Rationalisation of electricity pricing in South Africa's electricity distribution industry

Makawa-Mbewe, Patrick (2000-12)

Thesis (MBA)--Stellenbosch University, 2000.

Thesis

ENGLISH ABSTRACT: The South African Electricity Distribution Industry is riddled with tariffs. Every utility in South Africa probably uses some method for allocating cost, whether it is theoretically founded or not. There are currently over 2000 different tariffs in South Africa and the need for rationalisation has been widely recognised and acknowledged. Many of these tariffs have not been the outflow of accepted methodologies but rather a function of individual utility policy and practices. There is however a dire need to standardise such methodologies in the future. A standardised methodology might be the only way to eventually rationalise the thousands of tariffs that exist in the electricity industry. Government has emphasised the importance of tariffs to be cost reflective in the future. The only possible way to reach this objective would be to determine clear and concise methods of allocating cost that can be utilised by the entire industry. This study project describes a standardised methodology for determining the cost to supply different customer categories in an electricity distributor. The methodology offers enough flexibility not to bind any party into laboursome, complex and time consuming costing activities. It does however require that the costs of a distributor are carefully investigated and all functions performed in the utility are isolated. This is referred to as ringfencing of costs.

AFRIKAANSE OPSOMMING: Die Suid-Afrikaanse Elektrisiteitverspreidingsbedryf het veelvuldige tariewe. Elke utiliteit in Suid-Afrika gebruik waarskynlik 'n metode vir kostetoedeling, wat nie noodwendig teoreties gebaseer is nie. Huidiglik is daar meer as 2000 verskillende tariewe in Suid-Afrika en dit word alom besef en erken dat gronde vir rasionalisering bestaan. Baie van die tariewe het nie ontstaan uit die gebruik van aanvaarbare berekeningsmetodes nie, maar was eerder die gevolg van individuele beleid en praktyke van utiliteite. Daar is 'n dringende behoefte om hierdie berekeningsmetodes in die toekoms te standardiseer. 'n Standaard metode mag die enigste manier wees om uiteindelik die duisende tariewe wat in die elektrisiteitsbedryf bestaan te rasionaliseer. Die regering het die belangrikheid dat tariewe in die toekoms koste reflekterend moet wees benadruk. Die enigste moontlike manier om hierdie doelwit te bereik, is om helder en duidelike metodes vir koste toedeling te bepaal vir gebruik deur die hele bedryf. Hierdie verhandeling beskryf 'n standaard metodologie om die koste te bepaal om verskillende klantegroepe in 'n elektrisiteitsverspreider van krag te voorsien. Die metodologie bied voldoende plooibaarheid om geen party aan arbeidintensiewe, kompleks en tydrowende kostebepalings te verbind nie. Dit vereis egter dat die koste van 'n verspreider noukeurig ondersoek word en dat alle funksies wat verrig word uitgelig word. Hierna word verwys as afbakening van kostes.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/51893
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