 2 867 3 675 2 981

Gas turbine stations, GWh (net) 3 621 1 904 709 197 49 143 1 153 62 78 – –

Wind energy, GWh (net) 2 1 2 2 1 2 1 2 3 – –

Nuclear power station, GWh (net) 14 106 11 954 13 502 12 099 12 806 13 004 11 317 11 780 11 293 16 912 14 280

Purchased from IPPs, GWh 3 671 3 516 4 107 1 833 – – – – – – –

Wheeling, GWh3 3 353 2 948 3 099 3 423 3 175 – – – – – –

Total imported for Eskom system, GWh3 9 425 7 698 9 939 10 190 10 579 12 189 11 510 11 483 10 310 12 197 9 818

Total electricity available for distribution (generated by Eskom and purchased), GWh 247 578 246 911 254 434 252 876 246 566 241 133 250 619 243 928 232 298 285 601 229 970

Total consumed by Eskom, GWh4 3 862 4 037 3 982 3 962 3 695 3 816 4 136 3 937 3 814 5 043 4 040

Total available for distribution, GWh5 243 716 242 874 250 452 248 914 242 871 237 317 246 483 239 991 228 484 280 558 225 930

1. Difference between electricity available for distribution and electricity sold is due to transmission and other losses.2. Actual sales growth was 0.8% when compared to the 12 months 1 April 2004 to 31 March 2005.3. Prior to 2009/10, wheeling was combined with the total imported for the Eskom system.4. Used by Eskom for pumped-storage facilities and synchronous condenser mode of operation.5. Includes Eskom electricity delivered to neighbouring countries.


2013/14 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/062004/05

(15 months)2004

(12 months)

Plant performance indicators

Total power station installed capacity, MW 44 189 44 206 44 115 44 145 44 175 44 193 43 037 42 618 42 011 42 011 42 011

Total power station nominal capacity, MW 41 995 41 919 41 647 41 194 40 870 40 506 38 747 37 764 36 398 36 208 36 208

Peak demand on integrated Eskom system, MW 34 977 35 525 36 212 36 664 35 850 35 959 36 513 34 807 33 461 34 195 34 195

Peak demand on integrated Eskom system, including load reductions and non-Eskom generation, MW 36 002 36 345 37 065 36 970 35 912 36 227 37 158 35 441 33 461 34 195 34 195

Average energy availability – EAF (UCF), %1,2 75.1 (76.9) 77.7 (78.8) 82.0 (83.0) 84.6 (85.9) 85.2(85.9) 85.3(86.1) 84.8(86.2) 87.5(88.6) 87.4(88.7) 89.5(89.9)8 89.5(90.0)

Generation load factor, %3 62.8 63.6 65.1 66.4 66.2 67.0 72.3 72.4 69.7 69.0 69.2

Integrated Eskom system load factor (EUF), % 83.6 81.9 79.4 78.5 77.7 78.6 85.2 82.7 79.8 78.0 77.4

Environmental indicators

Specific water consumption, L/kWh sent out4 1.35 1.42 1.34 1.35 1.34 1.35 1.32 1.35 1.32 1.278 1.26

Net raw water consumption, ML 317 052 334 275 319 772 327 252 316 202 323 190 322 666 313 064 291 516 347 135 277 557

Environmental legal contraventions 32 485 50 63 55 114 46 50 55 57 44

Significant legal contraventions reported, number6 2 27 5 4 – 12 6 – 1 38 2

Liquid fuels (diesel and kerosene), ML 1 148.5 609.7 225.5 63.6 16.1 28.9 345.9 11.3 – – –

Coal burnt, Mt 122.4 123.0 125.2 124.7 122.7 121.2 125.3 119.1 112.1 136.4 109.6

Average calorific value, MJ/kg 19.77 19.76 19.61 19.45 19.22 19.10 18.51 19.06 19.58 19.36 19.42

Average ash content, % 28.56 28.69 28.88 29.03 29.56 29.70 29.09 29.70 29.10 29.60 29.60

Average sulphur content, % 0.87 0.88 0.79 0.78 0.81 0.83 0.87 0.86 0.88 0.87 0.87

Overall thermal efficiency, % 31.3 32.0 31.4 32.6 33.1 33.4 33.4 33.9 33.8 34.0 34.0

Table 1: 10-year statistical overview (continued)

1. EAF measures plant availability including planned and unplanned unavailability and energy losses not under plant management control.2. UCF measures plant availability including planned and unplanned outages.3. kWh produced, times 100, divided by average net maximum capacity times hours in a year.4. Volume of water consumed per unit of generated power sent out by commissioned power stations. 5. An additional legal contravention was declared against Group Capital after finalisation of the integrated report thus increasing the 2012/13 year

total to 48.6. Reported in terms of the 2002 definition of the operational health dashboard. From 2008, repeat legal contraventions are included in the criteria. 7. Increased from previously reported figure (1) due to an additional legal contravention which was identified during the year for activities

associated with the underground coal gasification (UCG) pilot plant, allocated to the time of identification in October 2012.8. Represents the 12-month moving average for 1 April 2004 to 31 March 2005.



2013/14 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/062004/05

(15 months)2004

(12 months)

Environmental indicators

Total energy losses, % 8.9 9.1 8.7 8.3 8.5 7.9 8.0 8.4 8.2 8.26 7.8

Nitrous oxide (N2O), t1 2 969 2 980 2 967 2 906 2 825 2 801 2 872 2 730 3 134 3 552 2 924

Carbon dioxide (CO2), Mt1 233.3 227.9 231.9 230.3 224.7 221.7 223.6 208.9 203.7 247.0 197.7

Sulphur dioxide (SO2), kt1 1 975 1 843 1 849 1 810 1 856 1 874 1 950 1 876 1 763 2 236 1 779

Nitrogen oxide (NOx) as NO2, kt2 954 965 977 977 959 957 984 930 877 994 797

Relative particulate emissions, kg/MWh sent out1 0.35 0.35 0.31 0.33 0.39 0.27 0.21 0.20 0.21 0.266 0.27

Particulate emissions, kt 78.92 80.68 72.42 75.84 88.27 55.64 50.84 46.08 45.76 72.83 59.17

Ash produced, Mt 34.97 35.30 36.21 36.22 36.01 36.66 36.04 34.16 33.40 40.80 33.10

Ash sold, Mt 2.4 2.4 2.3 2.0 2.0 2.1 2.4 2.2 1.8 2.0 1.6

Asbestos disposed, tons 458.0 374.6 448.1 611.5 321.4 3 590.8 321.0 6 060.0 – – –

Material containing polychlorinated biphenyls thermally destructed, tons 10.4 0.93 14.3 422.9 19.1 505.6 17.0 10.0 – – –

Public individual radiation exposure due to effluents, mSv4 0.0012 0.0019 0.0024 0.0043 0.0040 0.0045 0.0047 0.0034 0.0049 0.00796 0.0087

Low-level radioactive waste disposed of, cubic metres 324.0 54.0 53.8 81.0 216.0 189.0 270.0 135.0 91.0 – –

Intermediate-level radioactive waste disposed of, cubic metres 178.0 0 128.0 0 266.0 473.6 418.0 436.0 52.0 – –

Used nuclear fuel, number of elements discharged (cumulative figure)5 48 (2 061) 56 (2 013) 60 (1 957) 112 (1897) 56 (1 785) 56 (1 729) 112 (1 673) 56 (1 561) 52 (1 505) 104 (1 453) 56 (1 405)

1. Calculated figures based on coal characteristics and power station design parameters. Sulphur-dioxide and carbon-dioxide emissions are based on coal analysis and using coal burnt tonnages. Figures include coal-fired and

gas turbine power stations, as well as oil consumed during power station start-ups and, for carbon-dioxide emissions, the underground coal gasification pilot plant.

2. NOx reported as NO2 is calculated using average station-specific emission factors (which are measured intermittently) and tonnages of coal burnt.

3. In 2012/13, the polychlorinated biphenyls thermally destructed figure was incorrectly stated as litres instead of tons and this has been corrected 1 048 litres = 0.93 tons.

4. The limit set by the National Nuclear Regulator is ≤0,25mSv.5. The gross mass of a nuclear fuel element is approximately 670kg, with UO2 mass, typically between 462kg and 464kg.6. Represents the 12-month moving average for 1 April 2004 to 31 March 2005.

Table 1: 10-year statistical overview (continued)



Name of station Location

Numberand installed

capacity of generator sets

MW

Totalinstalledcapacity

MW1

Totalnominalcapacity

MW1

Othergeneration

installedcapacity

MW

Coal-fired stations (13) 37 759 35 726 –

Arnot2Middelburg,

Mpumalanga1x370; 1x390; 2x396;

2x400; 2 352 2 232 –

Camden3,9 Ermelo3x200; 1x196; 2x195;

1x190; 1x185 1 561 1 481 –

Duvha2 Witbank 6x600 3 600 3 450 –

Grootvlei3 Balfour 4x200; 2x190 1 180 1 120 –

Hendrina2,9 Mpumalanga5x200; 2x195; 2x170;

1x168 1 898 1 798 –

Kendal2,4 Witbank 6x686 4 116 3 840 –

Komati3,9Middelburg,

Mpumalanga 4x100; 4x125; 1x90 990 904 –

Kriel2 Bethal 6x500 3 000 2 850 –

Lethabo2 Viljoensdrift 6x618 3 708 3 558 –

Majuba2,4 Volksrust 3x657; 3x713 4 110 3 843 –

Matimba2,4 Lephalale 6x665 3 990 3 690 –

Matla2 Bethal 6x600 3 600 3 450 –

Tutuka2 Standerton 6x609 3 654 3 510 –

Nuclear power station (1)

Koeberg2 Cape Town 2x970 1 940 1 860 –

Gas/liquid fuel turbine stations (4)5 2 426 2 409 –

Acacia Cape Town 3x57 171 171 –

Ankerlig Atlantis 4x149.2; 5x148.3 1 338 1 327 –

Gourikwa Mossel Bay 5x149.2 746 740 –

Port Rex East London 3x57 171 171 –

Name of station Location

Numberand installed

capacity of generator sets

MW

Totalinstalledcapacity

MW1

Totalnominalcapacity

MW1

Othergeneration

installedcapacity

MW

Pumped-storage schemes (2)5,6 1 400 1 400

Drakensberg Bergville 4x250 1 000 1 000 –

Palmiet Grabouw 2x200 400 400 –

Hydroelectric stations (6) 661 600 61

Gariep5,7 Norvalspont 4x90 360 360 –

Vanderkloof5,7 Petrusville 2x120 240 240 –

Colley Wobbles8 Mbashe River 3x14 42 – 42

First Falls8 Umtata River 2x3 6 – 6

Ncora8 Ncora River 2x0.4; 1x1.3 2 – 2

Second Falls8 Umtata River 2x5.5 11 – 11

Wind energy (1)

Klipheuwel8 Klipheuwel 1x1.75; 1x0.66; 1x0.75 3 – 3

Total power station capacities (27) 44 189 41 995 64

1. The difference between installed and nominal capacity reflects auxiliary power consumption and reduced capacity caused by the age of plant and/or low coal quality.

2. Base-load station. 3. Return-to-service station.4. Dry-cooled unit specifications are based on design back-pressure and ambient air temperature. 5. Stations used for peaking or emergency supplies.6. Pumped-storage facilities are net users of electricity. Water is pumped during off-peak periods so that electricity can be generated during peak

periods.7. Use restricted to availability of water in Gariep and Vanderkloof dams. 8. Operational but not included for capacity management purposes.9. Due to technical constraints, some units at these stations have been de-rated.

Table 2: Power station commercial capacities at 31 March 2014



2013/14 2012/13 2011/12

Power lines

Transmission power lines, km1 29 924 29 297 28 995

765kV 2 235 1 667 1 153

533kV DC (monopolar) 1 035 1 035 1 035

400kV2 17 011 16 899 17 118

275kV 7 361 7 360 7 361

220kV 1 217 1 217 1 217

132kV 1 065 1 119 1 111

Distribution power lines, km 46 093 44 396 43 856

132kV and higher3 22 719 21 508 21 068

88-33kV3 23 374 22 888 22 788

Reticulation power lines, km

22kV and lower3 276 027 269 570 265 707

Underground cables, km 7 293 7 026 6 770

132 kV and higher3 65 65 50

33-88 kV3 364 212 217

22kV and lower3 6 864 6 749 6 503

Total all power lines, km 359 337 350 289 345 328

Total transformer capacity, MVA 232 179 225 799 205 865

Transmission, MVA4 138 350 135 840 132 955

Distribution and reticulation, MVA3 93 829 89 959 72 910

Total transformers, number 329 314 320 501 315 397

Transmission, number 420 412 408

Distribution and reticulation, number3 328 894 320 089 314 989

1. Transmission power line lengths as per Geographic Information System (GIS) distances.2. The Majuba Umfolozi No 1 (765kV line), even though constructed at 765kV, is currently still being operated at 400kV and thus, for now, is

reflected under the 400kV total.3. Restated comparatives.4. Base of definition: transformers rated ≥ 30 MVA and primary voltage ≥132 kV.

Table 3: Transmission and distribution equipment in service at 31 March 2014 Table 4: Environmental implications of using or saving electricity¹

Factor 1 (total energy

sold)2

Factor 2 (total energy

generated)3

If electricity consumption is measured in:

kWh MWh GWh TWh

Coal use 0.56 0.54 kilogram tonthousand

tons (kt) million tons

Water use4 1.46 1.40 litre kilolitre megalitrethousand

megalitres

Ash produced 160.48 153.87 gram kilogram tonthousand

tons (kt)

Particulate emissions 0.36 0.35 gram kilogram ton

thousand tons (kt)

CO2 emissions5 1.07 1.03 kilogram tonthousand

tons (kt) million tons

SOx emissions5 9.06 8.69 gram kilogram tonthousand

tons (kt)

NOx emissions6 4.38 4.20 gram kilogram tonthousand

tons (kt)

Use of table: Multiply electricity consumption or saving by the relevant factor to determine the environmental implication.

Example 1 (using factor 1): Example 3 (using factor 2):

Used 90MWh of electricity Used 90MWh of electricity

Water consumption: 90 x 1.46 = 131.4 Water consumption: 90 x 1.40 = 126

Therefore 131.4 kilolitres of water used Therefore 126 kilolitres of water used

Example 2 (using factor 1): Example 4 (using factor 2):

Used 90MWh of electricity Used 90MWh of electricity

CO2 emissions 90 x 1.07 = 96.3 CO2 emissions 90 x 1.03 = 92.7

Therefore 96.3 tons emitted Therefore 92.7 tons emitted

1. Figures represent the 12-month period from 1 April 2013 to 31 March 2014.2. Factor 1 figures are calculated based on total electricity sold by Eskom (based on total available to Eskom to distribute (including what Eskom

purchases) less technical electricity losses due to transmission and distribution of electricity across the country less electricity theft less internal use less wheeling). That is for CO2: 233.3Mt / 217 903GWh) = 1.07 tons per MWh.

3. Factor 2 figures are calculated based on total electricity generated by Eskom (coal, nuclear, pumped storage, wind, hydro and gas turbines) excluding the total consumed by Eskom. That is for CO2: 233.3 Mt / (231 129GWh – 3862GWh) = 1.02 tons per MWh.

4. Volume of water used at all Eskom power stations.5. Calculated figures based on coal characteristics and power station design parameters. Sulphur-dioxide and carbon-dioxide emissions are

based on coal analysis and using coal burnt tonnages. Figures include coal-fired and gas turbine power stations, as well as oil consumed during power station start-ups and, for carbon-dioxide emissions, the underground coal gasification pilot plant.

6. NOx reported as NO2 is calculated using average station-specific emission factors, which have been measured intermittently between 1982 and 2006, and tonnages of coal burnt.

7. Further information can also be obtained through the Eskom environmental helpline. Contact details are available in appendix F of the integrated report on the inside back cover.

8. For CDM related Eskom grid emission factor information please go to the following link: http://www.eskom.co.za/OurCompany/SustainableDevelopment/Pages/CDM_Calculations.aspx or via the Eskom website>Our Company>Sustainable Development>CDM calculations.



Number of customers

Category 2013/14 2012/13 2011/12

Local 5 232 904 5 013 435 4 852 712

Redistributors 801 795 786

Residential1 5 093 847 4 874 004 4 713 178

Commercial 50 425 50 399 50 270

Industrial 2 781 2 789 2 775

Mining 1 054 1 062 1 100

Agricultural 83 489 83 877 84 095

Rail 507 509 508

International 11 11 10

Utilities 7 7 7

End users across the border 4 4 3

5 232 915 5 013 446 4 852 722

Table 5: Sale of electricity and revenue per category of customer

Sold

Category2013/14

GWh2012/13

GWh2011/12

GWh

Local 205 525 202 770 211 590

Redistributors 91 262 91 386 92 140

Residential1 11 017 10 390 10 522

Commercial 9 605 9 519 9 270

Industrial 54 658 51 675 58 632

Mining 30 667 31 611 32 617

Agricultural 5 191 5 193 5 139

Rail 3 125 2 996 3 270

International 12 378 13 791 13 195

Utilities 3 401 4 659 3 607

End users across the border 8 977 9 132 9 588

217 903 216 561 224 785

Sales to countries in southern Africa, GWh 12 378 13 791 13 195

Botswana 1 608 2 574 2 498

Mozambique 8 314 8 284 8 265

Namibia 1 248 1 822 1 507

Zimbabwe 154 3 7

Lesotho 122 255 184

Swaziland 741 598 596

Zambia 143 253 134

Short-term energy market2 48 2 4

1. Pre-payments and public lighting are included under residential.

1. Pre-payments and public lighting are included under residential. 2. The short-term energy market consists of all the utilities in the southern African countries that form part of the Southern African Power Pool.

Energy is traded on a daily, weekly and monthly basis as there is no long-term bilateral contract.



Revenue

Category2013/14

Rm2012/13

Rm2011/12

Rm

Local 129 688 114 307 103 863

Redistributors 55 371 49 891 44 251

Residential1 10 181 9 044 8 155

Commercial 7 940 6 972 5 925

Industrial 28 305 23 543 23 522

Mining 19 829 17 620 15 689

Agricultural 5 645 5 180 4 482

Rail 2 417 2 057 1 839

International 5 887 5 892 4 846

Utilities 2 837 3 149 2 404

End users across the border 3 050 2 743 2 442

Gross electricity revenue 135 575 120 199 108 709

Environmental levy2 included in revenue 1 322 6 464 4 290

Less: Revenue capitalised3 (28) – –

Electricity revenue per note 32 in the annual financial statements 136 869 126 663 112 999

1. Pre-payments and public lighting are included under residential. 2. The environmental levy of 2c/kWh tax was effective from 1 July 2009 to 31 March 2011. On 1 April 2011 the levy was raised to 2.5c/kWh. On 1 July 2012 the levy was raised to 3.5c/kWh. The levy is payable for electricity produced from non-renewable sources (coal, nuclear and petroleum). The levy is raised on the total electricity production volumes and is recovered through sales.3. Revenue from the sale of production while testing generating plant not yet commissioned, capitalised to plant.

Table 5: Sale of electricity and revenue per category of customer (continued) Construction workers build the steel frame of a high-voltage pylon


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