1. Programme 7 2 6 1 Tx / Dx Demarcation Feb 08

2. Programme 7 2 6 2 Topics cover in this presentation Back Ground Existing and future MTS substations Lines connecting generators and other direct connected customers International inter-connectors Lines with above 132kV operating voltage currently belonging to Metros Other issue:  Short lines operating at 132kV or below, but directly interconnecting Tx substations.  Certain lines constructed with the capacity to operate at above 132kV, but integrated initially with Dx networks  Emergency supply facilities to nuclear power stations.  Traction Lines

3. Programme 7 2 6 3 Transmission Asset Ownership Boundary Since 2004 and presently, Eskom has formally supported the voltage based boundary principle, preferring a flexible approach with priority on safety, operational efficiency and purpose of use, with any asset issues arising between Transmission and Distribution in terms of the Blueprint definition being dealt with as REDs unfold. As the establishment of the REDs approached in 2005, Eskom proceeded to ringfence its assets along the 132kV demarcation with the intention of complying with regulatory requirements and aligning asset ownership as far as was practically possible. Significant safety and control risks have been highlighted during the detailed preparations for implementation within Main Transmission Substations (MTS). Consequently, Eskom is reviewing the position for approval by NERSA regarding ownership of assets within MTS substations i.e. they are to remain as is, demarcated in terms of the substation fence.

4. Programme 7 2 6 4 Existing Substations Complex and highly integrated substations For substations where the controls, protection and access are integrated no demarcation and whole substation must retain with Tx. Advantages:  Safety and OHSACT requirements will not be jeopardize.  Access control, operations, and complicated SLA’s, will not be necessary. Demarcation of assets w.r.t. NER requirements:  All equipment equal and smaller than 132kV must be ring fenced in the asset register of Tx. Demarcation point:  All equipment with in the boundaries of the Tx substation will form part of Tx.  The fence of the substation will be the demarcation point. 275 or 400 kV 132 kV TX 66 kV

5. Programme 7 2 6 5 New Future Sub Stations Transmission to supply only at the requested voltage and no secondary transformation will form part of the Transmission Sub station. Distribution Substation to be totally independent from the Tx sub. Advantages:  No shared equipment or services between Tx and Dx  Distribution the owner and totally responsible for the Dx yard.  No maintenance or operational SLA required for the Dx yard.  Dx responsible for any replacement or refurbishment in the distribution sub.  NER can ring-fence according the 132kV Voltage rule. Disadvantages Compensation equipment will have to be accommodated in the distribution yard 275 or 400 kV 132 / 88 / 66kV DX TX

6. Programme 7 2 6 6 Demarcation principles New Future Sub Stations with short bus bar Transmission may deiced to introduce a short secondary bus bar before feeding the Dx substation.  Advantages:  Configuration and operation of the Transformers independent from the configuration on the Dx bus bars.  All compensation and monitoring equipment required to regulate the supply voltage from Tx can be installed on the short bus bar.  Supply to other utilities (Metro or other RED’s) can be supplied from the short bus bar.

7. Programme 7 2 6 7 Migration of Existing Substations Possible migration of equipment from Tx to Dx For substations or portion there off where the layout and integration of the controls, protection and access are currently separated the 132 kV and smaller equipment must be re-linked to Dx. Advantages:  Safety and OHSACT requirements will not be jeopardize.  Distribution to take charge of the distribution voltage equipment sooner Upgrading and major refurbishment of 132kv and lower voltage equipment. If a substation or portion there of must be refurbish or replaced it must be investigated if part of the project can not also ensure that it will operate independent from TX and then that portion can be transferred. 275 or 400 kV 132 kV TX 66 kV

8. Programme 7 2 6 8 4. Networks feeding Generating equipment and contestable customers Note: Lines connecting direct customers: Only the customers noted in Annexure A of the demarcation document are under discussion. For future applications for access to 132kV and lower dedicated lines connecting Transmission substations and direct customers as well as generation equipment. Each application must be investigated individually.

9. Programme 7 2 6 9 International feeders International Utility Directly fed end-Customers across SA borders Parallel Circuit SA Customer EHV Network (220kV and above) HV Network (132kV and below) MV Network (usually 22 & 11 kV) SA Customer, Dx ownership, Tx ownership Tx ownership without exception radial networks feeding end-customers across international boundaries If source substation is Tx station, apply as above. Otherwise, Dx asset

10. Programme 7 2 6 10 275 kV and above lines and s/s equipment currently belonging to Metros Clearly for operating simplicity, Metro networks above 132kV isolated from the Transmission network by Distribution networks should remain with the Metro or transferred to REDs. In addition, Metro networks above 132kV adjoining Eskom Transmission networks of above 132kV should also remain with the metro’s or be transferred to REDs, unless a sound business case is provided for the overall benefit to the industry that offsets the abovementioned concerns. Metro’s/REDs may approach Eskom Transmission regarding the transfer of specific plant, yet these accounts will be negotiated to ensure the protection of each party’s interests. If above 132 kV assets are transferred from the Metro to NTC/Tx, the tariff will have to be restructured

11. Programme 7 2 6 11 Short lines operating at 132 kV or below Directly interconnecting Tx s/s’s If any such lines, operating at 132kV or below, are to form part of NTC/Tx, the asset transfer should be negotiated when a customer connection is most viable off the 132kV line Planned upgrades of such lines are to be taken into account on a case by case basis in determining which of these assets are transferred or remain with NTC/Tx

12. Programme 7 2 6 12 Tx Dx Tx or Potential Customer Actual Customer 275kV and above construction for strength or insulation with the intended use at / upgrade to Tx voltage or 275kV and above construction for strength or insulation with no intended use at / upgrade to Tx voltage Tx Dx Planned upgrade to 275kV and above Tx Certain lines constructed to operate at above 132 kV, but integrated initially with Dx networks Certain lines constructed with the intention of operating at above 132 kV, but integrated initially with Distribution networks are to remain with or be transferred to NTC/Tx with the use of a regulatory leasing methodology to influence Dx charges rather than Tx charges A line built to transmission voltage standards (e.g. for additional insulation for pollution strength benefits), should be transferred to or stay with RED/Dx, if there is no intention of upgrading its operating voltage in the future, especially if customers are connected to the line.

13. Programme 7 2 6 13 Emergency supply and Traction lines Emergency supply facilities to nuclear power stations Applying the exception in the blueprint, emergency supply facilities to nuclear power stations are to remain with or be transferred to NTC/Tx with the Duynefontein-Vissershoek double circuit 132kV line remaining with RED/Dx. Traction lines Since the secondary circuit of Traction lines are mainly owned and serviced by the customer, 220kV and above lines feeding Traction customers are to remain with NTC/Tx. Lines of 132kV and below are to remain or transferred to RED/Dx

14. Programme 7 2 6 14 Thank You