National Transmission Company South Africa (NTCSA) interim CEO Segomoco Scheppers has confirmed that the newly operationalised entity is making an allowable revenue application to the regulator that is distinct from that of Eskom as it seeks to secure the finances it requires for its operations and to implement its ambitious roll-out of new grid infrastructure.

Speaking at an event co-hosted by the Powerline and Substation Association and the South African Independent Power Producer Association, Scheppers argued that the newly separated entity had to be placed on a sound financial footing by securing the revenue required to run, maintain and expand the network.

He confirmed that capital allocations to the transmission business had been reduced over a number of years, owing to Eskom’s “severe” financial constraints and allowable-revenue allocations arising from regulatory determinations that were below that which had been requested.

To illustrate the nature of the shortfall, Scheppers highlighted the difference between its approved revenue of R44-billion for the financial years from 2018 to 2022, against its application to the National Energy Regulator of South Africa (Nersa) for R56-billion over the five-year period.

That transmission budget was then cut dramatically to only R19-billion after Eskom reprioritised its internal budgets to support its much-delayed and over-budget generation build programme and by the end of the period only R16-billion was actually spent on transmission.

“Clearly that had an impact in that we could not roll-out the infrastructure at the rate that we planned,” Scheppers said.

The backlog in investment is now meant to be closed through a Transmission Development Plan to roll out 14 218 km of new powerlines, 170 transformers (105 865 MVA), alongside 40 capacitors (2 700 MVar) and 52 reactors (14 713 MVar), in a programme that could cost up to R400-billion.

NTCSA, which began trading as an independent entity under Eskom holdings on July 1, will now seek to secure dedicated revenue by making a separate allowable revenue application to Nersa, which is gearing up to begin adjudicating the next multiyear price determination.

It has been reported that Eskom will be seeking allowable revenue of R446-billion for 2025/26, the first year covered by the three-year application. If approved, this would translate into a tariff hike of more than 36% for direct customers from April 1 next year.

“Given that NTCSA has got a licence in its own right, we are expecting that Nersa will make a decision that relates to NTCSA … and we hope that the submission we have made will be able to stand up to scrutiny to justify the requirements that we are putting forward,” he said, without providing specifics.

NTCSA’s finances have been separated from those of Eskom, which is undergoing a restructuring programme to unbundle its generation, distribution and transmission businesses in line with a 2019 policy roadmap.

The entity has its own board and some 3 400 Eskom staff members have been transferred to the NTCSA.

Besides securing dedicated revenue, Scheppers said the entity’s current strategy included the following key components:

• Protecting the existing grid assets through ongoing maintenance and renewal;
• Leveraging the existing assets to integrate additional renewables generation through mechanisms such as curtailment, the codification of which would be the subject of an upcoming Nersa hearing;
• Accelerating the development of new transmission corridors;
• Implementing measures to ensure grid stability as variable renewables penetration increased; and
• Expediting two priority grid capacity programmes.

The two priority programmes include 25 transformer projects at existing substations to  unlock 13 000 MW of new generation over the coming five years, and 22 “expedited projects” to unlock 24 000 MW of generation connection capacity by 2033.

Scheepers reported that the concept release for 46 of the 47 projects had already been approved and that 15 projects were currently being executed to deliver 7 500 MVA of transformer capacity and 749 km of lines.

“There is ongoing effort and focus to ensure timely and cost-effective delivery of these programmes,” Scheppers said.