Eskom Interim Results for the six months ended 30 September 2011 November 2011 Eskom, Megawatt Park Presentation version Disclaimer This presentation does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy or subscribe for or underwrite or otherwise acquire, securities of Eskom Holdings SOC Limited (“Eskom”), any holding company or any of its subsidiaries in any jurisdiction or any other person, nor an inducement to enter into any investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation does not constitute a recommendation regarding any securities of Eskom or any other person. Certain statements in this presentation regarding Eskom’s business operations may constitute “forward looking statements.” All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding the financial position, business strategy, management plans and objectives for future operations of Eskom are forward looking statements. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute Eskom’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal levels of operating performance and electricity demand in the Distribution and Transmission divisions and operational performance in the Generation and Primary Energy divisions consistent with historical levels, and incremental capacity additions through our Group Capital division at investment levels and rates of return consistent with prior experience, as well as achievements of planned productivity improvements throughout our business activities. Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Eskom neither intends to nor assumes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In preparation of this document we used certain publicly available data. While the sources we used are generally regarded as reliable we did not verify their content. Eskom does not accept any responsibility for using any such information. In support of 2 Today’s agenda and presenters Executive Summary Brian Dames Financial Results Paul O’Flaherty Capital Expenditure Paul O’Flaherty Operations Brian Dames State of the System Brian Dames Concluding Remarks Brian Dames In support of 3 Executive summary Brian Dames Remember your power In support of 4 The structure of SA's electricity industry is changing Change of the industry value chain • The ISMO Bill was tabled in Parliament on 13 ISMO May 2011 Independent System and Market Operator • A phased approach to be taken • The actual path to be followed is to be finalised To be Eskom moved out Primary Generation System Transmission Distribution Customer Construction energy operations Service sourcing Support functions In support of 5 Executive summary • No load shedding since April 2008, despite an extremely tightly balanced energy system • Safety remains a major concern and is of primary focus • Two and half years of strong financial performances – these financial surpluses will be reinvested in the business, helping to fund the capacity expansion programme and to service debt • Funding plan for the capacity expansion programme more than 74% secured • 2 AfDB loans (USD 365 million) were signed on 25 September 2011 and a World Bank loan (USD 250 million) was signed on 14 November 2011 in respect of renewable projects • Eskom build programme progress: • We have commissioned 160MW of additional capacity, 263km of high-voltage transmission lines and 250MVA of new transformer capacity during the six months to 30 September 2011 • There is a concern that the performance of some contractors has put the Medupi schedule at risk • R31.8bn spent on Broad-based Black Economic Empowerment (65.8% of attributable spend) In support of 6 Performance against shareholder compact September 2011/2012 2011/2012 March 2011 Performance area Company level performance indicator 2011 Actual Projection Target Actual Generation capacity installed (MW) 160 385 385 315 Ensuring adequate future electricity Transmission lines completed (km) 263 606 606 443 Transmission MVA installed 250 500 500 5 940 Management of the national supply/ No load Ensuring reliable - - - demand constraints shedding electricity supply DSM energy efficiency (GWh) 116 1 051 1 051 1 339 Internal energy efficiency - 25.5 25.5 26.2 (annualised GWh) Water usage (L/kWh sent out) 1.3 1.4 ≤1.35 1.4 Business sustainability Cost of electricity (R/MWh) 347.3 387.0 387.0 296.4 Debt: equity 1.4 2.0 ≤2.6 1.7 Interest cover 3.4 1.5 ≥1.0 1.4 % local content in new build contracts Supporting the 78.4 80.0 52.0 79.1 placed developmental Total learners in the system - engineers 1 723 1 800 1 800 1 335 objectives of South Africa Total learners in the system - technicians 564 700 700 692 Total learners in the system - artisans 1 992 2 350 2 350 2 213 Pursuing private Setup a ring-fenced Systems and Market Completed Completed - n/a sector participation Operator (SMO) Division within Eskom by year end by year end In support of 7 Triple bottom line: socio-economic B-BBEE attributable spend amounted to 65.8% or R31.8 billion of attributable spend for the period Supplier Job creation – 25 437 individuals working on new build project sites, of which 10 664 are development employed from the local districts and localisation 78.4% of local content for major projects for contracts awarded in the period Since the inception of the build programme, 5 069 individuals have completed their skills development training and 2 563 are currently in training Since inception of the electrification programme in 1991, a total of 4 092 027 homes and Electrification 12 654 grid schools and clinics have been electrified Investment in training for the half-year was R745.5 million (half-year to 30 September 2010: R469.4 million) Training and Eskom’s learner pipeline consists of 5 173 learners. This includes 4 279 engineering/ development technical learners Initiatives underway to train a further 2 500 learners this year Eskom leads by example in corporate governance, contributes to the country's leading position in anti-corruption performance within Africa and supports the realisation of South Corporate African development goals set out by the government governance Eskom’s 2011 Integrated Report was awarded 2nd place in the Ernst and Young, Sustainability Reporting Awards Eskom Invested R43.0 million in corporate social initiatives during 2011/12 which impacted 180 organisations with some 533 422 project beneficiaries during the period (R33.2 million Development invested in corporate social initiatives during the same six month period in 2010/11 which Foundation impacted 196 organisations with some 95 363 project beneficiaries) In support of 8 Triple bottom line: safety 6 Months 6 Months Year to Fatalities to 30 Sep to 30 Sep 31 March Employee and 2011 2010 2011 contractor Employees 6 2 7 (1) fatalities Contractors 7 6 18 Public Public 9 18 43 fatalities 6 Months 6 Months Year to Employee Employee lost-time to 30 Sep to 30 Sep 31 March lost-time incident rate 2011 2010 2011 incident rate Index (target:0.40) 0.45 0.52 0.47 Causes of fatalities Electrical Vehicle Other (1 April – 30 Sep 2011) Contact Accidents Causes of Employees and contractors 2 6 5 fatalities Public 6 2 1 In support of (1) Amended after issuing the annual report due to a lost time injury reported in January deteriorated to a fatality in July 2011 9 Extensive actions to improve safety • Internal team under leadership of Exco members appointed and extensive action taken already • Safety Bootcamp held and detailed action plan developed for management consideration • Shut down principles revised; may lead to shutdowns that inconvenience customers, but save lives • New safety initiative in 2012: considering the appointment of a Safety Panel of local and international experts: • Investigate safety in Eskom and contractors • Recommend best local and global practices as gold standard for safety in Eskom • Overhaul safety policies, procedures and practices • Re-invigorate safety training and practices In support of 10 Triple bottom line: environmental 6 Months 6 Months Year to Atmospheric Unit of Change to 30 Sep to 30 Sep 31 March emissions measure 2011 2010 2011 Carbon dioxide (CO2) Mt 117.6 117.7 230.3 Atmospheric Sulphur dioxide (SO2) kt 911.1 929.3 1 810 emissions Nitrogen oxide (NOx) kt 493.3 492.7 977 Relative particulate kg/MWh emissions 0.30 0.31 0.33 sent out 6 Months 6 Months Year to Water to 30 Sep to 30 Sep 31 March 2011 2010 2011 Water Specific water l/kWh consumption 1.29 1.32 1.35 sent out Net raw water consumption ML 154 905 156 014 327 252 Management Obtained ISO 14001 certification for four operational sites systems In support of 11 Triple bottom line: financial highlights Reviewed Reviewed six months to six months to 30 Sep 2011 30 Sep 2010 Income statement for the 6 month period Revenue (R m) 63 882 51 114 Growth in GWh sales (%) (1) 0.9 3.3 Income Profit for the period after tax (R m) 12 810 9 533 statement Return on average total assets (%) 3.7 3.6 Revenue per kWh (cents per kWh) (2) 55.3 44.6 Operating costs per kWh (cents per kWh) (3) 38.2 30.6 Capital Capital expenditure (R m) (4) 30 572 22 949 expenditure As at end of the 6 month period Average days coal stock (days) 41 46 Balance sheet Debt securities issued/borrowings (R m) 178 487 127 207 Debt: equity (ratio) 1.4 1.5 Funding plan well advanced and more than 74% of sources of funds secured Funding and Credit ratings remained the same during the period: Baa2 (Stable)/ BBB+ (Stable) rating credit ratings by Moody’s and S&P; however Moody’s changed its outlook from stable to negative in November 2011 to align with the adjusted South African sovereign rating In support of (1) Compared to the same period last year (3) Includes depreciation and amortisation costs 12 (2) Includes environmental levy (4) Including interest capitalised Financial results Paul O’Flaherty Remember, we’re all connected In support of 13 Income statement for the six months ended 30 September 2011 • Electricity sales of 114 043 GWh for the half- Rm Reviewed Reviewed Reviewed six months to six months to six months to year ended 30 September 2011, an increase 30 Sep 2011 30 Sep 2010 30 Sep 2009 of 0.9% when compared to the 113 072 GWh Revenue 63 882 51 114 38 264 reported in the same period in 2010 Other income 395 351 181 • Electricity sales are subject to seasonal fluctuations: Primary energy (21 858) (17 199) (13 980) Opex (including • Higher electricity demand and prices depreciation & (21 534) (16 400) (14 326) amortisation) during the cold winter months Net fair value loss on (1 126) ( 625) (2 131) • Large power user prices significantly financial instruments higher during the winter period Operating profit before embedded derivatives 19 759 17 241 8 008 • Maintenance undertaken during the warmer summer months Embedded derivative gain / 263 (1 471) (5 638) (loss) • Group revenue of R63.9 billion (30 September Operating profit 20 022 15 770 2 370 2010: R51.1 billion), an increase of 25.0% Net finance costs (2 106) (2 366) (278) • Revenue growth driven primarily as a result of Share of profit of equity - the 25.8% tariff increase granted by NERSA accounted investees 16 8 9 effective from 1 April 2011 Profit before tax 17 932 13 412 2 101 • Effective tax rate of 28.6% (2010: 28.9%) Income tax (5 129) (3 879) (746) • Net profit increased from R9.5 billion as at Loss from discontinued operations 7 0 (242) 30 September 2010 to R12.8 billion as at 30 September 2011 Net profit for the period 12 810 9 533 1 113 In support of 14 Key performance ratios Reviewed six Reviewed six Reviewed six Unit months ended months ended months ended 30 Sep 2011 30 Sep 2010 30 Sep 2009 EBITDA Rm 24 093 19 188 4 861 Funds from operations (FFO) Rm 22 755 14 635 8 241 Gross debt/ EBITDA ratio 8.3 7.5 20.8 FFO/ gross debt % 11.4 10.1 8.1 Return on average total assets % 3.7 3.6 0.5 Return on average equity % 13.4 12.4 1.8 Working capital ratio ratio 1.0 1.1 1.1 Revenue per kWh (electricity sales) cents per kWh 55.3 44.6 34.0 Costs per kWh (electricity business) cents per kWh 38.2 30.6 26.6 Bad debt as percentage of revenue % 0.9 0.8 0.7 Average debtor days: Dx LPU days 21.0 20.3 19.4 Dx SPU days 40.5 40.0 39.3 Average debtor days: Transmission (1) days 15.5 16.2 18.5 (1) Excluding disputes In support of 15 Net operating profit R million 1 734 (4 659) 537 65 44 (501) 12 166 (1 246) (750) (3 138) 20 022 15 770 2010 half-year Tariff GWh sales Other Other Net fair value Embedded Primary Manpower Depreciation Other 2011 half-year operating increase volume growth revenues income changes in derivatives energy costs and operating operating profit before financial amortisation expenses profit before finance costs instruments expense (1) finance costs (1) Includes net impairment losses In support of 16 EBIT before embedded derivatives Cents/kWh(1) 55.6 44.8 34.1 17.1 14.3 6.1 0.7 0.7 0.7 (2.6) (3.3) (4.0) (5.3) (2.1) (0.6) (1.0) (5.9) (6.5) (5.6) (7.5) (7.5) (12.8) (15.2) (19.2) (26.6) (30.6) (38.2) Total Primary Employee Depreciation Other Total Other income Net fair value EBIT (before revenue (2) energy benefit and operating operating loss on financial embedded costs expense amortisation expenses costs instruments, derivatives) expense excluding embedded derivatives 2009 2010 2011 In support of (1) Numbers represent the Eskom Company results (2) Total revenue includes non-electricity revenues 17 Improving profitability Total revenue (1) Free funds from operations (FFO) (1) Rm Rm 63 882 22 755 51 114 14 635 38 264 8 241 Sep-09 Sep-10 Sep-11 Sep-09 Sep-10 Sep-11 • Revenue growth is primarily driven by an Net profit (1) increase in tariffs Rm 12 810 • Electricity sales are subject to seasonal fluctuations and are higher in the first two 9 533 quarters of Eskom’s reporting cycle • Large power user prices higher in winter compared to summer 1 113 • Eskom has held a moratorium on dividend Sep-09 Sep-10 Sep-11 payments since 2008 due to its capacity (1) For the six month period ended 30 September 2009, 2010 and 2011 expansion programme In support of 18 Sales and revenue growth • 114 043 GWh sales for the half-year to Electricity sales (GWh) 30 September 2011: • represents a 0.9% increase compared to the GWh 113 072 114 043 109 463 same half-year period last year; and • below the budgeted sales of 114 636GWh (1.4% budgeted growth for the half-year to 30 September 2011) • Growth affected by: • Industrial action in the metal and gold industries • Winter demand from large power users was significantly below expectations Sep-09 Sep-10 Sep-11 • Winter cold snaps were severe, but relatively brief Electricity revenue (c/kWh) • Demand patterns also reflect weaker than Cents/ kWh 55.3 expected economic activity • Lower growth rate projected to continue; 44.6 year-end projected sales have been adjusted down to 225 781GWh from the budgeted 34.0 227 073GWh • 24.1% increase in electricity revenue per kWh, predominantly due to the 25.8% tariff increase granted by NERSA effective from 1 April 2011 Sep-09 Sep-10 Sep-11 In support of 19 Operating expenses(1) Primary Energy Costs Employee Benefit Expenses Rm Cents/ kWh Rm Cents// kWh 19.2 8.2 7.2 15.2 6.6 12.8 21 858 9 367 8 121 17 199 7 202 13 980 Sep-09 Sep-10 Sep-11 Sep-09 Sep-10 Sep-11 Depreciation & Amortisation Expenses(2) Other Operating Expenses(3) Rm Cents/ kWh Rm Cents/ kWh 6.6 4.1 3.4 4.0 7 531 2.5 3.9 4 636 3 886 4 345 4 393 2 779 Sep-09 Sep-10 Sep-11 Sep-09 Sep-10 Sep-11 Repairs, maintenance, transport and other expenses In support of (1) Cents/KWh figures are calculated based on total electricity sales numbers (2) Including net impairment loss (3) Including managerial, technical and other fees, R&D, operating lease expense, auditor’s remuneration, repairs and maintenance 20 Analysis of primary energy costs Primary energy costs increased by 26.0% from Primary Energy Costs 15.2 c/kWh (half-year to 30 September 2010) to cents/ kWh 20 19.2c/kWh 19.2 c/kWh for the current half-year to 30 18 September 2011 16 15.2 c/kWh 14 12.8 c/kWh The 3.96 c/kWh increase is made up of the 12 following: 10 • the increased cost of coal burnt (19.5% per 8 ton) contributed 1.94 c/kWh (49% of the 6 increase) 4 • the environmental levy increase of 0.5c/kWh 2 which took effect on 1 April 2011 contributed 0 0.66 c/kWh (17% of the increase) Half-year to Half-year to Half-year to 30 Sep 2009 30 Sep 2010 30 Sep 2011 • the cost of using IPPs (R1.7 billion) Coal Imports Other Levy IPP contributed 1.35 c/kWh (34% of the increase) Coal stock days Coal burnt 45 46 41 42 Sep Sep Sep 2009 2010 2011 Coal burnt (Mt) 61.8 62.8 63.3 Sep-09 Sep-10 Sep-11 Year end target In support of 21 Hedging policy Primary Energy Hedging: Embedded Derivatives (Loss) / Gain • Eskom does not formally hedge against Rm increases in coal prices 263 • Limited correlation with International Coal Prices (1 471) Commodity Derivatives Hedging: • Hedging in place to mitigate potential losses on the embedded derivatives since 1998 • Discussions with relevant stakeholders to find (5 638) a solution on the last remaining commodity linked power agreement continue Sep-09 Sep-10 Sep-11 Foreign Currency Hedging: • Eskom’s policy is to hedge all foreign currency Net Fair Value Loss on Financial Instruments exposure over R50 000 once commitment has Rm been made • Uses inter-alia forward exchange contracts with short maturities and roll-over at maturity as well as cross-currency and interest-rate ( 625) swaps • Note that 87% of our total debt as at (1 126) 30 September 2011 has a fixed interest rate component (2 131) Sep-09 Sep-10 Sep-11 In support of 22 Group financial position – growth in property, plant and equipment through debt raised Rm Assets 400 000 350 000 Other assets, R28 409m Working capital, R26 069m 300 000 Liquid assets, R54 162m Other assets, R18 225m 250 000 Working capital, R23 894m Liquid assets, R38 021m Other assets, R15 996m 200 000 Working capital, R19 320m Liquid assets, R28 239m 150 000 Property, plant and Property, plant and equipment, 100 000 Property, plant and equipment, R263 081m equipment, R207 733m 50 000 R159 488m 0 September 2009 September 2010 September 2011 Rm Equity and Liabilities 400 000 350 000 Equity, 300 000 R104 132m 250 000 Equity, R83 084m Other liabilities, R62 160m 200 000 Equity, R62 975m Working Capital, R26 942m Other liabilities, R56 311m 150 000 Other liabilities, R55 396m Working Capital, R21 271m Debt securities & 100 000 Working Capital, R16 944m Debt securities & borrowings, Debt securities & borrowings, R178 487m 50 000 borrowings, R127 207m R87 728m 0 In support of September 2009 September 2010 September 2011 23 Revaluation of assets After After Historical cost: Historical cost: revaluation: revaluation: For 6 months For 6 months For 6 months For 6 months R million to 30 Sep 11 to 30 Sep 10 to 30 Sep 11 to 30 Sep 10 Total profit/ (loss) for the year Historical profit/ (loss) for the period 12 810 12 810 9 533 9 533 Adjustments: Depreciation and amortisation expense - (7 308) - (7 298) Net impairment loss and other operating expenses - (225) - (69) Net finance cost - (4 855) - (2 985) Income tax - 3 469 - 2 898 Adjusted profit after revaluation for the year 12 810 3 891 9 533 2 079 Equity (cumulative impact) Historical closing equity balance - 104 132 - 83 084 Adjustments: Additional comprehensive loss for the year - (8 919) - (7 454) Revaluation of property, plant and equipment - 271 276 - 305 139 Deferred tax on equity adjustments - (75 957) - (85 439) Adjusted closing Equity balance 290 532 295 330 Statement of financial position Property, plant and equipment 263 081 521 969 207 733 502 519 Ratios Cost (cents) per kWh (Company) 38.2 44.9 30.6 37.1 Interest cover 3.5 2.2 3.9 2.1 Return on assets 3.7% 0.6% 3.6% 0.4% In support of 24 Debt maturity and leverage Gross Debt/ EBITDA ratio Debt Securities & Borrowings Maturity Profile(1) 20.8 1 year to 10 years 36.0% More than 10 years 7.5 8.3 60.8% Sep-09 Sep-10 Sep-11 Within 1 year 3.2% Interest Cover ratio FFO as a % of Gross Debt 3.9 3.5 11.4 10.1 8.1 1.7 Sep-09 Sep-10 Sep-11 Sep-09 Sep-10 Sep-11 (1) As at 30 September 2011 In support of 25 Debt maturity profile Strategic portfolio nominal and interest cashflows as at 30 September 2011 R bn R bn 50 250 Billions 45 40 200 35 30 150 25 20 100 15 10 50 5 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Total Capital Total Interest Nominal Cumulative Total In support of 26 Group cash flows Cash flows from operating activities Cash flows utilised in investing activities Rm Rm 21 260 17 130 9 512 (20 922) (20 176) (25 526) Sep-09 Sep-10 Sep-11 Sep-09 Sep-10 Sep-11 Cash flows from financing activities Cash and cash equivalents at period end Rm Rm 28 577 20 858 26 597 19 387 14 438 9 865 (5 566) (3 248) (10 515) Sep-09 Sep-10 Sep-11 Sep-09 Sep-10 Sep-11 Net debt issued Other financing In support of 27 Summary of cash flows Rm Ops Financing Investing 14 419 (782) 109 (24 552) 21 260 (4 554) (2 575) (974) 14 438 12 087 31 Mar 2011 Cash generated Net repayment of Net interest Debt Raised Investment in Other Capex Other investing 30 Sep 2011 Cash & cash by operations borrowings repayments securities financing expenditure Cash & cash equivalents equivalents In support of 28 Funding plan – R300 billion to 2017 Amount Draw-downs Funding sourced Currently secured supported by Source of funds to date Rbn Rbn Government Rbn Rbn Bonds 90.0 30.4 30.4 17.9 Commercial paper 70.0 70.0 15.0 0.0 Export Credit Agency 32.9 32.9 12.8 0.0 backed World Bank loan 29.7 29.7 3.8 29.7 AFDB loan 20.7 20.7 5.9 20.7 DBSA loan 15.0 15.0 2.0 0.0 Shareholder loan 20.0 20.0 20.0 20.0 Other sources 21.7 5.0 0.4 3.0 Totals 300.0 223.7 90.3 91.3 Percentages 74.6%(1) 40.4%(2) 40.8%(2) (1) As a percentage of the R300bn funding sourced (2) As a percentage of the currently secured total In support of 29 Credit ratings as at 30 September 2011 Entity Rating Status Moody’s S&P Fitch Foreign Currency Baa2 BBB+ - Eskom Local Currency Baa2 BBB+ A Holdings ZAR Long-term - AA AAA Ltd ZAR Short-term - A1 F1+ Outlook Negative (1) Stable Stable Stand-Alone Ratings Ba3 B None Foreign Currency A3 BBB+ BBB+ Local Currency A3 A+ A RSA Govt. ZAR Long-term - AAA AAA ZAR Short-term - A1 F1+ Outlook Negative (1) Stable Stable (1) During November 2011 Moody’s lowered its outlook on Eskom’s and South Africa’s sovereign credit rating to negative from stable In support of 30 Current credit rating uplifts(1) Long-term Long-term Long-term local currency Aaa AAA AAA Aa1 AA+ AA+ Aa2 AA AA Aa3 AA- AA- A1 A+ A+ Investment grade A2 A A (Final rating) A3 A- A- Baa1 BBB+ (Final rating) BBB+ Baa2 (Final rating) BBB BBB Baa3 BBB- BBB- Ba1 +4 notches BB+ +7-8 notches BB+ Ba2 BB BB Ba3 (Standalone) BB- BB- B1 B+ B+ B2 B (Standalone) B Non-investment grade B3 B- B- Caa1 CCC+ CCC+ Caa2 CCC CCC Caa3 CCC- CCC- Ca The certainty of the “user pays” principle for regulated entities is critically important from a ratings perspective In support of (1) As at 30 September 2011 31 Capital expenditure Paul O’Flaherty Switch from traditional light bulbs to CFLs or LEDs In support of 32 Capacity expansion programme Distribution & Primary Energy Generation Transmission Construction customer service Mpumalanga Return-to-service (RTS) New coal Peaking & renewables refurbishment Transmission  Komati (1 000 MW)  Medupi (4 764 MW)  Ankerlig (1 338.3MW)  Arnot capacity increase  765kV projects  Camden (1 520 MW)  Kusile (4 800 MW)  Gourikwa (746 MW) (300 MW)  Central projects  Grootvlei (1 180 MW)  Ingula (1 332 MW)  Matla refurbishment  Northern projects  Sere (100 MW)  Kriel refurbishment  Cape projects  Duvha refurbishment 3 700 MW 9 564 MW 3 516.3 MW 300 MW ~ 4 700 km Commissions of new stations First Unit Last Unit • ~ 17 080 MW of new capacity (5 381 MW installed and Medupi 2013 2018 commissioned) 2014 2018 • ~ 4 700 km of required transmission network (3 531 km Kusile installed) Ingula 2014 2014 Medupi is the first coal-generating plant in Africa to use supercritical power generation technology In support of 33 Build progress to date To date, a large amount of construction work has been completed, adding ~ 5 381 MW of capacity, ~ 3 531 km of transmission network and ~ 17 920 of sub-station transformers Megawatts MW of capacity 315 160 452 1 770 1 043 5 381 1 351 0.0 290.0 Transmission Km line 443 263 600 418 480 430 3 531 237 659 5 940 250 Substations MVAs 1 375 1 630 1 355 1 090 1 000 17 920 5 280 FY FY FY FY FY FY FY FY Total In support of 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 MVA – 2007/08 (1 355 MVA) includes Transmission contribution as well as Group Capital (1 295 MVA) 34 Current planned capacity expansion plan Project 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY Total Grootvlei (return to service) 160 30 190 Komati (return to service) 225 400 625 Arnot capacity upgrade (coal fired) 30 30 Medupi (coal fired) 794 1 588 794 794 794 4 764 Kusile (coal fired) 800 800 800 1 600 800 4 800 Ingula (pumped storage) 333 999 1 332 Sere wind farm (renewable) 100 100 TOTAL (MWs) 415 430 1 227 3 387 1 594 1 594 2 394 800 11 841 In addition, Eskom has commenced the development of a 100MW CSP plant In support of 35 Significant progress in build programme – began in 2005 with completion in 2017/18 % of estimated total cost spent as at 30 September 2011 25.9% R billion spent and to be spent on the capacity 121.0 expansion programme (excluding borrowing costs 50.3% capitalised) 98.9 In addition, we plan to spend: • More than R10 billion over each of the next 6 years to strengthen, refurbish and expand our Distribution 89.7 network; and 49.1 • R82 billion on refurbishing our generation plants over the next 6 years 87.4% 42.9% 70.4% 25.5 23.5 21.4 49.8 3.2 6.9 31.3 12.2 22.3 16.5 9.2 Medupi Kusile Ingula Return to service Transmission Completed Remaining 23,7 In support of 36 Significant risks: Mega-projects Investment Decision Delays: Investment decisions not made Inadequate Engineering timeously for capacity to be realised Definition During Project when required according to IRP and Planning & Development: Eskom Business Plan. This could Scope creep, cost overruns, time have various consequences ranging delays and poor quality, caused by from the need for higher tariffs, use poor defined/ inadequate project of more expensive generation scoping and engineering specifications options and insufficient reserve margin Industrial Action: Primary Energy challenges: Industrial action, leading to employee Late delivery of primary energy that safety incidents (injury and fatalities), could affect plant commissioning. At project delays and/or property damage. present the primary concern is at Resulting from employee Kusile as the Medupi Coal Conveyor dissatisfaction and, in particular, project is on track and contingencies contractor treatment of their employees are in place to truck in coal Targeted Disruption During Climate Change Conference (COP17): Delays in Acquiring Targeted disruptions by environmental Servitudes: activists during the COP17 Climate Delays in acquiring servitudes Change Conference (28 Nov to 10 caused by appeals and land Dec), leading to site closures and disputes, leading to delayed starts press coverage. Particularly adverse on projects and cost escalations publicity would result if activists were able to access a site In support of 37 Medupi update • As announced on 11 October 2011, Eskom initiated a detailed assessment of the timelines for the first unit of Medupi (Unit 6), which was due to deliver first power to the national grid in late 2012; We said the schedule was at risk • Main concern is the unit’s boiler, which is being built by a consortium comprising Hitachi Power Africa and Hitachi Power Europe. We are working closely with the parent company in Japan and Hitachi has put remedial measures in place to mitigate the risks • Hitachi has made commitments to enable Unit 6 to deliver first power to the grid by May 2013 – in line with the Integrated Resource Plan • Other contractual arrangements arising out of the delay are being addressed In support of 38 Operations Brian Dames If you’re not using it, switch it off In support of 39 Customer services • Total electricity sales of 114 043GWh and more than 4.7 million customers (including transmission customers) as at 30 September 2011 • Directly provides electricity to 45% of all end users in South Africa • Two main types of customers: • Redistributors: Mainly municipalities that sell electricity to end customers. • Direct customers: Industrial, commercial, mining, agricultural and residential consumers • Key Sales and Customer Service unit deals with customers using ≥100GWh of energy per year • At 30 September 2011, KSACS had approximately 143 customers accounting for 38.6% of total revenues • One customer has a supply contract indexed to commodity prices • A member of Southern African Power Pool (“SAPP”) Key figures for the half-year to 30 September 2011 Sales Split Gross Electricity Revenue Split Number of customers Total: 114 043GWh (113 072GWh)(1) Total: R63 096m (R50 392m)(1) Total: 4.7 million (4.6 million)(1) Commercial Agricultural Residential Commercial Agricultural 4.0% (4.0%) 2.0% (2.0%) 7.5% (7.5%) 5.3% (5.3%) 1.78% (1.85%) Residential Agricultural 4.8% (4.9%) International 3.6% (3.7%) Commercial Traction Other 4.0% (3.4%) 1.04% (1.06%) 0.11% (0.12%) 1.3% (1.2%) Traction International 1.6% (1.5%) 5.6% (5.8%) Mining Mining 14.8% (14.8%) 14.5% (14.5%) Redistributors Redistributors 42.1% (41.8%) Industrial 41.8% (41.5%) Industrial 21.4% (22.3%) Residential 25.7% (25.8%) 97.07% In support of (96.97%) (1) Numbers in brackets refer to the half-year to 30 September 2010 40 Integrated Demand Management Performance for the six months ended 30 September 2011 Annualised Energy Saving Project Peak Demand Savings (MW) (GWh) Expenditure Programme Category Associated Installed Verified Installed (R million) Verified Water heating load management 0 0 0 0 45 Compressed air systems 9 9 65 62 13 Industrial process optimisation 0 0 1 1 17 Lighting and air-conditioning 23 17 65 49 84 Solar water heating 0 (99 320 Units) 0 0 (99 320 Units) 5 429 Heat pumps 1 0 4 0 27 Shower Heads 0 0 0 0 2 Total 33 26 135 116 617 Quarterly Cumulative Projection Peak Demand Savings (MW) Energy Savings (GWh) Energy Savings (GWh) - 300 1 200 30 Internal Energy Efficiency 1 051 Annualised Energy Savings 26 Verified Peak Demand Savings 260 Annualised Energy Savings 250 1 000 25 19 200 800 20 (GWh) (GWh) (MW) 150 600 500 15 102 100 400 10 50 26 200 116 5 0 1 0 0 0 0 0 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Actual Actual Projection Projection Actual Actual Projection Projection Actual Actual Projection Projection In support of 41 Generation • Operates 27 power stations: 13 coal, Key figures 4 gas / liquid fuel turbines, 6 hydro Financial Year Half-year to electric, 2 pumped storage, 1 nuclear to 31 March 30 Sep 2011 and 1 wind 2011 Net Capacity (MW) 41 334 41 194 • Total net capacity of 41 334MW as at Capacity from Coal (MW) 35 092 34 952 30 September 2011 Coal Share in Total Capacity 84.9% 84.8% • Approximately 85% of net capacity is coal-fired Capacity from Nuclear (MW) 1 830 1 830 Nuclear Share in Total Capacity 4.4% 4.4% • Koeberg nuclear power station Total Energy Output (TWh) 121 237 • 1 830MW net capacity • 6.8TWh electricity produced from Energy from Coal (TWh) 111 220 nuclear in the half-year to 30 Coal Share in Total Output 92.0% 92.8% September 2011 Energy from Nuclear (TWh) 6.8 12.1 • Reserve margin of 16.9% for FY 2012. Nuclear Share in Total Output 5.6% 5.1% The reserve margin has been steadily Reserve margins increasing since FY 2008. It must be 15% international norm noted that this is not reflective of system and Eskom target adequacy, due to other factors like 16.4% 16.9% 14.9% maintenance and plant availabilities that results in lower operational reserves 10.6% provided to the system operator 5.6% In support of FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 42 Generation – operational performance Highlights • General improvement of coal quality to some power stations • All Grootvlei units are now in commercial operation • The fleet has shown an improvement in the utilisation of water compared to last year and the YTD performance is within target • Several stations are showing an improved particulate emission performance when compared to last year and the general trend of the fleet’s performance is improving In support of 43 Generation – operational performance Challenges • The return to service of Duvha Unit 4 turbine and generator which was extensively damaged in February 2011 • In a constrained power system we balance risk, planned maintenance and production requirements on ageing plant with the demand for electricity of a growing economy • Maintain focus to ensure coal qualities do not deteriorate • Original equipment manufacturer (OEM) supplier performance for maintenance In support of 44 Duvha recovery process is on track • Since the incident at Duvha Unit 4 on 9th February 2011 Eskom has launched a comprehensive and methodical recovery project, while also reporting timeously and regularly about progress, within legal, management, regulatory and governance framework requirements • Progress to date includes completion of the Technical Investigation and acceptance of the claim by the insurers, while keeping the Unit 4 Recovery Project on track for return to service in Winter 2012 • The focus is now on returning Unit 4 to service Latest News Following the completion of the joint investigation process by a joint team of experts, Eskom’s insurers have accepted the claim. Eskom has therefore mitigated the financial risk and now moves on to final phase of the recovery project In support of 45 A comprehensive recovery project Feb Nov 2011 2011 Final Insurance Insurance Insurance claim adjudication Event Investigation Report Feb 2011 Winter Return To Service Project 2012 Technical report including management response Organisational learning report Internal/HR processes Incident Quarterly Board & Exco Public notification Updates Shareholders In support of Communication 46 The investigation made three main findings • The incident was investigated by a team comprising representatives from TUV (investigating consultants appointed by insurers), Robertson and Co SA. (investigating consultants appointed by insurers), Eskom and VGB Powertech (engineering consultants to Eskom) • The insurers’ investigation report has been finalised and there was agreement on the findings between the investigating parties: • The overall conclusion reached by the investigators is that at the Power Station, there were a number of areas affected by inadequate and ineffective management of people, plant and procedures • The root cause of the incident was a modification undertaken by the Power Station in 2004 on the electro-hydraulic governor controller (known as the droop controller) • The direct cause of the incident is attributed to an operating error, in that the operator did not follow the set procedure while undertaking the physical overspeed test In support of 47 Eskom is taking comprehensive action • Everything Eskom has learned about the incident through the incident report will be used in training • Actions related to the inadequate and ineffective management of people, plant and procedures: • Where there has been inadequate controls, steps have been taken to improve these controls and to take corrective action • Every specific issue in the report will be addressed • Actions regarding the root cause; the modification undertaken by the Power Station in 2004 on the electro-hydraulic governor controller (known as the droop controller): • All software had been replaced with Original Equipment Approved software modifications • All units in Duvha have been checked for the same modification and where necessary replaced • New engineering governance regulations are in place to prevent a similar decision in future • Actions about the direct cause of the incident, attributed to an operating error, in that the operator did not follow the set procedure while undertaking the physical overspeed test • Where it has been determined in the investigation that procedures were not followed, action will be taken • Oversight and supervisory procedures for overspeed tests have been revised • Training on revised procedures has been done at Duvha and the learning will be extended across the fleet In support of 48 Project Scope • Recovery Project Team established • An initial visual inspection indicated that the steam turbine, generator and supporting components were extensively damaged during the event • The mechanical failure caused fire damage and structural damage to adjacent walls and supporting steel structures • The initial focus of the recovery team was to safeguard the unit and do critical repairs in order to make the area safe for work. Thereafter, the team focused on finalising the commercial strategy for the recovery of the unit. Completed • Project comprises of 4 phases as follows: Still progressing Not started Phase Status 1 1.1 Strip down and damage assessment 1.1 Q4 2011 1.2 Procurement and refurbishment of spares 1.2 Q1 2012 2 Repair turbine and generator foundations Q1 2012 3 Assembly of centreline Q2 2012 4 Commission the centre line and associated systems Q3 2012 In support of 49 Generation – technical performance Target As at 30 As at 30 As at 31 Measure Description 31 March September September March 2012 2011 2010 2011 UCF measures the plant availability and Unit capability factor indicates how well the plant is operated and 85.1% 87.2% 88.0% 85.9% (UCF) maintained. EAF measures plant availability (UCF above), Energy availability plus energy losses not under the control of 84.1% 86.3% 86.7% 84.6% factor (EAF) plant management UCLF measures the lost energy due to Unplanned unplanned production interruptions resulting capability loss factor 6.5% 6.8% 5.4% 6.1% from equipment failures and other plant (UCLF) conditions. GLF indicates the extent to which the Generation load generation fleet was loaded on average over 66.9% 66.9% 67.2% 66.4% factor (GLF) the year to produce the energy demanded. PCLF - planned energy loss is energy not Planned capability produced during the period because of planned 8.4% 6.1% 6.6% 8.0% loss factor (PCLF) shutdowns or load reductions due to causes under plant management control. Unplanned automatic grid UAGS/7000 indicates the amount of unplanned 2.8 2.8 3.7 3.6 separations / 7000 unit trips per 7000 operating hours hours (UAGS/7000) In support of 50 Slide required with graph and comments on performance Generation – technical performance Energy availability factor (EAF) % • The actual YTD EAF for September 2011 was 86.3% which is lower than target. This was 95 affected by the total unplanned unavailability 85 • The actual YTD planned unavailability (PCLF) 84.1 84.9 85.3 85.2 84.6 86.3 is 6.1%. Eskom requires an aspirational PCLF (maintenance ratio) of 10%, but the constraint 75 of the system meant that we could achieve only 6.1%. There is a growing maintenance 65 backlog that will require plant shutdowns, and this must be addressed over the coming years 55 • The Duvha Unit 4 event negatively impacted period on period performance 45 35 Year to 31 Year to 31 Year to 31 Year to 31 Half-year to Mar 2008 Mar 2009 Mar 2010 Mar 2011 30 Sep 2011 Actual Annual target EAF measures plant availability, plus energy losses not under the control of plant management In support of 51 Primary Energy – operational performance Coal • Largest primary energy source in South Africa Primary Energy Costs as % of Electricity Revenues • Average coal stock of 41 days as at 30 September 2011 (September 2010: 46 days); Burnt 63.3 million tonnes of coal in the half-year to 30 September 2011 (September 2010: 62.8 37.6% million tonnes) 34.1% 34.6% • Coal purchased as follows: • 43.6% cost plus contracts • 25.7% fixed price or indexed contracts • 30.7% short/medium - term contracts • Limited correlation with International Coal Prices Water • 154 905ML of water used in the half-year ended 30 September 2011 (*156 014ML for the half-year ended 30 September 2010) • Relative water consumption to generate electricity improved from Sep-09 Sep-10 Sep-11 1.32 litres/kWh as at 30 September 2010 to 1.29 litres/kWh as at September 2011 Nuclear Eskom’s Net Capacity Mix – 30 September 2011 • Sourced mainly on international market Hydro • Annual average ~ 30 tonnes of enriched uranium (equivalent to 1.5% ~270 tons natural uranium) fabricated into ~ 70 fuel elements Pump • Government authorizes all nuclear fuel contracts and importation storage of nuclear fuel in accordance with the Nuclear Energy Act 3.4% Nuclear Gas / Liquid Fuel 4.4% • Sourced locally with regulated price • No take or pay obligations in place except for tank rental Gas 5.8% obligations Coal • Eskom does not hedge against diesel price fluctuations due to 84.9% the uncertainty around the timing and quantity of usage * Figure excludes Grootvlei and Komati’s water use In support of 52 Primary Energy – operational performance Highlights • For the half year ended 30 September 2011 coal cost maintained below budget • Implementing the Tutuka containerised rail solution • Stock days have recovered well despite coal mining industry industrial action • Lower pumping costs as a result of the higher than expected rainfall and better water consumption rates at the power stations • Construction of the Komati water scheme augmentation project to support Kusile has commenced In support of 53 Primary Energy – operational performance Challenges • Delays in spending on the road repair programme • Road fatalities due to the transport of coal • Poor performance of some mines has resulted in the purchasing of more coal from the short/medium-term market, resulting in higher coal and transport costs • Poor performance of Majuba tippler impacting rail deliveries to Majuba Power Station • Maintenance of water schemes In support of 54 Transmission – operational performance Highlights • For the first 6 months of this financial year, the Single Buyer Office has successfully purchased 2 133 GWh of energy from non Eskom generation at a cost of R1.6 billion • Transmission energy losses of 3.14% versus a target of 3.40% Challenges • High levels of theft of equipment and electricity is affecting plant performance and increasing cost • Transmission system performance (SM<1) negatively impacted by risks resulting from modifications at operational sites • Employee security remains a concern • On 28 September 2011, a transmission fault caused an outage that lasted just under an hour. Eskom lost supply of approximately 1 186 MW, affecting supply to customers in Cape Town. The fault happened while planned maintenance was taking place In support of 55 Transmission – technical performance • Both the number of interruptions and the system minutes lost < 1 performance during the half-year were worse than expected. This is primarily attributable to: • human performance • equipment failure during planned plant outages for maintenance • One major incident was recorded on the Transmission network during the half-year Severity of Interruptions Number of Supply Interruptions (System minutes lost ≤ 1) 5 50 4.5 49 4 4.2 40 4.1 3.5 3.4 3.6 35 3 30 31 31 30 2.5 2.7 2.6 2 20 24 1.5 1 10 0.5 0 0 Year to 31 Year to 31 Year to 31 Year to 31 Half-year to Year to 31 Year to 31 Year to 31 Year to 31 Half-year to Mar 2008 Mar 2009 Mar 2010 Mar 2011 30 Sep 2011 Mar 2008 Mar 2009 Mar 2010 Mar 2011 30 Sep 2011 Actual Year end projection Annual target In support of 56 Energy losses Energy Losses (12 MMA)(1) Budget / 30 Sep 30 Sep 31 March Target 2011 2010 2011 Distribution losses ≤ 6.00% 5.94% 5.76% 5.68% Technical losses - 4.16% 4.03% 3.98% Non-technical - 1.78% 1.73% 1.70% losses Transmission losses (2) ≤ 3.40% 3.14% 3.30% 3.27% Total Eskom losses ≤ 8.75% 8.52% 8.46% 8.25% (1) 12 month moving average (2) Transmission losses are all technical losses In support of 57 Independent Power Producer Procurement Programme Independent Power Producer and Municipal Purchases April to September 2011 Actual Energy Planned Purchases (1) Average Purchases (GWh) Programme Category cost Capacity Energy Capacity Energy (R/kWh) Pilot National Cogeneration Programme (PNCP) - - - - - Medium term power purchase programme (MTPPP) 376 2 655 288 1 044 0.77 Municipal Generation 150 657 515 1 089 0.76 Independent Power Producer Programmes - - - - - Total 526 3 312 803 2 133 - • Eskom supporting two municipalities to run their generation plant – 515 MW signed up • PPAs have been signed with the following five MTPPP projects: • Sasol - (operational) • Sappi Saiccor - (operational) • Sappi Ngodwana - (operational) • IPSA - (operational) • Tangent Mining - (not yet operational) • The PPA for TSB Sugar has been approved by NERSA and is awaiting sign off by TSB Sugar In support of (1) Planned purchases applicable for the year to 31 March 2012 58 Distribution – operational performance Highlights • Distribution energy losses of 5.94% versus a target of 6.00%. (Total Eskom energy losses of 8.52% versus a target of 8.75%) Challenges • Safety performance • Distribution technical performance • Electricity theft • Electrification In support of 59 Distribution – technical performance • Average customer interruption duration of 54 hours per year • SAIFI and SAIDI performance has marginally deteriorated since March 2011 • Slower than anticipated benefit realisation for Distribution’s network performance improvement initiatives • There has been a continued focus on planned work SAIDI (hours/annum) SAIFI (number/annum) System average interruption duration index System average interruption frequency index 60 30 26.3(1) 25.4 24.7 25.3 25 24.2 55 55.5 54.4 22.0 53.8* 20 52.6 50 51.5 49.0 15 45 10 40 5 35 0 Year to Year to Year to Year to Half-year to Year to Year to Year to Year to Half-year to 31 Mar 31 Mar 31 Mar 31 Mar 30 Sep 31 Mar 31 Mar 31 Mar 31 Mar 30 Sep 2008 2009 2010 2011 2011 2008 2009 2010 2011 2011 Actual Annual target Actual Annual target (1) The 53.8 SAIDI and 26.3 SAIFI measurements as at 30 September 2011 represent a 12 month moving average In support of 60 Distribution network equipment theft Half-year Half-year Financial Financial Movement to 30 Sep to 30 Sep Movement year to 31 year to 31 2011 2010 March 2011 March 2010 No. of incidents 38% 1 252 905 (9)% 1 896 2 078 Value of materials stolen 78% R12.8m R7.2m (2)% R38.6m R39.5m Perpetrators arrested +5 142 137 +11 284 273 The increase in crime statistics seen in 2011 has been contributed by: • An increase in international demand for copper • Security capacity during the 2010 World Cup resulted in a decrease of crime Eskom’s strategy to combat crime: • Proactive patrols in “hotspots” where cable thieves are active, aimed at identifying and apprehending the same • Air support to support ground teams in “hotspots” • Aggressive policing of the scrap market • Continuous research and utilisation of technology • Co-ordination of all related functions in Eskom • On-going government and public awareness initiatives • Continued interaction/co-operation between government departments and industry role- players experiencing a similar problem In support of 61 State of the system Brian Dames If we all save as much as we can, we’ll all have as much as we need In support of 62 State of the system • The system will be tight for the next five years, the next two years critical • Most of our power stations are in their mid-life and require more maintenance; backlog has built up which must be addressed • Summer is maintenance season in Eskom, when we normally take advantage of lower demand to take capacity out of service, on a planned basis, to do maintenance • In addition, supply has also been constrained this summer by: • Koeberg Unit 2 shutdown for repairs (as announced 29/10/2011) • Hot weather, which impairs efficiency of certain dry-cooled power stations • Poor coal quality affecting performance of certain plants • Higher than expected demand in recent weeks, in part because of increased air-conditioning load • This summer has seen significantly increased use of open cycle gas turbines and other reserves to balance supply with demand We urge all customers to partner with us to save electricity and keep the lights on In support of 63 We took action to address the challenges we identified at the beginning of the year What we said What we did We would improve coal handling and coal quality Coal-related load losses have shown an to reduce load losses improving trend over the past few months Comparing September 2011 YTD with the same period in 2010, the EAF performance We targeted to improve generation output by deteriorated slightly by 0.4%. The Duvha unit 4 1%-2% over three years incident was a major setback in improving performance We would sign up about 400 MW of co- 373MW MTPPP signed up and about 515MW of generation and own generation by April municipal generation contracted We needed to undertake significant maintenance Critical maintenance has been prioritised during summer Demand side management programme in place Realised energy savings of 116GWh during the to reduce demand and energy savings first half of the year We would communicate with our stakeholders on Extensive programme of engagement with the state of the system stakeholders In support of 64 Expected system status MW MW MW MW A green week indicates that demand and all Week Week Forecast Operational Risk Level 500 MW reserve requirements can be met with all Start Surplus / Risk installed capacity (including the Open Cycle Deficit Mitigation Gas Turbines). 21-Nov-11 47 32526 30 30 530 A yellow week indicates that there is up to 28-Nov-11 48 32513 -972 -972 -472 1,000 MW shortage of meeting the demand 05-Dec-11 49 32252 -908 -908 -408 and reserves. There is an increased 12-Dec-11 50 31768 -1427 -1427 -927 probability of requiring some emergency 19-Dec-11 51 30296 -1114 -1114 -614 reserves to meet the peak demand 26-Dec-11 52 28434 -510 -510 -10 02-Jan-12 1 30055 -506 -506 -6 A orange week indicates that there is 09-Jan-12 2 31003 111 111 611 between 1000 and 2000 MW shortage of 16-Jan-12 3 31958 -730 -730 -230 meeting the demand and reserves. There is a 23-Jan-12 4 32037 -541 -541 -41 high probability of requiring substantial 30-Jan-12 5 32062 -993 -993 -493 emergency reserves to meet the peak 06-Feb-12 6 32368 -1169 -1169 -669 demand 13-Feb-12 7 32387 -527 -527 -27 20-Feb-12 8 32740 -823 -823 -323 The above doesn’t show the full picture • We have been making increased use of open cycle gas turbines • There is still a significant maintenance backlog • We are concerned about summer In support of 65 Concluding remarks Brian Dames Watch out for Power Alert and switch off appliances you don’t need In support of 66 Eskom’s strategic pillars support our purpose “To provide sustainable electricity solutions to grow Accomplish the economy and improve the quality of life of Eskom’s people and in the region” purpose 1 2 3 4 5 Leading and Reducing our Securing our Implementing Pursuing partnering to carbon future coal haulage private sector keep the footprint and resource and the road participation Execute lights on pursuing low requirements, to rail Strategic carbon growth mandate and migration plan Pillars opportunities the required enabling environment 1st Building Block: 2nd Building Block: 3rd Building Block: Setting ourselves up for Ensuring our financial Become a high Get success sustainability performance utility foundation right, build ZIISCE: Zero Harm, Integrity, Innovation, Sinobuntu, Customer Satisfaction, Excellence capacity Foundation: a focus on long-term nation-building, electricity for all, New Growth Path initiatives and balance the triple bottom line elements: commercial, environmental and socio-economic roles In support of 67 Eskom and COP17 – Eskom commits to a reduction of its carbon footprint Ensure reliable electricity delivery for the event, treatment of identified risks and managing Eskom’s reputation through delivery on renewable and energy efficiency initiatives and collaborating on government and business initiatives to enable a successful COP 17 Energy • Photo Voltaic’s at Kendal, Lethabo, Megawatt Park and MWP solar traffic lights Efficiency and • Solar Water Heating (SWH), Compact Fluorescent Lights (CFL) and SERE wind Renewable • Solar traffic lights, photo voltaic and Emitting Diodes (LED) street lights with partners Energy • Adequate generation capacity. Security of • Backup – Open Cycle Gas Turbines and Demand Market Participation Supply • Working with and supporting local municipalities • Eskom power plants national key points Security • Engagement with all stakeholders to ensure preparedness • SA COP 17 CEO Forum Business • Sector case studies on positive action taken in SA and appropriate mitigation actions • Business roundtable pre-COP Ministerial and Business Day at COP Electricity • To profile the work done by the electricity sector in combating climate change Utilities Project • 21 utilities participating including South African Power Pool Communications • Engagement with government, business and other key stakeholders Stakeholder • 49m and Eskom Exhibition at COP engagement Government • Supporting the negotiations and logistical arrangements Initiatives • Supporting in profiling initiatives including SERE, SWH and CFL rollout In support of 68 Conclusion • Addressing safety is a priority • System is tight – we urge South Africans to partner with us • Financial position is sound • Operational improvement programmes on-going • Refocusing on B-BBEE spend and job creation • Reviewing all capacity expansion schedules • All at Eskom working hard to keep the lights on • Continuing on the road to a sustainable future In support of 69 Thank you