Eskom, the power utility in South Africa, has confirmed that it will exceed its budget for using Open Cycle Gas Turbines (OCGT) to generate electricity. The harsh winter, with snowfall and frequent breakdowns in coal-fired power plants, has forced Eskom to rely heavily on OCGTs, resulting in high levels of load shedding. This increased usage is likely to lead to repercussions from the National Energy Regulator of South Africa (NERSA).

OCGTs are power stations that use diesel as their primary fuel source, which is costly and limited. Eskom acknowledges that its OCGT usage has surpassed NERSA's prescribed limits, and the total projected spend for the year is estimated at R28 billion, including Independent Power Producers (IPPs).

To cope with the demand and production challenges, Eskom has allocated funds from its own resources or other means, including the National Treasury, to finance the excess OCGT usage. Any requirement beyond the approved budget will need to be funded from cash from operations.

Eskom justifies the additional costs incurred during the Regulatory Clearing Accounts (RCA) stage and seeks approval from NERSA to pass on some of these costs to end-users through the claw-back mechanism. NERSA reviews the costs for prudency and efficiency before allowing them to be passed on to consumers.

During April, Eskom's annual OCGT usage peaked at 22%, with some weeks in May reaching more than 45%. The utility faces financial challenges and has received a R184 billion debt bailout, with the condition to fund its own operations and shortfalls going forward, based on the Eskom Debt Relief Bill.

NERSA determines the volume threshold and value for Eskom's Multi-Year Price Determination (MYPD) applications based on assumptions from Eskom's Production Plan. The situation highlights the ongoing struggles faced by Eskom in balancing the supply and demand of electricity in the country.