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Sustainability Report Part 2

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Sustainability Report Part 2 Partnering with our Customers As part of our commitment to improving customer value, service delivery and customer retention, we continued to conduct our Customer Value Management Survey. The survey which is conducted by an independent research organisation seeks to understand market perceptions of our service as well as the impact of changes and improvement we may have made. Through such engagement, we seek to ensure that we better understand customers’ needs and to ensure that all our customers have access to sustainable good quality uninterrupted water services. For the year under review, the overall customer satisfaction was 83.8%. In compliance with the water supply contracts we have signed with our customers, we also continue to conduct Service Level Evaluation. For the year under review, we achieved 96.8% Service Level Evaluation. In addition, various forums have been set up which provide us with an opportunity to engage directly with the customers, ensuring that their concerns and inputs are addressed in a timely manner. We continue to hold regular technical meetings with all our customers to ensure that there is integrated planning of water services to ensure continuity of water supply. 2009 2010 2011 Overall Satisfaction 75% 84% 83% We also continue to provide 24 hour customer service support and have developed, implemented and monitoring adherence to set turnaround times. We have also established the Rand Water Forums which form a key communication tool between us and our customers and stakeholders. The Forums provide a platform where water related issues can be discussed and solutions proffered. We have aligned the functions of the Forums to our strategic corporate objectives in order to ensure that we derive the most value that we can from their workings. 23 Our Approach to the Management of Our Infrastructure and Strategic Assets A defi ning feature of a utilities provider such as Rand Water is the size and value of infrastructure in relation to annual turnover, and the intention to maintain these assets indefi nitely to provide specifi ed levels of service. It follows that proper management of fi xed assets is a key success factor of the utility – supporting achievement of agreed service levels to customers at minimum long term cost. Our infrastructure is a multi-billion rand asset that needs to be managed and leveraged in order to extract maximum value, and monitored to minimise risk. Although 70% of infrastructure expenditure work currently takes place in the form of augmentation to meet the growth in demand, other projects are initiated because of the need to reduce operating costs, improve water treatment processes, enhance plant safety and extend the life of existing assets. As we enter the maturity phase in our lifecycle, we expect that demand will continue to grow, though there will ultimately be a slow-down in annual growth rates in the long term. Due to a period of rapid growth in demand, much of our infrastructure capacity has been added in the last few decades. As rates of growth slow down, the rate of investment in new infrastructure tends to slow down as well, while the average age will increase. However, we are cognizant of this and in order to create clear accountability for lifecycle management of this growing, ageing asset base, we have set up an asset management department which coordinates and optimizes the use of the infrastructure. We also take note of best practices in respect of design, operation, maintenance, rehabilitation and disposal of the infrastructure. Thus, the management of the existing assets is carried out in conjunction with our plans for the augmentation of infrastructure - all with a view to facilitating our ability to respond to growth in demand. 24 Infrastructure We operate a network of 3 500 km of pipelines, two large combined pumping and purifi cation stations (situated at Vereeniging and Zuikerbosch), four booster pumping stations (Zwartkopjes, Palmiet, Mapleton and Eikenhof) and a number of enclosed reservoirs. Two-thirds of the value of this infrastructure, estimated to be worth R70-billion at replacement value, is made up by our pipeline infrastructure. Planning After decades of expansion to meet the challenge of infrastructural development and population growth, our current infrastructure is adequate to meet our customers’ needs in the areas we service until 2012. This is in itself remarkable considering that in 1965, we were only supplying 1 000 Megalitres a day (Ml/d) and that demand is expected to increase four-fold to 4 000 Ml/d by 2012. In order to address the growth in demand post-2012, we have embarked on a project that focuses on meeting the demand for water in 2020 and beyond and we are doing this by focusing on infrastructure refurbishment and development. At present, we are working with a 20 - year planning horizon, driven mainly by projections and forecasts of future water needs of our consumers. This involves extensive research and analysis of trends and usage patterns, as well as discussions with various stakeholders on their expectations. Planning and management of assets is undertaken on the basis of supply systems, matching system capacity with projected customer requirements: 25 We draw raw water primarily from the Vaal River System. Two river stations – Zuikerbosch and Vereeniging – abstract, purify and pump into the network some 98% of the water supplied to our customers. About 90% of this water is further pumped by four primary booster stations situated on the southern side of the Witwatersrand ridge. The portions of the network supplied by each pumping station are indicated by colour coding all signifi cant customer supply points on the map as follows: • Zuikerbosch / Vereeniging direct (brown) – southern Gauteng and northern Free State (localized), in addition to supply to all booster pumping stations. • Eikenhof (pink) – western and north-western Johannesburg, the West Rand and greater Rustenburg. • Zwartkopjes (green) – central Johannesburg and a high-lying portion of the East Rand. • Palmiet (blue) – eastern and northern Johannesburg, large parts of Tshwane, and western portions of Ekurhuleni. • Mapleton (yellow) – central and eastern parts of Tshwane and Ekurhuleni, and selected areas in Mpumalanga. Projected growth in water demands Our municipal customers account for 92% of total demand, with direct supply to mines making up most of the balance. Periodically, we consult with our major customers and the information gathered from such consultations assists us in updating our projections of demands on the network. The latest forecast carried out indicates a continuation of the trend of gradually decreasing rates of annual demand growth. We now supply a predominantly urban, domestic consumer base. Population growth is the main driver of demand growth, with the economy having a secondary affect. Worldwide, urbanising populations exhibit reduced rates of population growth and in South Africa, this effect is magnifi ed by the impact of AIDS on fertility and mortality rates. A recent demographic study, undertaken on our behalf, confi rmed this trend. Total average daily demand for our network is projected to increase from the current 3900 Ml/d to around 5200 Ml/d in 2025. This gives an average rate of demand growth of 2% per annum over this period. The three metros that we supply –Johannesburg, Ekurhuleni and Tshwane – are all projected to grow at this rate. The metros consume 75% of water supplied from our network. Projected peak demands by main system Through the computer based network hydraulic modelling process, we are able to forecast customer demands and respond accordingly at each signifi cant supply point. This system allows for the estimation of peak fl ows in each pipeline, and peak demands on each of the pumping stations. Results for each of the major systems are given in the table below (quoted capacities exclude standby units). In our planning of the expansion of the network, we have taken into account our existing capacity constraints, as well as the need to maintain the ability to take existing infrastructure out of service for rehabilitation, without disrupting supply to customers and the result is our anticipated year of expansion that we have termed “Proposed year of augmentation” in the following table. 26 Peak demand forecasts and augmentation dates for main pumping stations Station Design Proposed Proposed Projected peak day demands (Ml/d) capacity additional year of 2015 2020 2025 2030 2035 (Ml/d) capacity augmentation (Ml/d) (fi rst phase) Zuikerbosch 3900 1200 2016 3910 4500 4030 4550 4080 Vereeniging 1400 Nil N/A 1400 1400 1400 1400 1400 Clarens Scheme Nil 1000 2025 1000 1000 2000 Eikenhof 2000 Nil N/A 1400 1550 1700 1840 1980 Zwartkopjes 800 200 2013 700 760 820 880 930 Palmiet 1870 600 2015 1880 2100 2300 2500 2700 Mapleton 960 300 2017 920 1040 1140 1240 1340 Our aim, in maintaining and expanding its infrastructure is to secure and sustain water supply in terms both quality and quantity – essentially, the core of our business. Our plans are to spend R8 billion over the next fi ve years on upgrading and refurbishing our water supply infrastructure. Of this amount, we have allocated 70% to augmentation schemes, with the remaining 30% will be allocated to renovations and upgrades of existing infrastructure. Capital Expenditure Forecast R' millions 27 Expanded area of service Implementation of pipeline from Bloemendal pumping station to Delmas. In October 2008, in conjunction with the Department of Water Affairs, the Mpumalanga Provincial Department of Provincial and Local Government and the Delmas Local Municipality, we entered into an agreement to undertake a 34km pipeline project between Bloemendal pumping station to Delmas. In terms of the agreement, we were appointed as the implementing agent to construct the 500mm diameter water pipeline and will continue to operate and maintain the water pipeline after construction.
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