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Eskom curbs BHP power as supply tightens

May 30 2011 15:29 Reuters

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BHP BILLITON PLC [JSE:BIL]

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Johannesburg - Power utility Eskom, which is struggling to keep the lights on, has been interrupting supplies to BHP Billiton’s aluminium smelters to help manage its tight supplies.
 
Eskom’s spokesperson Hilary Joffe said on Monday that under a special pricing agreement signed between the utility and BHP Billiton [JSE:BIL] in the 1980s Eskom can temporarily interrupt supplies to the smelters, but only for up to two hours a week.
 
“We’ve always used it... but because we’ve been running the system tighter to get more maintenance done before winter, we’ve used it more in May than in recent months but not as much as in May last year,” she said.
 
She said the utility may have used the agreement more often last May to keep the system safe ahead of the soccer World Cup.
South Africa’s national grid nearly collapsed in early 2008, forcing mines and smelters to shut for days and costing billions in lost output.
 
Eskom has said the system would be tight for the next few years until the first of its new power plants come on stream, but no rolling blackouts are foreseen for now.

With South Africa about to enter winter, demand for electricity is expected to peak from the usage of energy-intensive heaters and lighting.
 
Eskom has separate agreements with some energy intensive users by which those customers can reduce their demand in return for compensation. These deals could cut South Africa’s total load by up to 500 MW.
 
Eskom has said electricity use had recently risen during peak times to levels higher than at the same time last year.

Joffe said Eskom had avoided bigger disruptions to BHP by making use of its open cycle gas turbines, which can supply an additional 2 400 MW.
For every 1 degree Centigrade drop in winter temperatures, demand rises by 600-700 MW during peak time, Eskom has said.

The utility plans to invest up to R460bn ($66.51bn) in new power plants to plug the shortfall and meet fast-rising demand from industries and residential consumers, but analysts say this may not be enough or not soon enough.
 
The first unit of Eskom’s planned Medupi power station, the utility’s first new plant in more than two decades, is expected to come online towards the end of 2012.
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