Eskom Interrupts BHP Aluminum Smelter Power as Demand Rises (2)

May 30 (Bloomberg) -- Eskom Holdings Ltd., which supplies about 95 percent of South Africa’s electricity, said it interrupted power supplies to BHP Billiton Ltd.’s smelters this month to help manage “tight supplies” amid colder weather.

Eskom also invoked power-reduction agreements with large customers it can’t name “more frequently, almost daily,” Hilary Joffe, a spokeswoman for Johannesburg-based Eskom said by phone today. Customers, excluding BHP, whose tariff agreement with Eskom incorporates an interruption clause, receive financial compensation in return for reducing electricity use.

“Temperatures dropped quite early, so demand rose,” Joffe said. The utility used gas-fired plants, which are expensive to run “more than usual,” she said. South Africa

Electricity shortages caused rolling blackouts and temporarily shut msot of the country's mines and smelters for five days in January 2008. Eskom has warned that the gap between demand and supply will be narrow, at least until the first unit of the Medupi plant, which is part of a 485 billion-rand ($70 billion) expansion program, starts generating power in the fourth quarter of 2012.

Winter Peak

While the demand and supply gap remains small, “the picture of a system in crisis is not what we’re looking at here,” Joffe said. “There’s been a conscious decision to run the system tighter than usual.” Eskom carried out “some last” maintenance work this month ahead of winter, when usage peaks, she said.

Eskom said last month it’s unable to carry out sufficient maintenance ahead of the South African winter because demand is too high to shut plants. Demand rose 1.4 percent in the first quarter from a year earlier, according to Statistics South Africa.

Demand rose to more than 36,000 megawatts last week and may peak at about 35,800 megawatts today, Joffe said. Eskom’s net maximum capacity is about 40,500 megawatts.