CALCULATION OF NER LEVY ON GENERATORS 1. Legal Bases of the Generation Levy The Electricity Act No 41 of 1987 as amended specifies in section 5B(2) that the Minister may, on receipt of the business plan and statements of the NER prescribe license fees by notice in the Government Gazette. These fees are payable by licensed generators of electricity and will be (5B(3)c) payable in respect of electricity, calculated in kilowatt hours, generated for supply by any licensee concerned during the previous calendar year. 2. Definition of ‘Electricity Generated for Supply’ The act requires that the levy be payable by licensed generators on electricity generated for supply in the previous calendar year. The following definitions apply to the electricity measurement of generators: Energy Generated – measured at the generator terminals Auxiliary Consumption – consumption of electricity by the auxiliary plant of the generator Gross Energy Sent Out – Energy Generated minus Auxilliary Consumption Own Use – Electricity that is not supplied to third parties, but consumed by the generation facility. In the case of a co-generation plant it excludes all the electricity generated for use at the site. In the case of a pumped storage power station it includes the electricity used to pump the water back for re-use. In the case of a gas turbine station it includes the energy consumed while the generator is spinning. Net Energy Sent Out – Gross Energy Sent Out minus Own Use The Net Energy Sent Out is deemed to be the ‘electricity generated for supply’, according to the Act. 3. Determination of electricity amount on which the levy has to be applied All licensed generators are requested to send an annual return to the NER of their capacity, energy generated, energy sent out and own use. The information is required by the end of January to determine the size of the levy for budgeting purposes. (Responsibility of IRP Department) The energy numbers are normally provided in MWh. The following conversion factors apply to state the energy in kWh. 1 GWh (Gigawatt hour) = 1 000 000 kWh 1 MWh (Megawatt hour) = 1 000 kWh 4. Determination of the monetary amount to determine the levy The amount of money to be recovered via the generation levy is the budgeted expenditure for the financial year minus any other revenue expected to be received in the year. (Responsibility of Accounting Department) 5. Levy calculation The levy is calculated in cent per kwh, as follows: Levy in R/MWh = Budget to be recovered via the levy in Rand / Total Nett energy sent out in MWh Levy in c/kWh = Levy in Rand per MWh X100 / 1000 = Levy in Rand per MWh /10 6. Notice in Gazette It is the responsibility of the Department of Minerals and Energy to publish the notice in the Government Gazette after the NER business plan and budget has been approved. The final numbers for energy and the budget used to determine the published levy must be verified. (Responsibility of Accounting department) 7. Invoices Invoices stating the Net Energy Sent Out on which the licensed generator are levied are sent out by accounting department and an audit trail is kept.