City Power Johannesburg Pty Ltd
Draft Business Plan 2009/10 & 2010/11
PROPRIETARY LIMITED) Registration No: 2000/030051/07
(In terms of Section 121 of the Companies Act
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TABLE OF CONTENTS: BUSINESS ACRONYMS ...... 4 SECTION 1: EXECUTIVE SUMMARY ...... 5
HIGHLIGHTS AND CHALLENGES OF THE BUSINESS ...... 5 IDP INTERVENTIONS AND PROGRAMME ...... 6 STRUCTURE OF THE DOCUMENT ...... 8 SECTION 2: COMPANY OVERVIEW ...... 9
VISION , MISSION AND MANDATE ...... 9 MANAGEMENT AND ORGANISATIONAL STRUCTURES ...... 10 DESCRIPTION OF DAY -TO -DAY OPERATIONS ...... 16 KEY OPERATIONAL OUTPUTS ...... 22 SECTION 3: STRATEGIC AGENDA ...... 40
STRATEGIC AGENDA PRIORITIES ...... 40 STRATEGY MANAGEMENT PROCESSES ...... 40 STRATEGIC GOALS ...... 40 MAYORAL PRIORITIES ...... 41 COMPANY STRATEGIC PRIORITIES ...... 41 ENVIRONMENTAL ANALYSIS ...... 43 SWOT ANALYSIS ...... 44 ANALYSIS OF OUR BUSINESS AGAINST THE GDS PRINCIPLES ...... 45 SECTION 4: COMPANY BALANCED SCORECARD PERSPECTIVES ...... 48
FINANCIAL PERSPECTIVE ...... 48 CUSTOMER PERSPECTIVE ...... 50 INTERNAL PROCESS PERSPECTIVE ...... 52 LEARNING AND GROWTH PERSPECTIVE ...... 53 IDP PERSPECTIVE ...... 54 SECTION 5: RISK ASSESSMENT ...... 57
BACKGROUND ...... 57 RISK MANAGEMENT PROCESS ...... 57 SECTION 6: FINANCIAL IMPACT ...... 61
FINANCIAL PLANNING ASSUMPTIONS ...... 61 INCOME STATEMENT ...... 62 CASH FLOW ...... 66 BALANCE SHEET ...... 68 CAPITAL EXPENDITURE : INFRASTRUCTURE & SERVICE DELIVERY CAPITAL PLAN ...... 70 REVENUE AND TARIFF ANALYSIS ...... 89 SECTION 7: HUMAN CAPITAL ...... 96
STAFF ESTABLISHMENT ...... 96 HUMAN CAPITAL EXPENDITURE ...... 96 EMPLOYMENT EQUITY ...... 97 STAFF TURNOVER / MOVEMENT DURING PREVIOUS FINANCIAL YEAR ...... 97 EMPLOYEE WELLNESS PROGRAMMES ...... 98 SECTION 8: WARD PROJECTS & DEPENDENCY MATRIX ...... 99
WARDS ISSUES ...... 99 DEPENDENCY ...... 111 SECTION 9: APPENDICES ...... 112
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Business Acronyms AA – Affirmative Action IDP –Integrated Development Plan AMR – Automated Meter Reader IEP – Integrated Energy Planning AMP -Amperes ISD – Infrastructure and Services Department ASGISA –Accelerated and Shared Growth Initiative LPU – Large Power Users BEE – Black Economic Empowerment LV - Low Voltage BSC – Balanced Score Card MD – Managing Director CAIDI – Customer Average Interruption Duration MFMA - Municipal Finance Manage ment Act Index CAIFI – Customer Average Interruption Frequency MOE – Municipal Owned Entity Index CAPEX – Capital Expenditure MSA – Municipal Systems Act CBD – Central Development District MV - Medium Voltage CFL – Compact Fluorescent Light MVA – Mega Volt A mperes COJ – City of Johannesburg NERSA – National Energy Regulator of South Africa DIFR - Disabling Injury Frequency Ratio NPR – Network Performance Related DOE - Department of Energy OPEX – Operating Expenditure DSM – Demand Side Management RDP – Reco nstruction and Development Programme EDI – Electricity Delivery Industry RED – Restructured Electricity Distributor EE –Energy Efficiency R & D – Research and Development EPWP – Expanded Public Works Programme SAIDI – System Average Interruption Duratio n Index GRAAP – Generally Regulated Accepted SAIFI - System Average Interruption Frequency Accounting Processes Index GDS – Growth Development Strategy SBA -Sale of Business Agreement GE – Gender Equity SCADA – Supervisory Control and Data Acquisition HV - High Voltage SDA - Service Delivery Agreement JDA – Johannesburg Development Agency SHEQ – Safety, Health, Environmental and Quality JMPD – Johannesburg Metro Police Department SHU – Shareholder’s Unit JRA – Johannesburg Road Agency SPU –Small Power Users KPI – Key Performance Indicator STI – Small Ticket Items KVA - Kilo Volt Ampere TBA – To Be Announced KWH - KiloWatt Hour
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Section 1: Executive Summary
This document spells out City Power’s expected course of action for the period 2010/2014. It provides an analysis of the day-to-day operations, the financial and budgetary environment, the people, inter- governmental initiatives as well as information on collaboration with other sectors. City Power has been in existence since January 2001, as an electricity distributor. Its mandate is to purchase, distribute, and sell electricity in the City of Johannesburg, as well as managing the City’s street and public lights. The City of Johannesburg has developed a strategic thrust which acts as a central theme of principle guiding the direction that City Power should follow. This includes the following: • Maximizing access to electricity • Reducing maintenance backlogs • Reducing losses • Infrastructure upgrading • Implementation of Demand side Management (DSM)
Highlights and Challenges of the Business City Power was the first municipal entity in the country to attain accreditation for ISO 14001(Environmental) and OHSAS 18001(Occupational Health and Safety). Secondly, the MV upgrade for the Ellis Park Precinct in preparation for the 2009 Confederations Cup was incident free. As an event which is a forerunner to the 2010 World Cup, the Confederations Cup has implications which reverberate across Africa as the host continent, and the rest of the international community as the tournament’s guests. In addition, 2010 projects have commenced and are on track. Applying a more local viewpoint - City Power provided temporary and permanent power supply for the 2009 National and Provincial elections; and also scored improved satisfaction levels for both Key Customers and Domestic Customers in the region. The company also met and exceeded the following KPIs: 2008/09 financial year • Achieved 27.23% for the gender equity exceeding the yearly target of 20% • Achieved 26% for the Engendered Spent exceeding the yearly target of 22% • Achieved 74% for the Black Economic Empowerment (BEE), exceeding the yearly target of 70% • Query resolution time is at 1.27 days compared to a target of 3 days • Exceeded annual target of 100% for payment levels for top (101.77) and key customers (100.37) • Achieved 5096 for the number of new electrification customers, exceeding the annual target of 3000. • Attained 71 bulk voltage (HV) network performance related (NPR) outages, which is lower than the cap of 78 for the year • Attained 844 medium voltage (MV) network performance related (NPR) outages, which is lower than the cap of 1000 for the year • Achieved 100% for the NRS 048 compliance in all categories • Exceeded public lighting target of 4000 by achieving 4355 light provided both in formal and informal areas
In terms of challenges facing the company, while City Power has developed and implemented the Turnaround Strategy, it needs to focus on the highest impact activities and rethink how to accelerate action on these activities. The Turnaround Strategy and the current company strategy will not be changed going forward, instead the organization will focus on key aspects of the present strategy. Business Planning & Strategy Page 5
The current budget constraints place a lower limit on what can be achieved through capital and operational expenditure programs. This means that the risks associated with company goals are likely to increase as a result of implemented budget cuts. Moreover, the present financial recession is expected to last well into 2010, this means that the electricity prices established by Eskom will put further pressure on the economy and on City Power cost of sales. Not least, as the date draws closer, the 2010 WC will focus attention on City Power and increase pressure for service delivery.
IDP Interventions and Programme Table 1.1 Projects Total 5 Year Project Programme Strategic IDP Sub- Delivery Agenda Cost detail Cost Cost Objectives Programme Programme Detail (R’000) (R’000) (R’000) Reduce Reduce illegal Losses to Losses to reduce 16,994 unaccounted for electricity reduce down down by 11,4% and non connection by 11,4% revenue electricity and water losses
Upgrade Reduce City Power to City Power to 277,154 infrastructure electricity reduce bulk reduce bulk and reduce outages by outages to 75 outages to 75 and maintenance 50% in year and MV MV outages to backlog to meet 2010 outages to 1000 capacity 1000 requirements Reduce Implement Implement The 174,070 unaccounted for infrastructure infrastructure planned/unplanned and non refurbishment refurbishment ratio to be 75:25 revenue programme programme electricity and and install Due to budgetary water losses prepaid meters constraints the to reduce planned /unplanned water losses to ratio will change to 25% by 2010 45:55 and energy losses from 3% to 1% by 2011 Implementation 3000 households 56,691 of planned but final electrification target to be programme to determined Extend access 95% of to basic formalized services to all households by households 2010 Implement DSM Develop and Enforce by-laws 20,364 programme implement support for comprehensive installation of ripple demand side relays in hot water management geysers in new programme for developments water, waste and energy
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Projects Total 5 Year Project Programme Strategic IDP Sub- Delivery Agenda Cost detail Cost Cost Objectives Programme Programme Detail (R’000) (R’000) (R’000) Upgrade Design and Implement and 315, 438 infrastructure and implement long improve on the asset reduce term assets maintenance strategy maintenance management backlog to meet strategy and plan capacity for waste, water requirements and energy
Policy development Formulate and Policy to be 6,339 and By-law review implement policy developed within the on conventional next two years. and prepaid meters for water and electricity
Extend access to Allocat ion of free Provide households 137,380 basic services to all basic water and that consume up to households electricity to poor 500kWh with free basic households and electricity as per the those with special social package needs
Extend access to Provide street Movement from 62% 77,559 basic services to all lighting to 60% of to 63% and this households informal areas and converts to 186 000 60% in high crime public lights areas.
Service delivery Introduce and Develop key 4,868 monitoring and maintain quality performance indicators evaluation service monitoring that are measurable system for at least three years that can inform regular stakeholder engagement
Establish RED 4 Participate in Assist in the 246 activities that lead establishment of RED 4 to the establishment of RED 4 Service delivery Introduce and All other support 229,552 monitoring and maintain quality services or departments evaluation service monitoring system for at least three years that can inform regular stakeholder engagement
TOT AL PROGRAMME COSTS 1,316,655
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Structure of the Document
Section1 is the Executive Summary.
Section2 provides a detailed description of the company Overview outlining the Vision, Mission, Values, the Management and organizational structure. The day to day description of core business operations, the various types and number of customers to whom we provide our services and key operational outputs.
Section3 is the Strategic agenda which provides the company goals, Mayoral priorities, strategic priorities, as well as the company’s response to the IDP, GDS.
Section 4 is the Departmental Balanced Scorecard, a framework for performance monitoring.
Section 5 gives a detailed description of the methodology used to assess and analyse risks holistically. The top business risks are listed, along with information on their background, the control measures in place, and actions that will be followed to mitigate and manage these risks (how they will be addressed).
Section 6 has the financials and is divided into CAPEX, OPEX and Tariff Plan. The CAPEX section presents a comprehensive overview of the long-term capital budget and a skeleton of the five-year capital budget. It also shows what funds are used by the company to acquire or upgrade physical assets, such as plants and equipment, in order to provide sustainable, affordable, safe and reliable electricity; and how these funds are deployed. At the end of this subsection, the impact of not receiving sufficient funds is discussed.
Section 7 provides the analysis of such aspects as employee satisfaction, skills development, employee productivity, salary costs, staffing, and capital outflow and employment equity, together with the plan which has been developed to address these aspects.
Section 8 outlines the ward issues/ projects and the dependency table which lists the projects that require support from the other departments within the city of Johannesburg.
Section 9 outlines appendices and detailed budgets.
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Section 2: Company Overview
Vision, Mission and Mandate
Vision To be a world-class electricity distributor Mission The mission of City Power Johannesburg (Pty) Ltd is to meet the expectations of our customers and stakeholders by: • Providing a sustainable, affordable, safe and reliable electricity supply • Providing prompt and efficient customer services • Developing and incentivizing our employees • Being the preferred equal opportunity employer • Undertaking our business in an environmentally acceptable manner Aspired values City Power aspires to be: • Resourceful • Resilient • Reliable • Respectful Always with Integrity Business Operations Principles The company endeavors to operate its business in accordance with the following principles: • Customer-centric organization • Seamless value chain driven organization • Maximum technology enablement • Zero tolerance for poor performance • Business case driven investment decisions • One stop service, doing it right the first time
Company Details Company Name: City Power Johannesburg (Pty) Ltd Company Registration Number: Reg 2000/030051/07 Physical Address: 40 Heronmere Road, Reuven Postal Address: PO Box 38766, Booysens, 2016 Phone Number: (+27) 011 490 7000 Fax Number: (+27) 011 490 7590 E-mail: [email protected] Website: www.citypower.co.za Customer Contact Centre: JoConnect at (+27) 011 375 555
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Management and Organisational Structures Board of Directors City Power has a unitary board, which consists of executive and Non-Executive Directors. The Board is chaired by a Non-Executive Director: Ms G Simelane. The Board meets regularly, at least quarterly and retains full control over the company. The Board remains accountable to the City of Johannesburg Metropolitan Municipality (the company’s sole shareholder) and its stakeholders, the Citizens of Johannesburg. A Service Delivery Agreement (SDA), concluded in accordance with the provisions of the (Municipal Systems Act) (MSA) governs the company’s relationship with the City of Johannesburg. The Board provides monthly, quarterly, bi-annual and annual reports on its performance and service delivery to its parent municipality as prescribed in the SDA, the MFMA and the MSA. Such reports are submitted within the stipulated timeframes.
Non-Executive Directors contribute an independent view to matters under consideration and add to the depth of experience of the Board. The roles of Chairperson and Managing Director of the company are separated, with responsibilities divided between them. The Chairperson has no executive functions. Members of the Board have unlimited access to the Company Secretary, who acts as an advisor to the Board and its Committees on matters including compliance with company rules and procedures, statutory regulations and best corporate practices.
The Board, or any of its Members, may, in appropriate circumstances and at the expense of the company, obtain the advice of independent professionals. A director and peer review as well as a Board evaluation is undertaken on an annual basis.
The Articles of Association provide that the Directors of the company will be elected by the shareholder and appointed by the Board of Directors. The Managing Director is appointed by the Board.
Board members The Board currently consisted of nine Non-Executive Directors and one Executive Director as indicated in table 2.1.0.
Table 2.1.0: Board Members
Member Portfolio 1 Ms G Simelane Chairperson of the Board 2 Mr G Badela Non -Executive Director 3 Ms D Dondur Non -Executive Director 4 Adv K Garlipp Non -Executive Director 5 Mr B Hawksworth Non -Executive Director 6 Ms J Kumbirai Non -Executive Director 7 Prof T Marwala Non -Executive Director 8 Mr H Mateya Non -Executive Director 9 Dr Y Ndema Non -Executive Director 10 Mr S Zimu (MD)Executive Director
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Executive Directors are regarded as contract employees in terms of the company’s conditions of service. Board Sub-Committees and their Members The following Committees have been formed, each of which is chaired by a Non-Executive Director. • Audit Committee • Human Resources and Remuneration Committee • Pricing and Regulatory Committee • Oversight Committee • Ad Hoc EDI Working Group • Turnaround Strategy Working Group • Phakama Working Group
a. Audit Committee Members The Audit Committee consists of the following Directors and Independent Audit Committee Members:
Table 2.1.1: Audit Committee Members
Member Portfolio 1 Ms D Dondur Chairperson of the Committee 2 Ms L Fosu Independent Member of the Audit Committee 3 Mr W Hattingh Independent Member of the Audit Committee 4 Mr B Hawksworth Non -Executive Director 5 Mr H Moolla Independent Member of the Audit Committee 6 Mr S Zimu In attendance
The role of the Audit Committee is to assist the Board by performing an objective and independent review of the functioning of the company’s finance, accounting and risk control mechanisms. It exercises its functions through close liaison and communication with senior management and the internal and external auditors. The Audit Committee operates in accordance with a written charter authorized by the Board, and provides assistance to the Board with regards to: • Ensuring compliance with applicable legislation and the requirements of regulatory authorities; • Matters relating to financial accounting, accounting policies, reporting and disclosures; • Matters relating to risk management • Internal and external audit policy • Activities, scope, adequacy and effectiveness of the internal audit function and audit plans; • Reviewing and recommending the approval of external audit plans, findings, reports and fees; • Reviewing and recommending the approval of strategic risks and mitigating strategies • Compliance with the Code of Corporate Practices and Conduct; and • Compliance with the Code of Ethics.
b. HR & Remuneration Committee Members The Human Resources and Remuneration Committee consists of the following Directors:
Table 2.1.2: Human Resources and Remuneration Committee Members
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Member Portfolio 1 Mr H Mateya Chairperson of the Committee 2 Mr G Badela Non -Executive Director 3 Ms D Dondur Non -Executive Director 4 Ms J Kumbirai Non -Executive Director 5 Ms G Simelane Non -Executive Director 6 Mr S Zimu Executive Director
The Human Resources and Remuneration Committee advises the Board on remuneration policies, remuneration packages and other terms of employment for all directors and senior management. Its specific terms of reference also include recommendations to the Board on matters relating to general staff policy remuneration, profit bonuses, executive remuneration, director remuneration and fees and service contracts.
c. Pricing & Regulatory Committee Members The Pricing and Regulatory Committee consists of the following Directors:
Table 2.1.3: Pricing and Regulatory Committee Members
Member Portfolio 1 Ms J Kumbirai Chairperson of the Committee 2 Prof T Mar wala Non -Executive Director 3 Mr H Mateya Non -Executive Director 4 Dr Y Ndema Non -Executive Director 5 Mr S Zimu Executive Director
The Pricing and Regulatory Committee advises the Board on strategic direction on electricity pricing strategies and policies, addresses regulatory changes in the Electricity Supply Industry that affects the company, ensures that the company complies with the regulatory requirements on tariffs, recommends structural tariffs changes to the National Electricity Regulator, and ensures compliance with NRS 047 (Quality of Service) and NRS 048 (Quality of Supply) regulations.
d. Board Oversight Committee Members The Oversight Committee consists of the following Directors: Table 2.1.4: Oversight Committee Members Member Portfolio 1 Adv K Garlipp Chairperson of the Committee 2 Mr G Badela Non -Executive Director 3 Prof T Marwala Non -Executive Director 4 Dr Y Ndema Non -Executive Director 5 Ms G Simelane Non -Executive Director 6 Mr S Zimu Executive Director
The Oversight Committee advises the Board on the oversight responsibilities set out in the supply chain management policy and procedures which are in line with the Municipal Finance Management Act regulations on supply chain management.
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• The Oversight Committee operates in accordance with a mandate 13authorized by the Board, and provides assistance to the Board with regards to: Maintaining oversight over the implementation of the supply chain management policies as contained in the supply chain management manual; • Monitoring and reporting on the implementation of the supply chain management policy and procedures and the performance of supply chain management; • Assessing deviations and exceptions from policy and procedures; • Advising on the multi-year business plan and annual budget plan; • Monitoring and reporting on company spend against the approved budget and business plan; • Assessing the achievements of output on projects. The Oversight Committee is informed of all emergency procurement and considers the following; • Approving any spend planned outside the approved plans; and • Pro-active approval of deviations/amendments from policy.
e. (Ad Hoc) Edi Working Group Members The Ad Hoc EDI Working Group consists of the following Directors:
Table 2.1.5: EDI Working Group Members
Member Portfolio 1 Prof T Marwala Chairperson of the Committee 2 Adv K Garlipp Non -Executive Director 3 Dr Y Ndema Non -Executive Director 4 Ms G Simelane Non -Executive Director 5 Mr S Zimu Executive Director
The Ad Hoc EDI Working Group is an ad hoc joint executive and Board working group formed to consider and advise the company of EDI restructuring developments and to prepare City Power for transition into the RED.
f. Turnaround Strategy Working Group The Turnaround Strategy Working Group consists of the following Directors:
Table 2.1.6: Turnaround Strategy Working Group Members
Member Portfolio 1 Mr H Mateya Chairperson of the Committee 2 Ms D Dondur Non -Executive Director 3 Mr B Hawksworth Non -Executive Director
The Turnaround Strategy Working Group is an ad hoc Board working group which was formed to advise and assist the company with a financial turnaround strategy following the financial loss the company suffered in the 2007/2008 financial year.
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g. Phakama Working Group The Phakama Working Group consists of the following Directors:
Table 2.1.7: Phakama Working Group Members
Member Portfolio 1 Mr H Mateya Chairperson of the Committee 2 Adv K Garlipp Non -Executive Director 3 Prof T Marwala Non -Executive Director 4 Dr Y Ndema Non -Executive Director 5 Ms G Simelane Non -Executive Director 6 Mr S Zimu Executive Director
The Phakama Working Group is an ad hoc Board working group which was formed to advise and assist the Board on the agency agreement entered into between the company and the City of Johannesburg for the appointment of the City as the company’s agent to Customer Revenue Collection (CRC) and Customer Relationship Management (CRM) Functions.
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Description of day-to-day operations City Power Johannesburg (Pty) Ltd is the Electricity Distribution Service Provider to the Service Authority, Johannesburg Council. The core competency of the business is to purchase, distribute and sell electricity within its geographical footprint of business. The National Energy Regulator of South Africa (NERSA) granted City Power Johannesburg (Pty) Ltd a license to trade on 19 December 2001. The City of Johannesburg is the sole Shareowner. The Council, by means of a Service Delivery Agreement, regulates the service in respect of the following: financial issues (such as tariffs and capital expenditure), human resource issues (such as skills development), delivery targets (maintenance of assets and addressing assets), and standards of customer care. City Power Johannesburg (Pty) Ltd is accountable to provide network services to all its customers. Network services include: • the purchasing and distribution and sale of electricity • constructing networks • connecting customers • repair and maintenance of networks • installation and maintenance of public lighting The City of Johannesburg provides retail customer services for all domestic customers, i.e. processing of applications, customer queries, customer complaints, customer accounts and revenue management. City Power Johannesburg (Pty) Ltd provides retail customer services for the key customers, top customers and pre-paid customers only.
Provide Network Infrastructure City Power Johannesburg (Pty) Ltd projected network infrastructure status is given in Table 2.1
Table 2.1.8: Network Infrastructure
Measure Indicator Unit 07/08 Plan 08/09 09/10 Plan Plan Eskom Supply Points No 39 39 42 High voltage Substations (Bulk Intake No 5 5 5 Points) Medium voltage Substations (Major No 82 82 82 Substations) excluding Bulk Intake Substations Low voltage Substations (Devices) No 14252 14764 15276 High voltage Overhead Transmission Lines km 811 811 811 > 44kV) High voltage Transmission Cables > 44kV km 93.68 93.68 93.68 Medium voltage Overhead Lines >20.5kV km 11.2 11.2 11.2 and < 44kV Medium voltage Cables >20.5kV and <44kV km 123.3 123.3 123.3 Ripple Relays Installed No. 183 000 232 000 281 000 Ripple Relays In-service No. 92 000 167 000 242 000
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Distribute Electricity City Power Johannesburg (Pty) Ltd operates six independent networks, representative of the former Municipal Transmission Systems. Figure 2.2 depicts the independent systems:
Figure 2.0: City Power Johannesburg (Pty) Ltd Networks
Figure 2.1: below gives the schematic representation of City Power Johannesburg (Pty) Ltd’s Johannesburg transmission system and bulk power nodes:
DELTA 2*250MVA 88kV Transmission Circuits KELVIN PS ESKOM 275kV 600MW Firm capacity Rosebank, Ridge, 250 MVA Fort,Parkhurst and MD 200 MVA MD 419 MVA Roosevelt Park Marlboro Cydna, Gresswold, Eskom Observatory, Bellevue, Orchards, Alexandra Proposed and Westfield. ESKOM 275kV Sebenza 275kV Alexandra Intake from Firm capacity township 750 MVA Eskom MD 512 MVA Braamfontein, John Ware, Bree, Mayfair, Selby, and Central (20kV). Eldorado, Nancefield, Pritchard, Siemert, Central, Nirvana, Hursthill, Robertsham, Mondeor, Industria, Eikenhof, FORDSBURG Mulbarton, Moffat, Cleveland, and Soweto. Kazerne, Wemmer and Van 4*250MVA PROSPECT Beek. 4*250MVA
ORLANDO 88kV SWITCHYARD ESKOM 275kV Proposed Firm capacity Proposed Mondeor 88kV 750 MVA Quattro 275kV Bus MD 869 MVA Eskom Intake Lenasiafrom Eskom
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This simplified operational diagram depicts the Johannesburg portion of City Power’s transmission network. Bulk power is received from Eskom at three bulk intake points (Prospect, Fordsburg and Delta) at a voltage of 275kV. At these stations the voltage is transformed down to 88kV for onward transmission via City Power’s transmission grid to over 30 major step-down substations. In addition, the 88kV transmission network is supplemented by a power input from the independently operated Kelvin Power Station. There are also two smaller substations which receive an in-feed directly from the Eskom networks, which supply a small number of City Power customers.
Network Restoration Table 2.2.0 below gives the network restoration times for the past three financial years. Restoration times have improved over the years. The actual restoration times for faults in the 3.5, 7.5 and 24hrs categories are better than specified in NRS 047; however, the restoration times for faults in the 1.5 hours category do not meet the NRS 047 target. Therefore, on average, City Power’s performance is better than the targets set.
Table 2.2.0 Restoration Times
2005/6 2006/7 2007/8 08/09 09/10 10/11 Indicator Unit Actual Actual Actual Plan Plan Plan Restoration % (Supply restored within 1,5 hours) % 26.32 24.73 25.86% 25.86% 30% 30% Restoration % (Supply restored within 3,5 hours) % 66.97 64.56 66.23% 66.23% 60% 60% Restoration % (Supply restored within 7,5 hours) % 86.97 91.18 91.20% 91.20% 90% 90% Restoration % (Supply restored within 24 hours) % 95.53 98.68 98.84% 98.84% 98% 98%
Based on the restoration times of 1.5, 3.5, 7.5 and 24 hours, the plan is to meet all four restoration times KPI’s by 2009.
Suppliers of Materials City Power’s Supply Chain strategy is configured using a stock classification model that places importance on the variables of network criticality, cost and market availability. All materials requirements are intended to be sourced through supplier agreements based on strategic sourcing principles, with strategic long term agreements focusing on equipment that is of particular importance to the business. Supply Chain Management has implemented a number of contracts based on strategic sourcing principles. The commodity groups, to which this process has been applied, are Switchgear, Transformers, Cable, Cable Accessories and STI’s (Small Ticket Items).
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In materials management stock items are classified as “A”, “B” or “C”. “A” materials are the most “important” items. This is determined by factors such as usage value, lead time, quantity used, the consequences of being out of stock, etc. “C” items are the least important items. These are typically items where a stock out is not critical to operations and/or they can be obtained quickly and easily. The materials spend profile is significantly skewed with a large proportion of expenditure directed to more strategic items classified as “A” items.
Supplier expenditure on materials likewise features this profile as illustrated in the Table 2.2.1: Top 15 Suppliers of stock materials by value 2009/10
Rank Vendor Value 1 CBI ELECTRIC : AFRICAN CABLES R 283,110,766 2 TECHNOLOGY INTEGRATED R 25,088,230 3 HAWKER SIDDELEY TRANSFORMERS R 20,602,760 4 ELECTRO INDUCTIVE I NDUSTRIES R 20,010,419 5 ASHANTI POWER ([PTY) LTD R 18,790,284 6 LANDIS + GYR R 17,843,098 7 MTN SERVICE PROVIDER (PTY) LTD R 14,143,872 8 TECHNOLOGY INTEGRATED - A DIVISION R 14,095,437 9 DESTA POWER MATLA (PTY) LTD R 13,996,090 10 LIGHT-BE CONSTRUCTION R 13,439,199 11 BEKA (PTY) LTD R 9,837,385 12 ABB POWER TECHNOLOGY MEDIUM VOLTAGE R 9,629,505 13 GEO STOTT & COMPANY R 8,351,437 14 INDUSTRIAL POLES & MASTS (PTY) LTD R 7,565,439 15 ACRYLIC ART LIGHTING R 6,724,507 16 Rest R 73,283,894 Total R 556,512,321
Quality of key customer Relations Customer Base City Power’s customer base as at June 2009 was 323,401. Initiatives are currently underway to convert conventionally metered (‘credit’) domestic customers to prepaid metering. This compounded with the unprecedented growth in the domestic market segment and will lead to a large increase in the number of prepaid customers. A breakdown per customer segments is given in Figure 1.2. below:
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Figure 2.3 Customer Base The City of Johannesburg provides retail customer services for the domestic customer segment whilst City Power Johannesburg (Pty) Ltd provides retail customer services for the remaining segments. Figure 1.3 below depicts the customer base distribution:
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The Top 20 customers, based on revenue in the 2009/2010 financial year are given in Table 2.2.2
Annual Contract Amount No.: Account Customer Name (R'000) 1 220063623 RAND WATER BOARD 105,252,070.90 2 220063905 THE STANDARD BANK OF SA LTD 30,793,027.92 3 220078683 SABC LTD 27,079 ,649.07 4 220055911 PRETORIA PORTLAND CEMENT COMPANY LTD 26,613,248.13 5 220100522 DIMENSION DATA FACILITIES (PTY) LTD 24,163,017.84 6 220062010 CARLTON CENTRE 22,532,595.18 7 220070589 PARETO LIMITED 22,481,996.74 8 220068999 JOHANNESBURG HOSPITAL 21,984,462.83 9 221178105 MELROSE ARCH INVESTMENT HOLDINGS 21,978,780.07 10 220055870 HAGGIE SON & LOVE 19,677,503.64 11 221006106 AFRICAN EXPLOSIVES LTD 19,555,783.98 12 221005656 EKURHULENI-PHOMOLONG 19,541,212.84 13 220007516 WESTGATE REGIONAL SHOPPING 19,274,513.31 14 220028474 BARAGWANATH HOSPITAL 17,938,748.55 15 221284031 SASOL PENSION FUND(PTY)LTD 17,684,900.22 16 220060809 JOHANNESBURG WATER (PTY) LTD 16,183,227.83 17 220076252 GOLD STAR YEAST (PTY) LTD 16,027,199.92 18 221148460 ATTFUND LIMITED Clear Water Mall 14,864,508.43 19 220079408 MINTEK 14,778,047.55 20 220060904 JOHANNESBURG WATER (PTY) LTD 14,690,308.48 493,094,803.43
The Manage Customer Interface Value Chain is aimed at fostering superior customer experience at the point of contact until customer needs are met. The successful implementation of this value chain is not only fully dependent on the other four value chains, but also on the proper implementation of outbound services such as customer education and communication.
The following are the main challenges: City Power Johannesburg (Pty) Ltd is not the only place where customers can log their queries and does not have control on how customers are handled at other customer interface points. That makes it difficult to provide acceptable customer service to all customers at all customer interface points. The interface between PEGASUS system and e-Respond is not optimally used. • No full CRM solution - Pegasus system is only a call take system • Non –adherence to the KPI ‘s as stipulated in the other four key value chains • Limited Call Centre service offerings
There is a fluctuating trend of customer contact due to seasonality. The trend is highly influenced because the majority of customer contacts are power related.
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Network Related Contacts There has been an increase in network related complaints. A significant portion of these calls can be attributed to repeated calls in the event of unplanned outages and prolonged outages Typical network call types that the company receives are: power loss, earth leakage, damaged cables, illegal connections, sparks on poles, trees touching lines, shocks on taps, voltage fluctuation, lines down, phases out, street lights calls, prepaid queries regarding units or no power, vandalism, size of supply and quality of supply, meters burnt out, no hot water, stolen overhead lines and temporary supply queries.
Non Network Related Contacts There has been a steady increase in account related queries. These queries are caused mostly by estimated accounts and customers applying for clearance certificates. Typical types of calls include: final readings, reprint of accounts, balance enquiries, final accounts, payments not credited, adjustments, account to high, account not received, information requests, change of details, reconnections, disconnection requests, meter boxes not installed, meters not read, meters not turning as well as tariff queries.
Quality customer information The utilization of multiple systems that are not integrated poses a challenge in the quest of providing quality information. The company does not have one view of a customer or a history of the customer as the information resides in different systems. Data cleanup initiatives will result in the refinement of customer data.
Key Operational Outputs The Strategic priority objectives are: • Electrification • Public lighting • Reduction of losses • Reduction of outages • Demand side management programme • Inner-city rejuvenation • 2010 FIFA World Cup • EPWP • Revenue Maximization
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Electrification
City Power has electrified over 5029 previously-disadvantaged dwellings during the 2008/9 financial year.
Table 2.2.3: shows the areas that have been electrified during 2008/09:
Project Name Number Political Ward of Stands Region Number Electrifi cation of Far East Bank Ext.7 48 Region E 32 Electrification of Tshepisong West (Ebumnandini) 598 Region C 53 Electrification of Nancefield Hostel 414 Region D 37 Electrification of Mountainview 676 Region G 5 Electrification of Clermont (Kathrada) 339 Region B 68 Lehae Village Phase 1 275 Region G 8 Alexandra Normalisation (Phase 4.1) 2080 Region E 76,75,91,107 Electrification of M2 Hostel(Ward 76) 373 Region D 76 Electrification of Lawley ext 3&4 226 Region G 7 Total 5029
These programmes have positively contributed towards poverty alleviation, as the following have emerged in the townships: • Establishment of “Spaza” shops • Back yard mechanics • Informal restaurants • Employment of local community during project execution (EPWP) • Community Phones (Cell C, Vodacom and MTN); and • Improved living standards
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Current Electrification Projects Table 2.2.4: illustrates the townships that have been proclaimed recently, where the electrification process is currently underway. Though the majority of these projects are at the construction stage, however, others are already at advance stage of completion.
Table 2.2.4: Electrification projects to be completed 2009/10
Project Name Number Political Status Ward of Stands Region Numbers Electrification of Mount ain View 984 Region G Completed 5 Electrification of Alexandra FEB 2021 Region E Construction 32,81 ext 09 phase1&2K206 (Alexandra) Infills &Relocation from a shack to 1000 All Construction All a house Electrification of Hospital Hill 1553 Region G Cons truction 7 Electrification of Orange Farm ext 9 920 Region G Completed 3 Normalisation of Rabie Ridge 1920 Region G Construction 80 Total 8398
Future Electrification Plans Table 2.2.5: shows the projects that have been identified as part the electrification master plan, which is derived from the housing plan. It is envisaged that the following townships will be proclaimed and developed in the near future.
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Table 2.2.5: Projects included in the master plan:
Financial Project Name Number Political Ward Year of Stands Region Numbers 2010/11 Electrification of Lufhereng(Doornkop) 1192 Region D 53 2010/11 Alexandra Far East Bank Ext.10 1084 Region E 32,105 2010/11 Electrification of Fleurhof ext 2&3 1500 Region D 70 2010/11 Electrification of Alexandra Far East 1087 Region E 32,81 Bank ext 09 phase3 (K206) 2010/11 Normalisation of Tshepisong West 1547 Region C 53 2010/11 Removal of service connection from a 1000 All All shack to a newly built RPD house on all electrification projects.
2011/12 Electrification of Lehae Phase 2 2500 Region G 8 2011/12 Electrification of Fleurhof ext 2&3 5000 Region C 70 2012/13 Electrification of Kya Sands 2989 Region C TBA 2012/13 Electrification of Slovo 950 Region G TBA 2012/13 Electrification of Freedom chater 2691 Region D TBA Square 2012/13 Electrification of Slovo Park(Nance 1052 Region G TBA Field) 2012/13 Electrification of Motswaledi 1289 Region D TBA 2012/13 Electrification of Princess Plot 2536 Region C TBA 2012/13 Electrification of Lindelani Boundary 1996 Region A TBA 2013/14 K60 2119 Region A TBA 2013/14 Dunusa 2164 Region C TBA Total 32 696
Electrification specification City Power has improved its electrification specification in order to cater for proper revenue collection, make provision for public lighting infrastructure, network protection and future upgrades by providing the following:
• Split Prepaid metering • Street Lighting • Concrete Poles • Auto Recloses • Path Finders • 60Amp breakers • Underground MV bulk infrastructure
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Due to the above specification, the cost per connection has increased to an average of R7600 per stand.
Typical electrification layout
Bulk Electrification Infrastructure The majority of the above mentioned townships are located on the outskirts of Johannesburg, far from serviced areas. Their locality has posed a large challenge in terms of bulk infrastructure availability. Bulk infrastructure is becoming increasingly critical in the roll out of the electrification programme. The total funding requirements to allow bulk to address the electrification are in table 2.3.6:
Table 2.2.6: Total funding requirements for bulk supply
BULK SUPPLY PROJECTS Description Project Benefits Cost Ward Numbers Upgrade of Lunar Provide electricit y supply to 12 456 6 Substation approximately 1722 household in 326.74 Mountain view Upgrade of Lotus Provide electricity supply to 13 456 8 Substation approximately 1553 household in 104.86 Hospital Hill Upgrade of Alexandra Provide electricity supply t o 32 000 81 Substation approximately 3000 household in 000.00 Alexandra Kliptown Bulk supply Provide electricity supply to 84 200 11 approximately 5000 household in 000.00 Kliptown Pennyville E 88/11kV Provide electricity supply to 88 570 68 Substation approximately 3000 household in 000.00 Pennyville development Total 230 682 431.60
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Challenges The following are the challenges currently faced by City Power in rolling out the electrification projects: Lack of funding, for both internal reticulation and bulk infrastructure requirements Slow allocation of beneficiaries by housing to their respective RDP houses Slow pegging and re-location of beneficiaries to their demarcated stands Lack of coordination between departments and spheres of government e.g. Local and provincial housing Unavailability of Housing Master Plan to guide the electrification future project plans
Public Lighting
Analysis of current backlog for new streetlights has been done. Table 2.2.7: is the backlog of streetlights per administrative region.
Table 2.2.7: The streetlights backlog per administrative region:
No of Streetlights required per Budget Required Region No of Streetlights per area area % Backlog (Present day cost A 9 934 26 393 73% R 263,930,000.00 B 37 430 500 1% R 5,000,000.00 C 23 596 12 555 35% R 125,550,000.00 D 29 028 26 677 48% R 266,770,000.00 E 25 934 28 025 52% R 280,250,000.00 F 39 762 1 789 4% R 17,890,000.00 G 14 166 22 305 61% R 223,050,000.00 Total 179 850 118 244 40% R 1,182,440,000.00
Public lighting is one of the mayor’s strategic priorities. The figure below shows the expenditure spent on implement Public Lighting Programme.
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These are the projections as per public Lighting master plan. Total of 23471 lights will be installed in the future years.
The table 2.2.8: indicates the number of lights installed during 2008/9 financial year
Light Installed Ward Project object Amount Numbers Fine Town 600 4,846,333 6 Poortjie 200 3,282,751 5 Weilers Farm informal settlement 371 6,895,000 6 Zandspruit informal settlement 9 2,543,000 100 Stretford 900 8,254,350 1 Drieziek 800 10,794,550 4 Zola 600 6,656,000 51 Dobsonville 316 3,723,000 47 Winchester Hills 14 150,000 54 Fourways 133 1,475,000 106 Wilgeheuwel/Nic Diedericks 95 1,200,000 97 Brighton Road (Lomabardy West) 23 200,000 76 4061 50 019 TOTALS 984.00
Area Region Number of New Lights Project Cost Ward
Soweto D 3,046 R36,824,385.48 21,34,35,36,40
Orange Farms G 1,617 R13,875,768.06 3
Ivory Park A 1,034 R8 ,872,940.12 All
5,697 R59,573,093.66
Reduction of losses
The City of Johannesburg has a 5 year (2006- 2010) objective of reducing losses by 2 percent. The target is moving from 13.9% total losses in June 2006 and should be at 11.5% by June 2011. Total losses are made up of technical and non-technical losses. The technical losses are at 9% and the non technical losses were at 3.5% at the end of June 2006. The programme to reduce losses includes: • Continued customer education programmes in targeted areas; • Continuous roll-out of protective structures in order to reduce tampering with conventional meters and street light poles; • Promote alignment with the City’s debt write-off and indigence support programmes; • Provide clear criteria to inform where and when prepayment meters will be used;
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• Installation of prepayment meters. Reduction of outages Outages can be classified in the HV, MV and LV categories and are also further sub-divided into ‘All’ or ‘NPR’. ‘All’ refers to all outages which occur irrespective of the cause.
‘NPR’ is an abbreviation for ‘Network Performance Related’ and refers to outages which are under City Power’s control and, therefore, exclude damage by contractors, theft and vandalism etc.
The two tables below show the number of outages over the past four years. It can be seen that the outages are showing a downward trend over the years
Table 2.2.9(a) HV outages
06/07 06/07 07/08 07/08 08/09 08/09 09/10 09/10 10/11 10/11N All NPR All NPR All NPR All NPR All PR HV 80 78 81 80 75 71 Ceiling 115 104 104 94 90 80 90 85 85 80
Table 2.2.9(b): MV outages
06/07 06/07 07/08 07/08 08/09 08/09 09/10 09/10 10/11 10/11N All NPR All NPR All NPR All NPR All PR MV 1184 941 1334 916 1615 844 Ceiling 1195 1076 1000 950 1250 950 1000 930 1000 930
Going forward, City Power will be using CAIDI, CAIFI, SAIDI and SAIFI figures to measure interruptions on the network. • CAIDI = Customer Average Interruption Duration Index. These measures, on average, how long a customer was out? • CAIFI = Customer Average Interruption Frequency Index. These measures, on average, how often a customer was out. • SAIDI = System Average Interruption Duration Index. These measures, on average, how long a system was out? • SAIFI = Customer Average Interruption Frequency Index. These measures, on average, how often a system was out.
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Demand Side Management Programme (DSM) Table 2.3.1: DSM programme Project / Intervention Title Gas Turbine Refurbishment
Objective To refurbish the John Ware, Durban Stree t and Cottesloe Gas Turbine sets to their original design capacity and establish operational capacity for the purpose of improving the security of supply
Potential Yield – Energy Dependent on operating hours Project timeline savings GWh – 8 hrs per weekday day = Start:: Jan 08 19.68 GWh per month End: Dec 2010
Potential Yield - Demand MW 120 MW Budget Estimate R49,6 for 2007/8 (R mil) R12 - 2008/9 R30 – 2009/10 Finance Source CAPEX - DSM Levy Progress Report 100 of 120MW has been restored to service, 1.2 million litres of fuel recovered Issues Raised In terms of fuels supply, application is being made to DOE for exemption from certain fuel taxes and levies. In order to avail the generating capacity in times of emergency, a means of passing the fuel cost on to consumers needs to be established. Several models are being investigated and documented for assessment. Actions to be taken Operational structures to be established. Control system refurbishment is still required (R30 million) to improve reliability and stability of the units. Project / Intervention Title Project - Ripple Control Audit and Reinstatement (Existing Areas)
Objective To refurbish and restore capacity to existing ripple geyser control systems in the area of supply, by auditing and re-instating the 140 000 installations in the areas where it was previously installed, and install receivers in the Cleveland and Observatory substation areas where new transmitters have been installed. Potential Yield – Energy Project Start date 2009 savings per annum timeline Completion target 2011
Potential Yield - Demand 150 MW at morning and Budget R5m for 08/09 Reduction evening peak periods, (geyser Estimate R5mfor 09/10 load only) (R mil) R10m for 10/11 Finance Source DSM levy Progress Report Of the 40 000 ripple control units purchased in 2008/9, 13 015 have been installed while undertaking receiver audit and re-instatement programs throughout the area of supply. After restoring to service 7,5
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MW of controllable geyser load ( a total of 15 735 geyser controls added, at a labor cost of R 5,7 million and material/relay costs of R7.2 million) the program was stopped due to CAPEX constraints Risk / Issues Raised No further Capex funding made available in 2009/10 F/Y, however, the re is a possibility of receiving DSM levy funding
Actions to be taken Finance to approach CoJ for DSM levy funding
Project / Intervention Title Project - Load Management Expansion into New Areas (Conventional Ripple or Smart Metering systems) Objective To expand geyser control throughout the area of supply, (areas never previously equipped, or where discontinued radio systems were installed), where it is estimated an additional 150 000 residences will be connected. The project may include time of use or demand response (smart) metering in conjunction with active load switching. Potential Yield – Energy Project Start date savings per annum timeline Completion target Potential Yield - Demand 150 MW at morning and Budget R 90 for 08/09 Reduction evening peak periods, (geyser Estimate R 100 for 09/10 load only) (R mil) Finance Source Yet to be identified – Possible DSM Levy Progress Report Following the evaluation of the RFP (closed April 08) the need to clarify cost effective and sustainable telecommunications platforms for bi- directional metering communications became apparent. 35 respondents were evaluated; however, no new appointments have been made over and above two existing suppliers involved in pilot projects at City Power. Risk / Issues R aised At the time of RFP issue, the NRS049 advanced metering specification was also not finalized. Suppliers were subsequently asked to state the degree of compliance of their offers to the specification, verification of such compliance would be required Actions to be taken Evaluation presentation sessions to be set up on 8 and 9 May, ISD to be invited – project put on hold due to financial constraints Project / Intervention Title Solar Water Heating Installation - Pilot project.
Objective To install 42 solar water heating systems at approximately 40 residences on a measured, trial basis to test the viability of City Power acting as an implementer for a large scale SWH roll-out project. The objective is also to identify the potential difficulties of SWH installation and secure the endorsement of participants following success of pilot. (CoJ Mayoral Committee participating.) Potential Yield – Energy Estimated 3212 kWh per Project Start date: 25/3/2008 savings per annum installation per annum, based timeline Completion target: July on 200 litres hot water used 2008 per day.
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Potential Yield - Demand Estimated 0,7 kW per Budget R 1 for 07/08 Reduction installation Estimate (R mil) Finance Source 50% DBSA and 50% CAPEX
Progress Report Problems were enco untered in finalizing the installation sites. Focus of attention was diverted to the mass roll-out proposal. Risk / Issues Raised DBSA Financial year end – request to extend or move to next year.
Actions to be taken Site identification (Mayoral Committee members) to be concluded.
Project / Intervention Title Solar Water Heating Installation - Mass Roll -out.
Objective To act in the capacity of an implementer and operator, on a fee -for - service basis (revenue generation), of solar water heating systems ac ross the area of supply. To diversify the region’s energy mix to include renewable energy on a significant scale. 220 000 residences are estimated to be suitable for installation. Potential Yield – Energy Estimated 3212 kWh per Project Start date: August 2008 savings installation per annum, based timeline Completion target: August on 200 liters hot water used 2010 per day. 706,6 GWh per annum Potential Yield - Demand Estimated 0,7 kW per Budget R 1200 for 09/10 Reduction installation Estimate R 2000 for 10/11 154 MW diversified (R mil) Progress Report An RFP for a Transaction Advisor and arranger was issued by City Treasury and closed 3 Nov 08. Bidder presentations were invited and conducted for all interested parties. Two offers have been short-listed and negotiations are to be conducted with both. An RFP for solar water heater suppliers and installers was issued by CP and closed 30 January 09. Bidder presentations were invited and conducted for all interested parties in the week of 23 to 27 March. The procurement process continues. Risk / Issues Raised The pre -requisite for ‘off balance sheet’ funding was stipulated by Council. However, this may not be entirely possible both in terms accounting practices / regulations applicable to municipal entities and guarantees that potential investors are likely to include in funding arrangements. Supplier capacity needs to be cross-checked across bidders as equipment commitment made to the various installing companies. Actions to be taken The procurement processe s as well as the exact roll -out strategy will be decided and applied following the evaluation of both arranger and supplier offers.
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Project / Intervention Title Building Energy Efficiency, EE lighting retro -fit,
Objective To reduce the energy consumpti on of City Power’s offices and depot facilities by: Replacing inefficient incandescent and older fluorescent lighting with EE lighting and control gear. Installation of motion sensors to control lighting and air conditioning load of unoccupied facilities. Potential Yield – Energy Subject to RFP assessments Project Start date: April 09 Savings per annum per site. 15% minimum timeline Completion target: June 09 targeted Potential Yield - Demand Subject to RFP assessments Budget R 6 for 08/09 Reduction per site Estimate (R mil) Finance Source CAPEX
Progress Report Project put on hold due to financial constraints
Risk / Issues Raised Risk of delivery / installation after end June (financial year end)
Actions to be taken Installation of metering s ystems for the purpose of measurement and verification has been concluded. Project / Intervention Title Street Lighting Control – Replacement of electro -mechanical clocks
Objective To replace all electro -mechanical street lighting clocks that are affecte d by supply interruptions due to load shedding activities with battery backed up electronic clocks. Specifically applies to street light strings controlled from chambers inside buildings and transformer houses where it is impractical to install photocells. Potential Yield – Energy Avoids wasted day time Project timeline Start: April 08 Savings per annum energy consumption due to Completion target: mechanical clock drift Dec 09 Potential Yield - Demand Budget Estimate R 1 for 07/ 08 Reduction (R mil)
Finance Source CAPEX (From R 100 m CoJ additional DSM allocation 07/08 )
Progress Report The replacements are done as part of maintenance as well as in response to reports of cases of street lighting being on in daytime. Risk / Issues Raised
Act ions to be taken
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Project / Intervention Title Customer Energy Efficiency Awareness and Education
Objective Identify effective communication methods and media, and use these to provide Energy Efficiency information to customers. The aim is to create awareness and educate customers on the need (avoiding load shedding) and benefits (financial savings) of energy conservation and efficiency measures that can be implemented. Create an energy efficient culture and promote investment in EE interventions. Po tential Yield – Energy Target 10% reduction of Project This is a continuous Savings domestic and light commercial timeline exercise load – (1260 GWh per annum) Potential Yield - Demand Variable Budget R 3.4 for 2007/8 Reduction Estimate R2.7 for 2008/9 (R mil) R 3.5 for 2009/2010 Finance Source OPEX, allocation from DSM Levy
Progress Report Pamphlets and material created and distributed, and a broad PR campaign planned. Risk / Issues Raised Additional, professional advice to be sought from indus try leaders – best methods to get effective messages across must be found. Include animated ads, industrial theatre, City Buzz and inserts into billing statements Actions to be taken Coordination with the NERT Communications work group.
Project / Interve ntion Title Compact Fluorescent Lighting (CFL) Residential Roll -out
Objective To replace one million incandescent light bulbs, (nominally three per domestic/residential customer premises). Establish a CFL bulb replacement scheme via our customer walk-in centres to ensure sustained use of CFLs and provide an environmentally acceptable method of bulb disposal. (Partner with Pikitup) Potential Yield – Energy 67,5 GWh per annum Project timeline Start: January 2010 Savings Completion: July 2010
Potential Yie ld - Demand 45 MW, 5 hours Budget Estimate R 5 million 09/10 Reduction covering evening peak (R mil) R 13 million 10/11 period. Finance Source Division of Revenue (DORA) funds through the DoE
Progress Report Project planning is under way, procureme nt of lamps to commence in January 2010 Risk / Issues Raised
Actions to be taken
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Project / Intervention Title Energy Efficient Street Lighting. (Mercury Vapour bulb replacement) Objective To replace 7638 Mercury vapour 400 Watt street light lamps wit h 250 Watt high pressure sodium lamps as well as replace 10 000 mercury vapour 125 Watt with 70 Watt high pressure sodium lamps. Potential Yield – Energy 6.3 GWh per annum Project timeline October 2009 Savings per annum Completion: July 2010 Potential Yi eld - Demand 1.65 MW Budget Estimate R 15 million Reduction (R mil) Finance Source Division of Revenue (DORA) funds through the DoE Progress Report The DoE required an additional condition to employ independent M&V services to confirm project yield s. This was agreed to in an addendum to the original MoU. The renewal of street light labor contract as well as equipment supply contracts is under way. Risk / Issues Raised If this funding is not used this year, next year’s allocation may not be made av ailable. DORA allocation for City Power is as follows: 2009/10 R 21,9 million; 2010/11 R 28 million, 2011/12 R45 million. Actions to be taken Continue the process of accessing DORA through the DoE Project / Intervention Title Distributed Generation Plant Installation / Partnering
Objective To identify the capacity of privately -owned standby generation that may be available for utilisation by means of generation partner agreements. (On an interruptible or load displacement basis where a peaking tariff is used to offset private generation fuel costs). Also determine the standby generation capacity that Municipal Owned Entities (MOEs) require, that may be installed and used on the same principle. Potential Yield – Energy Not applicable Pro ject Start date: April 2008 Savings per annum timeline Potential Yield - Demand To be determined by survey to Budget R 1for 2007 /8 Reduction identify customers with installed Estimate R 80 for 2008/9 generation capacity and capacity (R mil) requirements of MOEs requiring backup power. Finance Source CAPEX Progress Report The generator requirements of the Civic Centre have been specified in preparation for the procurement process. Other municipal entity requirement assessments are continuing. Project on hold due to f inancial constraints Risk / Issues Raised The concept of aggregating privately owned generation is at risk if the single buyer model as currently proposed for all independent power producers (IPPs) is finally legislated by NERSA. Actions to be taken Opti ons of establishing CP as an IPP broker, in a position to sell aggregated premium cost power to Eskom on a pass-through basis, to avoid load shedding to be investigated
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EPWP (Expanded Public Works Programme) The legacy of the past has resulted in a large proportion of our population not yet having the skills or opportunities to effectively participate in South Africa’s economy and earn a living. The EPWP is one of government’s initiatives to bridge the gap between the growing economy and the large numbers of unskilled and unemployed people who have yet to fully enjoy the benefits of economic development.
The EPWP involves creating temporary work opportunities for the unemployed, using public sector expenditure. It builds on existing best-practice government infrastructure and social programmes either by deepening their labour absorption or extending them.
Given that most of the unemployed are unskilled, the emphasis is on relatively unskilled work opportunities. All of the work opportunities generated by the EPWP are therefore combined with training, education or skills development, with the aim of increasing the ability of people to earn an income once they leave the programme.
City Power, in line with the City of Johannesburg uses EPWP as a vehicle and strategy to alleviate poverty and reduce unemployment within the City of Johannesburg’s area of supply. The fundamental strategies are to increase economic growth so that the number of net new jobs being created starts to exceed the number of new entrants into the labour market, and to improve the education system such that the workforce is able to take up the largely skilled work opportunities which economic growth will generate. The EPWP is one of the initiatives agreed to at the Growth and Development Summit (GDS) in June 2003 and is a GDS programme {DoL}.
City Power EPWP Strategy City Power started implementing EPWP in 2005, where project that met the City’s EPWP requirements were identified. It should be noted that this started within the City Power’s network build/Capital Execution environment and the aim is now to expand to all other Departments as detailed in the Strategy below.
One of the City Power strategies in addressing unemployment and ensuring maximization of job creation has always been to minimize the use of excavating machinery and only use manual labour on all our CAPEX (Capital Expenditure) projects. During project implementation phase, City power approaches the political heads (Councillors) in the area or political wards where these projects are being implemented. A list of candidates is therefore submitted to City Power’s contractors as part of employment and selection process. The successful candidates are then temporarily employed by those contractors and reported on monthly basis as part of City Power’s EPWP contribution. The number of days that those candidates worked, as well as their identification numbers are captured, consolidated and sent to the City of Johannesburg and the EPWP office on monthly bases.
As mentioned above City Power started EPWP implementation since 2005, in 2009 City Power has extended the scope by rolling the EPWP across the whole business, this has been done by structuring all labor contracts e.g. Maintenance, Metering, etc to support the EPWP.
EPWP Targets City Power EPWP targets are always aligned to the City’s targets. City Power has through the years improved in the number of jobs created. The Table 2.3.2: illustrates City Power’s growth in terms of EPWP related jobs created from 2006 to 2010.
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Table 2.3.2: EPWP Jobs created from 2006 to 2010
Financial 2006_2007 2007_2008 2008_2009 2009_2010 2010_2011 Years EPWP 2000 2500 2600 3000 3000 Targets Jobs Created 2455 3828 2605
Note: The number of jobs created is limited by the projects availability, which is also informed by the budget/ availability of funds. Challenges The budget cut has led to numerous projects being deferred and or being stopped. This has a direct impact on the number of EPWP related jobs created and targets achieved. At the beginning of the current 2009/10 financial year, City Power had a capital budget of approximately R1billion, but this was subsequently cut to approximately R600million. The initial City Power’s EPWP target was 3000 jobs created, with the budget cut, it is possible that this could not be achieved at the end of the financial year. City Power will continue to strive to maximize job creation within the City of Johannesburg, with the available funds.
Highlights of the Program City Power has always exceeded their targets and has created over 10000 jobs for the past 4 years. Over the past four years, City Power has spent approximately R250 million on EPWP job creations.
Revenue Maximization Revenue target is driven from units (kWh) sold informed by the units purchased and tariffs charged. Revenue targets are depended on meters to be installed to all properties with and they should correctly install. Reading of meters also plays a critical in achieving the revenue target. Reduction in time between customer consumption to billing is integral to measure revenue completeness.The customer acquisition process has been automated to reduce loss of new customer application forms and to ensure that feedback is given to Customer Service. However, with migration of function and staff to Revenue & customer Relations management (R&CRM) , the automated process will not be used and thus creating a gap in using manual capturing, resulting in lost documents and this affects completeness of Revenue. Current prepaid meters make it difficult to accurately report on prepaid revenue completeness. The proposed installation of automated metering including prepaid meters will make it easy for reporting on actual consumption, which will address completeness of revenue.
Challenges are: • By-passed meters • Faulty CT & VT • Un-metered supplies • Billboards, traffic lights, direction boards • Premises without a meter • Faulty meters • Meter Readings • Reduction of non technical losses • Cash management
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• Payment levels • Summary on Collections Future Plans City Power’s response to the above mentioned challenges is a comprehensive strategy that will include: • Removal of illegal connections • Re-commissioning of by-passed meters • Intensifying data and technical audits • Continuing with meter installations for un-metered customers • Intensifying credit control measures • Converting to pre-payment meters • Automated metering
The projects are explained on more detail below of these projects is: Remove illegal connections City Power will continue to pursue legal recourse to eliminate illegal connections. Potential benefit is improvement in customer safety, an increase in revenues and a reduction in losses. The estimated cost of implementation is R30 million in the medium term and another R30 million in the longer term. In addition City Power will continue to strengthening security in hot spot areas.
Re-commissioning of by-passed meters City Power will continue to pursue the re-commissioning of approximately 14 000 bypassed meters. Again it is expected that potential benefit is improvement in customer safety, an increase in revenues and a reduction in losses.
Intensify data and technical audits City Power will intensify its efforts to audit its customer data sets with a view to increase the accuracy of its information. This will lead to higher customer satisfaction and improved collections. The cost of implementation is estimated at R95 million. Following on the short term interventions City Power will continue with technical audits to identify and replace faulty meters, VT’s and CT’s. These initiatives should contribute to an improvement in customer safety, an increase in revenues and a reduction in losses.
Continue with meter installations for un-metered customers City Power plans to continue with the installation of meters for un-metered customers. The aim of the project is to reduce non-technical losses and improve revenues. There is a need for an Audit of all new service connections done in the last 3 years to ensure that they are properly metered and billed.
Intensify credit control measures Stricter enforcement of City Power’s cut-off policy will improve payment discipline and lead to an increase of around R30 million in revenues.
Convert to pre-payment meters In addition to the initiatives described under the short term strategic interventions, City Power’s ongoing massive roll-out of prepayment metering will reduce the number of meters that have to be read manually; this will eliminate estimations and accounts queries which should improve cash flow.
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Automated metering 1. Automated metering means all meters will be read automatically. The benefits are improved cash flows and increased customer service. The estimated cost of implementation is R750 million in the medium term and another R750 million in the longer term.
To positively contribute towards the revenue, it is also recommended that more capital should be allocated towards revenue generation and protection type projects.
Table 2.3.3: Funding Requirements for Revenue Maximization Projects
Revenue Maximization projects Unit Type 20 10 /11 201 1/12 Re -commissioning by -passed meters Rm Opex 23 Removal of illegal connections Rm Opex 30 30 Data and technical audits: CT's and VTs for LPUs Rm Capex 95 100 Intensify credit control measures Rm Opex 30 30 Convert to pre -payme nt smart meters Rm Capex 750 750 Convert to pre -payment smart meters Rm Opex 50 50 Protective structures Rm Capex 100 100 Roll out Automated metering Rm Capex 20 20 TOTAL Rm 1098 10 80
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Section 3: Strategic Agenda
Strategic Agenda Priorities The strategic agenda of City Power Johannesburg (Pty) Ltd is:
“To enhance the value proposition of the company to become the model for and leader of future developments in the electricity distribution field.”
Strategy Management Processes The company has successfully deployed the strategy focused business planning methodology by developing and implementing a strategy management value chain, depicted below in
Figure 3.0. Furthermore, it has succeeded in deploying a strategy focused governance structure to facilitate the development, execution and performance monitoring of the company strategy. A performance scoring appraisal is currently under review in an Endeavour to improve and align it to the COJ performance scoring system.
Figure 3 .0: Strategy Management Value Chain
Strategic Goals In pursuance of its strategic intent City Power Johannesburg (Pty) Ltd has identified its strategic goals as given in Table 3.1:
Table 3.1: Company Strategic Goals Perspective Goal CoJ Stakeholder Sustain COJ stakeholder satisfaction Perspective Community Perspective Sustain community satisfaction Financial Perspective Increase the profit base without compromising the viability of the business Customer Perspective Sustain customer satisfaction Internal Processes Al ign processes and practices to support the vision and enhance our value proposition Learning and Growth Maximize employee productivity and provide enabling information systems Business Planning & Strategy Page 40
Mayoral Priorities City Power is a municipal entity and thus has to align itself with the mayoral priorities of the City of Johannesburg. In Johannesburg there are six mayoral priorities as depicted in table
Table 3.2: Mayoral Priorities Mayoral Priority City Power’s response with regards to outcome Economic Growth and Job Align supply and demand: BEE, Engendered spend, EPWP, Free Creation Basic Electricity, Providing product and price range, etc Health and Community Compliance to basic services delivery programme Development Housing and Services Adherence to the housing requ irements, compliance to service reliability programme Safe, Clean and Green City Compliance to SHEQ , address the demand side management Well Governed and Managed Compliance to legislation, regulatory and governance policies City HIV/AIDS Compliance to t he HIV/AIDS programme
Company Strategic Priorities After due consideration, based on past performance and future challenges, the company determined the following three strategic priorities, in order of priority, to ensure sustained business performance: Figure 3.1 below shows the company’s strategic priorities
Business Planning & Strategy Page 41
Strategic Issues
The following are the strategic issues that the company has to take into account during 2009/10 and 2010/11 • 2010 FIFA World Cup • Regional Electricity Distributors • Phakama • Managing new growth • Regulation for new developments, ASGISA & Regulation for existing homes • Improve service delivery/maximising profit • Reduce outages and improve restoration • Energy crisis • Reduce consumption by 10% & Energy generation capacity for Joburg • Theft and vandalism • Improving the working environment • Eskom tariff changes • Create scenarios
Top 10 Priorities for 09/10 and 10/11 NB: Business Unusual • Turnaround Strategy • Training & Development • Financial Management • Asset Management • Funding • Revenue Maximization • Develop an aggressive anti- theft strategy • Effective Performance Management • Value Chains • Improve communication (internal & External)
Business Planning & Strategy Page 42
Environmental analysis PEST Analysis
Table 3.3: High Level PEST Analysis
Political Economic
• Local Government elections – new mayor, • Global economic meltdown – increase in new priorities. non- payment, high consumer debt, increase in bad debts. • World Cup 2010 – increase backlog on • Exchange rate – increase cost of capital and electrification projects. imported goods and equipment.
• FBE (free basic electricity) – increase • Funding constraints. costs on social responsibility.
• Extended Public works programme . • Eskom tariff increase – operational costs. Social Technological
• Unemployment – increase in theft and • The ever changing IT equipments and vandalism of equipments. systems.
• Resistance culture – Culture of non - payment. • Service Delivery protests. • Urbanization – • The impact of HIV/ Aids to organization.
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SWOT analysis
Table 3.4: High Level SWOT Analysis
Strengths Weaknesses
• Poor communication both • Ability to work in high pressure environment. internal and external. • Adaptive culture. • Inaccurate customer data. • Latest IT systems and equipments. • System integration. • Good business processes and policies in • Poor credit control processes place. resulting to increased bad debts. • Good knowledge and understanding of the • Poor contract management. business. Internal • ISO accreditation. • Poor financial discipline. • Operate in captive market. • Operating in Si los. • Staff performance poorly • Alignment to legislative framework. managed. • Clean audit for the past two years. • Old IT infrastructure. • Reliable and quality supply. • No succession planning. • Value chains processes are not
adhered to. • Loss of key essential staff.
Opportunities Threats
• Socio-political uncertainty and • Green energy expectations. • Financial meltdown (impact on • Carbon Funding/ CEF cash-flow and revenue) External • Loss of revenue – illegal • Extra revenue from advertising on our connections, theft and network infrastructure. vandalism. • Lack of suffient funding. • Aging and overloaded networks. • Public exposure to dangerous
equipment due to vandalism.
Business Planning & Strategy Page 44
Analysis of our Business against the GDS Principles The GDS is translated into the Integrated Development Plan (IDP). City Power influences the GDS’s many sectors and principles, but most of its influence is on the infrastructure sector. The company priorities will be in line with the GDS, IDP and the strategic framework of the shareholder. The table below shows how the City Power’s strategic agenda is in line with the GDS:
Table 3.5: City Power’s strategic agenda and GDS
Long-term Long-term 5-year strategic Delivery agenda for Delivery agenda for Goals Strategic Objectives 2009/10 2010/11 Interventions 1. Extend a Eliminat e all Distribute electricity to 3000 planned, final target 3000 planned, final target differentiated backlogs at least 95% of TBD and is dependent on TBD and is dependent on package of In access to formalised households housing and funding housing and funding service that basic services Prov ide street lighting The target for 09/10 is he target for 10/11 is 1%, is fit for to 95% of formal areas 1%, this means it will be this means it will be moving purpose, in Johannesburg but moving from 62% to 63% from 63% to 64% cumulative affordable City Power will only cumulative and is and is dependant on funding. and reliable, achieve 65% because dependant on funding. This means 1000 public light in of continued budgetary This means 1000 public will be provided in formal accordance constraints light will be provided in areas with national formal areas. policy commitments Provide street lig hting The target is 2% in The target is 2% in targeted and an to 60% of informal targeted areas, this areas, this means it will be agreed local settlements means it will be moving moving from 15 to 16% definition of from 13 to 15% cumulative and is dependent appropriate cumulative and is on funding. levels of dependent on funding. service Increase allocation of Provide households that Provide households that free basic electricity to consume up to 300kWh consume up to 300kWh with poor households and with FBE FBE those with special needs 2. Reduce Within a Reduce losses by 2% 12.5 % total losses 12.5 % total losses electricity competitive to 1% outages by industry Reduce electricity Implement and improve Implement and improve on 50% by year environment, outages by 50% by on the asset maintenance the asset maintenance 2010 (bulk, contribute to year 2010 (bulk, management strategy management strategy medium and meeting the medium and low HV NPR: 85 management voltage) but City Power HV NPR: 80 low voltage) MV NPR: 950 but City needs of the city will only achieve 30% MV NPR: 930 CAIDI – Customer Power will because of the only achieve Budgetary constraints Average Interruption CAIDI 30% because experienced in 07/08 Duration Index CAIFI of the CAIFI – Customer SAIDI Budgetary Average Interruption SAIFI constraints Frequency Index experienced SAIDI – Customer The planned/unplanned ratio in 07/08 Average Interruption to 55:45 Duration Index SAIFI - Customer Average Interruption Business Planning & Strategy Page 45
Long-term Long-term 5-year strategic Delivery agenda for Delivery agenda for Goals Strategic Objectives 2009/10 2010/11 Interventions Frequency Index Planned/unplanned ratio to 45:55
Within the Reduction on energy Investigation of energy Investigation of energy usage framework of the usage/ Improve energy usage patterns in low- patterns in low-income RED meet the efficiency (ISD) income residential areas, residential areas, including electricity needs including the Inner City; the Inner City; of all commercial Investigation of the Investigation of the and bulk relationship between relationship between usage electricity users usage per capita and per capita and usage per in the city usage per consumer unit; consumer unit; Identifying areas where a Identifying areas where a Through revised approach is revised approach is efficiency necessary (e.g. Tariff necessary (e.g. Tariff model improvements, model to suite specific to suite specific areas); and reduce the cost areas); and Recommendations for Tariff per capita Recommendations for adjustments for 2010/11 will operating Tariff adjustments for be prepared. expenditure for 2009/10 will be prepared. running and maintaining all service networks
3. Service Ensure Reduce illegal Implement a Implement a comprehensive delivery is integrated electricity connections comprehensive strategy strategy on the reduction of secured design and on the reduction of illegal illegal connections subject to through well maintenance connections subject to funding availability. This designed, planning for all funding availability. This includes: well- infrastructure includes: • Continued customer integrated with a view to • Continued customer education programmes in and well- manageable education targeted areas; maintained recurrent costs programmes in • Working with JMPD to Generation and extended targeted areas; remove illegal /supply, life of service • Working with JMPD connections *Continuous processing networks to remove illegal roll-out of protective and connections structures in order to distribution *Continuous roll-out reduce tampering with networks of protective conventional meters and structures in order to street light poles; reduce tampering • Promote alignment with with conventional the City’s debt write-off meters and street and indigence support light poles; programmes; • Promote alignment • Limited installation of with the City’s debt prepayment meters write-off and indigence support programmes; • Continue installation of prepayment meters
4. Leadership Ensure Implement at least five Turbines reinstated Turbines reinstated subject to Business Planning & Strategy Page 46
Long-term Long-term 5-year strategic Delivery agenda for Delivery agenda for Goals Strategic Objectives 2009/10 2010/11 Interventions in sponsoring investments to innovative new subject to funding funding and adopting extend the technologies in service Solar heating, light ing Solar heating, lighting and innovative , service life of delivery and other technologies other technologies yet locally infrastructure Solar Water heating Solar Water heating relevant are within cost Roll out AMR/ Smart Roll out AMR/ Smart metering technologies effective metering and delivery thresholds and DSM/EE DSM/EE capabilities technical Roll out CFL Roll out CFL that enable tolerances Network Automation Netwo rk Automation new service Network Protection Network Protection offerings and Technology Technology ongoing Contribute to Develop and implement Development and Development and efficiency Research and comprehensive implementation of a implementation of a demand improvement industry demand side demand side energy side energy management across all development by management management programme, programme, in conjunction service areas sponsoring and programmes for energy in conjunction with CP. with CP. where Enforce by–law for Enforce by–law for appropriate installation of ripple installation of ripple relays in adopting new relays in hot water hot water geysers in new technologies geysers in new developments. that enable developments. Environmental Management service Environmental Unit will continue to address efficiency and Management Unit will the conservation awareness quality continue to address the program in the 09/10 financial improvements, conservation awareness year. especially those program in the 09/10 that are relevant financial year. to developing world/city contexts 5. M aintain a Maintain and Support the Assist in the Assist in the establishment of regime of improve service establishment of the establishment of RED RED responsible delivery RED service efficiency levels delivery through regulation progressive and and continuous stakeholder improvement interaction
Business Planning & Strategy Page 47
Section 4: Company Balanced Scorecard Perspectives
Figure 4.1 Company Balanced Scorecard Framework Our Strategic Destination
COJ Stakeholder Perspective Community Perspective
“How do we attract resources and “How do we have a social impact with authorisation for our mission” citizens/constituents”
Financial Perspective
“How should we manage and allocate resource for maximum return”
Customer Perspective
“To achieve our vision, how must we look to our customers”
Internal Process Perspective
“To satisfy our customers and shareholders, at which processes must we excel”
Learning & Growth Perspective
“To excel at our critical processes, how must our organisation learn and improve”
Financial Perspective The company’s financial value proposition is depicted in Table 4.1 below. In particular the value drivers, in order of importance, are: • Sustained cash flow • Low operating costs • Sustained profit • Sustained revenue growth • High asset productivity
Business Planning & Strategy Page 48
The BSC financial indicators are given in Table 4.1 below
Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan 1= (-1% ) - ( -2%) 1= (-1% ) - ( -2%) 2 = 0% - (1%) 2 = 0% - (1%)
Turnover RM 3 = Original Budget 3 = Original Budget 5,555,287 4 = 0 - 1% (Above) 4 = 0 - 1% (Above) 5 = 1% - 2%( Above) 5 = 1% - 2%( Above) 1= 2 % - Above 1= 2 % - Above 2 = 1% 2 = 1%
Direct Costs RM 3 = Original Budget 3 = Original Budget 3,752,533 4 = - 1% 4 = - 1% 5 = -2% or more 5 = -2% or more 1= below 32 1= below 32 2 = 32 to <32.5 2 = 32 to <32.5
Gross Margin % 3 = 33 to <33.5 3 = 31 to <31.5 36 4 = 33.6 to <34.5 4 = 31.6 to <32.5 5 = 34.6 and above 5 = 32.6 and above 1= 2 % - Above 1= 2 % - Above 2 = 1% 2 = 1% Bad Debts RM 3 = Original Budget 3 = Original Budget Contribution 235,099 4 = - 1% 4 = - 1% 5 = -2% or more 5 = -2% or more 1= 2 % - Above 1= 2 % - Above 2 = 1% 2 = 1%
OPEX RM 3 = Original Budget 3 = Original Budget 1,572,197 4 = - 1% 4 = - 1% 5 = -2% or more 5 = -2% or more 1= (-1% ) - ( -2%) 1= (-1% ) - ( -2%) 2 = 0% - (1%) 2 = 0% - (1%)
Net Profit RM 3 = Original Budget 3 = Original Budget 286,952 4 = 0 - 1% (Above) 4 = 0 - 1% (Above) 5 = 1% - 2%( Above) 5 = 1% - 2%( Above) 1= 3 % and Above 1= 3 % and Above 2 =2 % 2 =2 % CAPEX - RM 743,584 3 = Original Budget 3 = Original Budget Controllable 4 = - 1% 4 = - 1% 5 = -2% or more 5 = -2% or more 1= 3 % and Above 1= 3 % and Above 2 =2 % 2 =2 % CAPEX - Non- 3 = Original Budget 3 = Original Budget RM Controllable 319,880 4 = - 1% 4 = - 1% 5 = -2% or more 5 = -2% or more Subject to funding Subject to funding 1 = below 96 1 = below 96 Payment Levels – % 100.37 2 = 96 to < 99 2 = 96 to < 99 Key Customers 3 = 99 to < 100 3 = 99 to < 100 Business Planning & Strategy Page 49
Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan 4 = 100 to < 101 4 = 100 to < 101 5 = 101 and above 5 = 101 and above 1 = Below 96 1 = Below 96 2 = 96 to < 98 2 = 96 to < 98 Payment Levels – % 101.7 3 = 98 to < 99.5 3 = 98 to < 99.5 LPU Customers 4 = 99.5 to < 100 4 = 99.5 to < 100 5 = 100 and above 5 = 100 and above 1 = Below 90 1 = Below 90 Payment Levels - 2 = 90 to < 92 2 = 90 to < 92 Domestic % 91.4 3 = 92 to < 94 3 = 92 to < 94 Customers 4 = 94 to < 95 4 = 94 to < 95 5 = 95 and above 5 = 95 and above 1 = above 12.4 1 = above 12 2 = 12.1 to <12.4 2 = 11.6 to <12 Total Losses % 13.32 3 = 12 to < 12.5 3 = 11 to < 11.5 4 = 11.5 to < 12 4 = 11.4 to < 11 5 = below 11.5 5 = below 11 1 = above 9.4 1 = above 9.4 2 = 9.1 to < 9.4 2 = 9.1 to < 9.4 Technical % 9 3 = 9 to < 9.1 3 = 9 to < 9.1 4 = 8.5 to < 9 4 = 8.5 to < 9 1=4.5 & above 1=3 & above Non-Technical 2 = 4 to <4.5 2 = 2.6 to <3 % 4.32 Losses 3 = 3.5 to <4 3 = 2.0 to <2.5 4 = 3 to <3.5 4 = 2.4 to <2
Customer Perspective The company’s customer value proposition is depicted in Figure 4.2 below. In particular the value drivers, in order of importance, are: • Quality of supply • Quality of revenue collection • Quality service experience • High product availability • Affordable product price • Positive company image • Quality of customer information • Quality of key customer relations
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The BSC customer indicators are given in Table 4.2 below:
Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan 1= Less than 60% 1= Less than 60% Customer 2= 61% to 70% 2= 61% to 70% satisfaction – Index 67 3= 71% to 75% 3= 71% to 75% LPU Customers 4= 76% to 80% 4= 76% to 80% 5= Above 80% 5= Above 80 % 1= Less than 70% 1= Less than 70% Customer 2= 70% to 74% 2= 70% to 74% satisfaction - Index 80 3= 75% to 80% 3= 75% to 80% Key Customers 4= 81% to 85% 4= 81% to 85% 5= Above 85% 5= Above 85% 1 = 90 & above 1 = 85 & above 2 =86 to <90 2 =81 to <85 Bulk Outages - No 71 3 =80 to <85 3 =75 to <80 NPR 4 =75 to <80 4 =70 to <75 5 =Below 75 5 =Below 70 1 = 980 & above 1 = 980 & above 2 = 930 to <980 2 = 930 to <980 Medium voltage No 884 3=880 to <930 3=880 to <930 Outages - NPR 4 = 830 to <880 4 = 830 to <880 5 = below 830 5 = below 830 CAIDI Minutes 5033 TBD TBD CAIFI No 23.42 TBD TBD SAIDI Minutes 325.9 TBD TBD SAIFI No 1.41 TBD TBD Faults restoration within the specified As Per NRS As Per NRS time frame as a percentage of the total 1=Below 22.5; 52.5; 82.5; 1=Below 22.5; 52.5; 82.5; 90.5 number of faults reported (NRS 047) 90.5 Within 1.5 Hrs % 25.86 2= 22.5; 52.5; 82.5; 90.5 2= 22.5; 52.5; 82.5; 90.5 Within 3.5 Hrs 66.23 3 = 25; 55; 85; 93 3 = 25; 55; 85; 93 Within 7.5 Hrs 93.06 4= 27.5; 57.5; 87.5; 95.5 4= 27.5; 57.5; 87.5; 95.5 Within than 24 98.84 5 = 30; 60; 90; 98 5 = 30; 60; 90; 98 Hrs
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Internal Process Perspective The company’s internal process value proposition is depicted in Table 4.3 below. In particular the value drivers, in order of importance, are: • Product delivery processes • Revenue collection processes • Service delivery processes • Governance and compliance processes • Product pricing processes • Strategy management processes
Table 4.3: BSC Internal Process Indicators
Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan 1= Below 90% 1= Below 90% NRS 048 2= 90 to < 95% 2= 90 to < 95% Compliance % 100 3= 95 to < 9 7 % 3= 95 to < 97 % Category 4 – Domestic 4= 97 to < 98% 4= 97 to < 98% 5= 98% & above 5= 98% & above 1= Below 90% 1= Below 90% NRS 048 2= 90 to < 95% 2= 90 to < 95% Compliance % 100 3= 95 to < 97 % 3= 95 to < 97 % Category 2 – Industrial 4= 97 to < 98% 4= 97 to < 98% 5= 98% & above 5= 98% & above 1= Below 90% 1= Below 90% NRS 048 2= 90 to < 95% 2= 90 to < 95% Compliance % 100 3= 95 to < 97 % 3= 95 to < 97 % Category 3 – Rural 4= 97 to < 98% 4= 97 to < 98% 5= 98% & above 5= 98% & above 1= 0 < 22 1= 0 < 22 2= 22 - < 23 2= 22 - < 23 Engendered % 26 3= 23 - < 24 3= 23 - < 24 Company Spend 4= 24 - < 25 4= 24 - < 25 5= 25 & Above 5= 25 & Above 1 = Below 68% 1 = Below 68% BEE Spend 2 = 69% to < 72% 2 = 69% to < 72% (Opex plus % 74 3 = 72% to < 73% 3 = 72% to < 73% Capex) 4 = 74% to < 78% 4 = 74% to < 78% 5 = 78% & above 5 = 78% & above
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Learning and Growth Perspective The company’s learning and growth value proposition is depicted in Table 4.4 below. In particular the value drivers, in order of importance, are: • Human Capital Utilisation • Information Capital Utilisation • Organisational Capital Utilisation
The Learning and growth indicators are given in Table 4.4 below:
Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan 1= Below 67% 1= Below 67% 2= 67% to < 70% 2= 67% to < 70% Affirmative % 76.8 3= 70% to < 73% 3= 70% to < 73% action 4= 73% to < 76% 4= 73% to < 76% 5= 76% and above 5= 76% and above 1= Below 20% 1= Below 2 0% 2= 20% to < 23% 2= 20% to < 23% Gender Equity % 27.29 3= 23% to < 25% 3= 23% to < 25% 4= 25% to < 27% 4= 25% to < 27% 5= 27% and above 5= 27% and above Number of employees with No 19 21 21 Disabilities 1= 1.5 and above 1= 1.5 and above Disabling Injury 2= 1 to < 1.5 2= 1 to < 1.5 Frequency Ratio Ratio 0.69 3= 0.5 to < 1 3= 0.5 to < 1 (DIFR) 4= > 0 to < 0.5 4= > 0 to < 0.5 5= Equal to 0 5= Equal to 0 *Employees 1=above 0 1=above 0 No 1 fatalities 5=0 5=0
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IDP Perspective The company’s community value proposition is depicted in Table 4.5 below. In particular the value drivers, in order of importance, are: • Minimum environmental impact • Sustained social investment • Sustained job creation • Public safety
Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan Total Number of No 323,401 323,401 Customers 323,401 Number of households with access to free
basic electricity No 115,958 115,958 115,958 (Lifeline tariff only) Residential 1 = Below 2800 1 = Below 2800 2 = 2800 to <2900 2 = 2800 to <2900 Number of new 3 = 2900 to <3000 3 = 2900 to <3000 electrification No 5 029 4 = 3000 to <4000 4 = 3000 to <4000 customers 5 = 4000 & above 5 = 4000 & above Dependent on funding Dependent on funding Total number of 1= less than 88 1= less than 88 customer 2= 88 to <90 2= 88 to <90 complaints 3= 90 to <92 3= 90 to <92 CLOSED versus 4= 92 to <95 4= 92 to <95 Total number of % 96 customer complaints 5= 95 & above 5= 95 & above RAISED (during a defined period) 1 = Below 62 1 = Below 62 2 = 62 to <63 2 = 62 to <63 Provision of 3 = 63 to <64 3 = 63 to <64 Public lights in No 97 4 = 64 to <65 4 = 64 to <65 formal Areas 5 = 65 & above 5 = 65 & above Depending on funding Depending on funding 1 = below 90, 1 = below 90, Public lights 2 = 90 to < 95, 2 = 90 to < 95, working in high % 80 3 = 95 to 97, 3 = 95 to 97, crimes areas 4 = 97 to 98, 4 = 97 to 98, 5 = Above 98 5 = Above 98 Business Planning & Strategy Page 54
Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan Depending on funding Depending on funding No of tasks 1 = Below 2 1 = Below 2 undertaken to 2 = 2 2 = 2 comply with 3 = 3 3 = 3 environmental No 3 4 = 4 4 = 4 management systems (ISO 14001) by target date 5 = 5 & above 5 = 5 & above HIV/Aids workplace % 100 100 100 programmes in place 1 = Below 2500 1 = Below 2500 2= 2500to <3000 2= 2500to <3000 Job creation as No 2 605 3= 3000 to <3500 3= 3000 to <3500 per EPWP policy 4= 3500 to <4000 4= 3500 to <4000 5= Above 4000 5= Above 4000 *Fatalities (Public) No 0 0 0 Controllable Fatalities (Public) Non- No 3 0 0 Controllable As per NRS As per NRS Average time 1 = above 4 Days 1 = above 4 Days taken for City 2 = 4 Days 2 = 4 Days Power to resolve Days 1.67 3= 3 Days 3= 3 Days queries that are referred to them 4= 2 Days 4= 2 Days 5= Below 2 Days 5= Below 2 Days 1= 2 % - Above 1 = below 7 2 = 1% 2 = 7 to < 9 % Reduction in 3 = Original Budget 3 = 9 to < 11 electricity % 5.6 4 = - 1% 4 = 11 to < 13, consumption 5 = -2% or more 5 = 13 and above
Opex spent on 1= 2 % - Above 1= 2 % - Above maintenance 2 = 1% 2 = 1% programmes as 3 = Original Budget 3 = Original Budget % 13.2 a percentage of 4 = - 1% 4 = - 1% overall Opex 5 = -2% or more 5 = -2% or more budget
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Measure 2008/09 Indicator Unit Actual 2009/2010 Plan 2010/2011 Plan Capex spent on network as a percentage of % 96 95 95 the overall Capex budget % of ME’s capital budget % 99.9 100 100 spent % Variance against ME’s % 172.7 0 0 operating budget Reconciliation of inter company % 100 100 100 balances with the CoJ Reconciliation of intra company % 100 100 100 balances with other ME’s Fully SA GRAAP compliant % 100 100 100 register of assets 1= unqualified audit report with matters of emphasis, material 1= unqualified audit report with adjustment and other matters of emphasis, material matters adjustment and other matters 2=Unqualified audit 2=Unqualified audit with matter Unqualifi with matter of % Attainment of of emphasis and other matters ed audit emphasis and other clean audit 3= Unqualified audit with % with other matters report attained matters of emphasis matters 3= Unqualified audit by MOE 4= Unqualified audit with other with matters of matters emphasis 5=Unqualified audit report with 4= Unqualified audit no matters (Full Compliance) with other matters
5=Unqualified audit report with no matters (Full Compliance)
Business Planning & Strategy Page 56
Section 5: Risk Assessment
Background City Power is a Municipal Owned Enterprise (MOE), owned by the City of Johannesburg (COJ) and as such City Power is continuously ensuring alignment and compliance to COJ requirements. City Power’s Risk Management process is aligned and has adopted the COJ Risk Management Framework.
Broad Definition ‘Risk’ is defined as an event that may have an impact on the ability of the company to achieve its business objectives.
Risk Management Process City Power's Risk Management process has four broad steps: • Risk identification • Risk Assessment and treatment • Monitoring and Reporting • Auditing
Figure 5.1: Risk Management Process
Risk Ris k Assessment Identification and treatment
Monitoring Auditing and reporting
Risk Identification The City Power risk identification process is aligned to the COJ framework. The company risks are identified annually and they form part of the risk register. These risks are influenced by the executive committee, taken for the Audit Committee of the board and then approved by the board. The approved risks are then incorporate in the business plan.
Risk Assessment and Treatment Once risks have been identified, they must then be subjected to a consistent assessment process to ensure that City Power achieves an objective and holistic result that can inform its risk profile. Risk is measured in two ways: • By the likelihood or frequency of the risk occurring Business Planning & Strategy - (Fifth Draft Business Plan) Page 57
• By the severity / impact on City Power of the risk occurring The City of Johannesburg has developed a two-stage assessment process to assess and quantify the identified risks.
Stage One – Impact and likelihood The first stage involves an assessment of the potential impact (or severity) of each risk, and then the likelihood of the event actually occurring. Each risk is scored on a scale of one to five. Table 6.1: shows the criteria used to assess the potential Impact / Severity of each risk occurring
Table 5.1 : The criteria used to assess the potential Impact / Severity of each risk occurring Assessment of impact / severity
Financial Reputation Stakeholders Customers
Event would have l ittle Contained within individual service area. Employees may have Customers may have been financial impact on From a regulatory perspective, minor suffered minor first aid minimally impacted. Event either income or budget fines or penalties may have been injuries. Event may may impact minimally on 1 suffered. have resulted in achieving a performance localised staff morale target. problems. Notsignificant Event would have Af fects significant number of service Employees may have Event may impact on moderate financial areas but with likely short-term impact suffered temporary achieving a performance impact (>2% on on public memory. From a regulatory disabling injuries. target where a major 2 budget/income or >2%) perspective, fines or penalties >R50k Event may have milestone was missed by – on either income or may have been suffered. Customers resulted in staff loss more than 1 month, 3 budget. may have been impacted resulting in causing minor to impacting on a client complaints with media coverage moderate segment. (suburban newspaper). consequences. Minor Event would have Regulator inquiry with medium -term Employees may have Event may impact on serious financial impact on public memory. From a suffered multiple achieving a performance impact (>4 -6% on regulatory perspective, fines or temporary disabling target where a major 4 budget/income or penalties >R100k may have been injuries. Event may milestone was missed by – >4%) on either suffered. Customers may have been have resulted in staff more than 3 months and 5 income or budget. impacted resulting in complaints with loss, causing serious subsequent interruption media coverage (local newspaper not consequences. over several days to front page). customers. Moderate Event would have very Medium -term public impact with minor Employees may have Event may impact on serious financial impact political implications. From a regulatory suffered multiple achieving a performance (>8% on budget/ income perspective, fines or penalties >R150k permanent disabling target where a major or >8%) on either may have been suffered. Customers may injuries. Event may milestone was missed by 6 income or budget. have been impacted resulting in have resulted in staff more than 6 months, – complaints with media coverage (national loss, causing very resulting in a major 7 TV headlines) and loss of service >1 serious consequences. customer impact. month. ajor M Event would have Long -term impact on public memory and Employees may have Event may impact on a catastrophic financial major political implications. From a suffered fatalities. performance target, where impact (>15-25% on regulatory perspective, fines or penalties Event may have a major milestone was 8 budget/income or >15%) >R500k may have been suffered. resulted in staff loss, missed by more than 8 – on either income or Customers may have been impacted causing catastrophic months to over 1 year.
9 budget. resulting in complaints with media consequences. coverage (national TV headlines) and loss of service >6 months. Catastrophic
Business Planning & Strategy - (Fifth Draft Business Plan) Page 58
Table 5.2 shows the criteria used to assess the likelihood of the risk occurring: Likelihood Description Probability Descriptor Almost Certain – Event has occurred within the last year The event is certain to occur 8-9 repeatedly. within this financial year. Event has occurred within the last The event is likely to occur within Likely – 6-7 financial year. this financial year.
The event has a probability of occurring at Event has been recorded within Possible – 4-5 some time, in the next year. organization as well as within the sector in the last 2 years. Very few recorded or known incidents. The event may occur at some Reasonable opportunity to occur or has time, within the next 2 years. Unlikely – 2-3 occurred within other organizations within sector. Event may occur in exceptional No event recorded in the last 3 circumstances. No recorded incidents or years. Rare - 1 little opportunity for occurrence.
The product of this stage one assessment of impact and likelihood is an " Inherent Risk Score ", which can range from a minimum of 1 to a maximum of 25, by multiplying the frequency and impact scores.
Stage two – Development of Risk Drivers and Risk Casual Model Risk drivers are those elements which tend to be the cause of the risk occurring. Risk drivers are a key process in risk management as they provide an in-depth understanding of the risk. Analysis of the drivers’ lead to the effective monitoring of the risk as well as the development of control measures to mitigate or manage the risk. These will be measured and monitored as per the next phase of this project. The formulation of risk drivers is to assist with the understanding of the risk (i.e. make the risk more tangible) and in the formulation of controls, both pre- and post and to manage / minimise the risk drivers, which in turn reduces the overall headline risk. If the drivers are not identified, then the process only provides a snapshot of the risks at a point in time. Monitoring and Reporting • Monthly, quarterly and annual reporting on progress with status of action items. Auditing • This process will be audited continuously.
Business Planning & Strategy - (Fifth Draft Business Plan) Page 59
Table 5.3: Risk Register
60
Section 6: FINANCIAL IMPACT Financials are subject to NERSA detailed tariff approval
Financial Planning Assumptions
Table 6.1: Financial Planning Assumptions
Details Notes Budget Forecast Budget Budget Budget 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013
Revenue Average Tariff Increase % 30.60% 30.60% 29,3% 35.00% 35.00% Income Split Key Customers % 46.00% 46.00% 46.00% 46.00% 46.00% Income Split City Power % 15.00% 15.00% 15.00% 15.00% 15.00% Income Split Prepaid 2.00% 2.00% 2.00% 2.00% 2.00% Income Split COJ % 37.00% 37.00% 37.00% 37.00% 37.00% Other Income 5.00% 4.5% 4.5% 4.0% 4.0%
Direct Costs Kelvin Power Station Increase % 47.60% 6.00% 56.00% 6.00% 6.00% ESKOM Increase % 35.60% 34.00% 28.90% 35.00% 35.00% % Growth in units purchased % 2.00% 1.00% 2.00% 2.00% 2.00%
Payment Levels Key Customers % 99.0% 99.0% 99.0% 99.0% 99.0% City Power Top Customers % 99.0% 99.0% 99.0% 99.0% 99.0% City Power Prepaid 100.0% 100.0% 100.0% 100.0% 100.0% COJ Domestic Customers % 93.0% 93.0% 93.0% 93.0% 93.0%
Expenditure
Inflation CPIX % 6.2% 6.8% 6.3% 5.9% 5.7% Salary Increases: Salaries % 8.30% 13.00% 7.8% 6.9% 5.7% Allowances % 8.30% 13.00% 7.8% 6.9% 5.7% General Expenses % 6.2% 7.3% 0.6% 5.1% 5.7% Repairs and Maintenance % 6.5% 8.8% 8.3% 7.9% 7.7% Repairs and Maintenance Other % 50.0% 8.8% 8.3% 7.9% 7.7%
Capital Expenditure R000 1,043,352 754,274 1,081,581 891,400 798,500 Loan funded projects R000 595,649 429,221 542,000 474,700 404,500 DSM Levy R000 150,000 0 230,000 250,000 270,000 Other R000 297,703 325,053 309,581 166,700 124,000
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Income Statement
Table6.2: Income statement Details Actual Budget Revised Forecast Budget Budget Budget 2008-2009 2009-2010 2009-2010 2009-2010 2010-2011 2011-2012 2012-2013 Total Operating Income 5,866,142 7,302,326 7,217,288 7,702,767 9,022,828 11,046,932 13,545,794 Turnover 5,520,868 6,909,043 6,849,043 7,334,523 8,858,538 10,823,875 13,309,596 Other Income 345,274 393,283 368,245 368,244 164,290 223,057 236,198 Cost of Sales 3,752,533 4,830,710 4,810,710 5,331,010 6,420,441 7,890,013 9,788,059 Gross margin 2,113,609 2,471,616 2,406,578 2,371,757 2,602,387 3,156,919 3,757,734 Gross margin % 36.03% 33.85% 33.34% 33.34% 28.84% 28.58% 27.74%
Operating overheads 1,538,686 1,793,376 1,653,624 1,627,067 1,867,528 2,469,979 3,051,240 Employee Related Costs Salaries 533,549 556,074 611,780 611,780 633,866 718,319 770,789 Gen.exp - Other 455,479 518,013 410,613 393,617 442,954 503,663 631,119 Repairs and maintenance 202,930 223,040 215,016 205,454 305,994 554,317 828,358 Contribution bad debts 235,099 252,042 217,008 217,008 260,159 394,855 485,534 Depreciation and amortisation 111,629 244,208 199,207 199,207 224,554 298,825 335,440
Operating Profit before interest and taxes 574,923 678,240 752,953 744,691 734,858 686,940 706,494 Operating Profit % 9.80% 9.29% 10.43% 9.67% 8.14% 6.22% 5.22%
Net interest (287,971) (326,996) (328,231) (319,969) (343,783) (275,381) (211,431) Interest income/(Expense -ve) 45,918 54,592 52,798 52,798 30,514 95,224 139,367 Interest on COJ shareholder loans (-ve) (109,617) (109,617) (109,617) (109,617) (109,617) (109,617) (109,617) Interest on Mirror conduit loans (-ve) (50,784) (34,308) (34,308) (34,308) (14,723) (14,023) Interest on Capex loans (-ve) (218,286) (271,694) (271,134) (262,871) (284,856) (299,000) (301,811) Interest on outstanding Debtors 44,798 34,030 34,029 34,029 34,897 52,035 60,629
Add Back Prior year adjustments Profit before fair value adjustments 286,952 351,244 424,722 424,722 391,075 411,559 495,063 Net Fair Value Adj Profit before tax 286,952 351,244 424,722 306,151 391,075 411,559 495,063 Taxation (98,348) (118,922) (118,922) (109,501) (115,236) (138,618) Attributable income 286,952 252,896 305,800 305,800 281,574 296,322 356,445 Retained income at beginning of period 760,455 866,037 938,857 938,857 1,159,285 1,440,859 1,737,182 Retained income at end of period 1,047,407 1,118,933 1,244,657 1,244,657 1,440,859 1,737,182 2,093,627
Forecast for 2009/2010 The forecasted profit for the year has been unchanged from the revised budget of R305,8 million However changes has been made which include the following: Turnover Turnover has increased from R6, 849 million to R7,335 million or R485 million. The increase is a result of the following: • Increase in units sold due to higher demand from customers. The units sold YTD is 6, 5% higher than budget. The budgeted kWh to be sold was 10,999,000,000 kWh but because of the increase in demand we expect to sell 11,260,629,705 kWh.
Direct cost has increased from R4, 8 billion to R5, 3 billion due to the following: • Units increased from 12 570, 79 GWh to 13 519, 86 GWh mainly because of the increase in demand. • This means an average year on year increase in units of 4, 5%.
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• The current year to date increase in demand amounts to 9, 8% more than budget.
Gross Profit As a consequence of the increase in direct cost for the year, gross profit has decreased by R35 million.
Operating Expenditure Operating Expenditure has decreased from R1, 65 billion to R1, 63 billion by R27 million to accommodate the net decrease in gross profit because of the increase in direct cost. General Expenses: The budget has decreased from R410,6 million to R393,6 million as to accommodate the increase in direct cost.
BAD DEBT • The current budgeted provision for bad debt amounts to R217 million. However with the current trend of payment levels that is less than budget, the provision may need to increase. The current YTD payment levels for City Power and COJ as at end of October are 97, 9% and 86, 51% respectively. Taking the current situation into consideration where COJ payment levels are 6, 5% less than budget we are likely to increase the provision at year end if the current payment level remains the same.
REPAIRS AND MAINTENANCE The Budget of Repairs and Maintenance is decreasing from R215 million to R205 million to accommodate the increase in direct cost. Budget 2010/2011
Overview The budget for 2010/11 has been prepared on the following basis: • The revised budget for 2009/10 has been used as the base period except for direct cost and revenue which was based on the forecast for 2009/2010 . • For expenditure the COJ indicatives have been followed: • CPIX - - 6,3% • Salary increases - 8,5% • Repairs and maintenance increase - 8,3% • Other expenditure - 0,6% • Growth in consumption - 2%
The following increases in direct costs were utilized • Eskom - 28,9% (35% in 2010/11 and 35% thereafter) • Kelvin - 56%
Revenue Tariff Increase A standardized tariff model was utilized for the COJ entities utilizing a Rate of Return methodology. This methodology is also in line with recent NERSA initiatives. A key driver of the required revenue increase is the capital base. A risk weighted return on the asset base is incorporated into the required tariff increase calculation to ensure there is adequate investment in the network infrastructure. This is influenced by the level of capital expenditure required by the entity.
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Income Statement Explanations for the amounts provided in the income statement are set out below. Reasons for the increases between the revised budget for 2009/2010 and the forecast budget for 2009/2010 are also included where necessary. Turnover Turnover has increased from R6, 849 million to R8, 859 million compared to the original budget, an increase of 29, 3% or an increase of 20.8% based on the forecast. In addition to the growth and reduction in non-technical losses, the details of which are contained elsewhere in the business plan, provision has been made for a tariff increase of 28,9%. Other Income The main components of other income and the budget provision made for 2010/2011 include the following: New Service Connections - R56, 2 million Deferred Income - R29 million Cut off Fees - R45 million Sale of Scrap - R4, 8 million
DSM Levy has been removed from other income and will be used to finance DSM capital projects. Other income has generally been increased by the CPIX of 6, 3%. Direct Costs The forecast of R5, 331 million has been used as the base figure on which the budget for 2010/2011 has been calculated. Cost of sales has increased by 33, 4% based on the budget and 20, 4% based on the forecast for 2009/2010. This increase is based on a tariff increase of 28, 9% on Eskom and 56% increase on Kelvin as well as a 2% growth in units because of new developments and increase in demand by customers.
Gross Margin The gross margin for the 2010/2011 financial year of 28% is less than the original budget of 33, 34%, due to the fact that provision has been made for a tariff increase of 29.3% while Eskom costs are budgeted to increase by 28, 9% and Kelvin Power Station by 56% and other income is also reduced by 55% because of the transfer of the DSM levy. Provision is also made for additional cost for the gas turbines.
Operating Expenditure Total operating expenditure for 2010/2011 financial year amounts to R1,878 million compared to the original budget for 2009/2010 of R1,654 million, which represents an increase of 13,5% or R224 million. This increase is analyzed below. Salaries and Allowances: Salaries are only increased by 3.6% because of the following: • Customer Services staff that are transferred to Panamá. An amount of R64 million will be transferred. • A salary increase of 8.5% • Provision for filling of vacancies and new positions amounts to R35 million. General Expenses: Increase of R32 million against budget. General expenses have increased by 7.8% or R32 million based on budget or 12.4% based on the forecast. The main reasons for the increase are the following:
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• Increase of 0.6% amounts to R2,5 million
• Professional fees
o IT Programmes - R4 million o ISO -R2 million o Strategic partners and King 3 training -R2 million
• General Expenses o Security -R5 million o Insurance -R10 million o Removal of illegal connections -R6,5 million
Repairs and Maintenance: Increase of R91 million (42%) based on budget or 49, 3% based on forecast. • R18 million is based on the increase of 8, 3% as prescribed by COJ. • R73 million will be utilized to maintain the current assets. New assets that were installed last three years maintenance programs needs to start as well as the maintenance of other assets as assets cannot be replaced because of the reduction in capital expenditure.
Contribution to Bad Debts: Increase of R43 million based on the budget 2009/2010. Bad debts have increased by 19.8% mainly because of the poor collection levels and because of the increase in debtors because of the non-payment and increase in sales. Depreciation: Increase of R25 million based on the budget 2009/2010. The increase in capital expenditure is the reason for the high increase in depreciation. Net Interest: Increase of R16 million Net interest shows an increase of 4, 8% from R328, 2 million to R343, 8 million based on the 2009/2010 budget, Although the interest on the Shareholders Loans remains constant, and the interest on Mirror Loans is decreasing as the loans are repaid, interest on new capital project loans has increased from R271 million to R285 million. This increase is due to the increase in capital spending and, specifically, the loan funded projects where expenditure financed from loans will amount to R542 million. • Profit The original revised profit for 2009/2010 amounted to R305, 8 million. The profit after tax for 2010/2011 amounts to R281, 6 million which represents an decrease of 7.9% based on the budget.
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Cash Flow Table 6.3 below shows the cash flow statement for the four year budgetary period.
Details Actual Budget Forecast Budget Budget Budget 2008-2009 2009-2010 2009-2010 2010-2011 2011-2012 2012-2013
Profit Before Interest and Taxes 507,528 678,240 650,621 734,858 686,940 706,494 add: Depreciation and amortisations 116,953 244,208 199,207 224,554 298,825 335,440 Add loss on disposal of assets Add Exceptional items Less: Interest (paid)/ received (293,162) (326,997) (344,470) (343,783) (275,381) (211,431) Less: Taxes paid/fair Value Adjustments (98,348) (85,722) (109,501) (115,236) (138,618)
Cash generated from operations 331,319 497,102 419,636 506,128 595,147 691,885
Increase/decrease in net current assets 791,422 430,860 312,324 206,738 236,136 364,425 Less : (Increase)-decrease in stock (49,553) (2,038) (1,780) (1,761) (1,872) (1,863) ( Increase)-decrease in debtors (8,322) (2,996) (54,174) (13,995) (449) (447) (Increase)-decrease in other current assets 304,410 260,264 43,847 (84,807) (6,865) (19,668) add: Increase-(decrease) in creditors 447,390 83,601 144,027 356,539 212,376 349,159 Increase- (decrease) in accruals and provisions 30,504 11,331 (21,210) 9,657 9,275 8,845 Increase-(decrease) in short term portion of LTL 90,659 50,741 157,427 -83,335 -5,217 -3,956 Increase-(decrease) in consumer deposits 17,473 29,957 44,187 24,440 28,890 32,356 Increase-(decrease) in other current liabilities (7,182) 0 0 0 0 Prior year adjustments -33,957 Net cash generated / (absorbed) 1,122,741 927,962 731,960 712,866 831,284 1,056,311 from operations
Cash impact from investing activities (1,069,709) (827,901) (728,087) (1,081,629) (891,400) (798,500) Increase in intangible assets (37,405) Acquisition / (realisation proceeds) of fixed assets (1,032,304) (827,901) (728,087) (1,081,629) (891,400) (798,500) Proceeds on disposal of Assets Cash impact from financing activities 265,982 443,574 286,814 346,587 398,300 365,935 Increase -(decrease) in shareholder loans 0 0 0 0 0 0 Increase-(decrease) in long term liabilities (191,394) (103,936) (119,887) (25,327) () Increase-(decrease) in Capex Loans 238,763 298,490 175,664 36,982 100,054 142,809 Increase-(decrease) in Deferred Income 218,613 207,047 189,064 334,932 234,994 154,356 Increase in Deferred Tax 0 41,973 41,973 63,252 68,770
Net movement in cash position 319,014 543,635 290,687 (22,177) 338,184 623,745
Opening cash position 366,180 152,340 685,194 975,881 953,704 1,291,888
Closing net cash position 685,194 695,975 975,881 953,704 1,291,888 1,915,634
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The closing net cash position for City Power for the 2010/2011 financial year amounts to R954 million. This is based on a forecast cash flow balance for the 2009/2010 financial year of R976 million plus a net outflow of cash for 2010/2011 of R22 million.
The reasons for the net outflow of R22 million are given below: • Cash generated from operations amounts to R506 million of which R735 million relates to profit before interest and tax • Net current assets reflect an increase of R207 million mainly as a result of the increase in creditors of R357 million. • The cash impact from investing activities amounts to R1,082 million. This capital expenditure is made up of R542 million in respect of loans, and R540 million by way of public contributions and government grants. • The cash impact from financing activities amounts to R347 million the bulk of which relates to the increase in new capital loans refunded to City Power by the City of Johannesburg. Deferred income has also increased by R335 million resulting from the capital projects funded from public contributions, DSM levy and government grants.
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Balance Sheet Table 6.4 shows the company’s Balance Sheet.
Details Actual Budget Forecast Budget Budget Budget 2008-2009 2009-2010 2009-2010 2010-2011 2011-2012 2012-2013 Assets
Non Current Assets
Employment of Capital Fixed assets (net book values) 5,255,645 5,675,951 5,727,178 6,596,048 7,200,417 7,675,271 Land and buildings 149,645 81,020 140,478 136,205 132,218 128,195 Plant & equipment 4,927,473 5,312,398 5,377,110 6,187,696 6,750,806 7,194,362 Fixtures and fittings 16,443 2,533 2,008 1,127 1,360 1,360 Office equipment 4,610 23,336 11,507 17,825 24,161 28,411 Other fixed assets 157,474 256,664 196,075 253,194 291,872 322,943
Intangible Assets - Goodw ill
Other non-Current Assets 108,974 61,598 103,337 91,543 79,748 67,954 Other Long Term Assets 108,974 61,598 103,337 91,543 79,748 67,954
Current Assets 1,745,691 1,691,245 2,052,460 2,045,475 2,392,845 3,038,570 Debtors 1,799,902 2,358,425 2,373,783 2,390,625 2,785,480 3,271,014 Less :Provision for Bad Debts(-ve) (930,987) (1,542,063) (1,557,421) (1,521,710) (1,916,565) (2,402,099) Sundry Debtors 6,273 45,692 45,692 7,134 7,583 8,031 Stock / Projects in progress 81,405 32,013 27,951 29,712 31,583 33,447 Cash & equivalents 685,194 695,975 1,061,252 953,704 1,291,888 1,915,634 COJ 103,904 101,203 101,203 186,010 192,875 212,544
Total Employment of Capital 7,110,310 7,428,794 7,882,976 8,733,065 9,673,011 10,781,795
Equities and Liabilities
Capital and Reserves 1,087,289 1,231,399 1,357,123 1,553,325 1,849,648 2,206,093 Share Capital and Premium 112,466 112,466 112,466 112,466 112,466 112,466 NDR on corporatisation and revaluation Retained Income 974,823 1,118,933 1,244,657 1,440,859 1,737,182 2,093,627
Non-Current Liabilities 3,935,041 4,195,709 4,397,127 4,743,714 5,142,015 5,507,949 Mirror Conduit External Loans 41,279 25,327 25,327 0 0 0 Shareholders Loans 624,793 624,793 624,793 624,793 624,793 624,793 Other External Loans 2,117,433 2,279,941 2,279,941 2,316,923 2,416,978 2,559,787 Deferred Income 1,151,536 1,174,178 1,375,596 1,710,528 1,945,522 2,099,878 Deferred Tax Liability 0 91,470 91,470 91,470 154,722 223,492
Current Liabilities 2,087,980 2,001,687 2,128,725 2,436,026 2,681,348 3,067,753 Trade creditors 1,365,191 1,223,485 1,350,523 1,707,062 1,919,438 2,268,597 Accruals and provisions 144,709 109,253 109,253 118,910 128,185 137,030 Short term portion of long term liabilties 385,873 452,641 452,641 369,306 364,089 360,133 Consumer Deposits 172,121 216,308 216,308 240,747 269,637 301,993 Other UAC's of COJ 20,086
Total Equities and Liabilities 7,110,310 7,428,794 7,882,976 8,733,065 9,673,011 10,781,795
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The main items contained in the Balance Sheet for the period 2009/2010 that warrant comments are detailed below. Fixed Assets
The net book value of fixed assets amounts to R6, 688 million, and has increased by R950 million when compared to the original budget for 2009/10, and R857 million compared to the forecast. This is attributed to the increased capital spending during the 2009/10 financial year and the impact of the proposed capital spending for the 2010/11 financial year. Current Assets
Changes to current assets include the following: • Debtors have increased to R2, 391 million compare to the budget of R2, 358, and an increase of R18 million compare to the forecast, while the provision for bad debts amounts to R1, 522 million. • City of Johannesburg inter-company debtors amount to R186 million. This includes capital claims on the City which are outstanding at the end of the financial year and are raised as debtors. • The cash balances amounts to R954 million. Capital and Reserves
Capital and reserves amount to R1, 553 million compared to R1, 231 million reflected in the 2009/10 budget or R1, 357 million based on the forecast. This increase is due to the budgeted profit of R281 million for the 2010/11 financial year. Non-Current Liabilities
Non-current liabilities amount to R4, 744 million. The main changes from the 2009/2010 budget are: • Other capital loans, for new capital projects have increased by R542 million owing to increased capital spending financed from loans. Capital repayments to be made during the year amount to R369 million. • Deferred income has increased from R1, 174 million in the 2009/2010 budget or R1, 375 million on the forecast to R1, 711 million as a result of public contributions and government grants. Current Liabilities
Current liabilities for the 2010/2011 financial year amount to R2, 436 million and consist of the following: • Trade Creditors amount to R1, 707 million and consist of energy purchases from Eskom and Kelvin Power Station as well as normal trade creditors. The increase in capital spending especially in the last month of the financial year also has a substantial impact on creditors. • The short term portion of the long term debt has decreased from R452 million reflected in the 2009/2010 budget to R369 million. This decrease is due to the decrease in loan outstanding. • Consumer deposits have been increased to R241 million based on the average of previous years trends.
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Capital Expenditure: Infrastructure & Service Delivery Capital Plan Background City Power is currently faced with the enormous task of addressing the following challenges: • Reducing the average age of our transmission and distribution network where it is in excess of 40 years through refurbishment and replacement. • Obsolete and unreliable equipment for which we are no longer able to obtain spares • Addressing and improving safety on the network i.e. replacement of high risk equipment • A network that, due to densification, has in many areas exceeded its firm capacity and in some instances reached its installed capacity • Reduction in outages and restoration times to restore power following outages • Increased economic activity which will lead to increased demand on our networks • Extending the transmission and distribution networks in support of new development, the electrification programme and projected 9% growth rate • Dramatic increase in the cost of key resources i.e. labour and materials • Meeting the Mayoral priorities i.e. Inner City, BRT, • Alignment with the City GDS • Upgrading of the networks to ensure a reliable supply for 2010 • Provision of capacity in support of the Gautrain • Increasing backlogs due to insufficient capital
Long Term Capital Budget Indicatives
Table 6.5: Long Term Capital budget
Measure 06/07 07/08 07/08 08/09 09/10 10/11 11/12 12/13 Indicator Unit Actual Plan YE Forc Plan Plan Plan Plan Plan Network Assets R m 824.50 852,70 1,012.32 1,018.55 786.37 761.12 717.66 717.66 Other Assets R m 40.53 23.50 29.78 25.00 39.50 39.50 37.50 37.50
Total R m 865.03 876.20 1,042.10 1,001.55 745,640 1,081,581 773,540 971,600
5 year Capital Requirements City Power developed a 5 year rolling capital plan, table 6.5 below outlines the five (5) year requirements based on the projects identified from the five year master plan.
Table 6.6: Five (5) year capital requirements Five (5) year Capital Plan Financial Year 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 R'000 RX1000 RX1000 RX1000 RX1000 RX1000 RX1000 Requirements 3,394,000 3,714,744 3,095,046 2,369530 1,875,975 1,000,000
Funding Requirements 2010/11 Table 6.7 outlines the budget requirements for 2010/11 financial based on the projects already committed and projects which are critical for sustainability of the company going forward.
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Contractually Funding requirements 2010/11 committed Urgent Important Total and Critical
X R1000 X R1000 X R1000 X R1000
Bulk Infrastructure 301,855 161,000 450,180 913,035 Bulk Infrastructure - Electrification 56,800 70,000 52,000 178,800 Electrification 123,635 85,500 0 209,135 Emergency Generators for MOE’s 30,000 30,000 Fire and Security 20,000 1,500 0 21,500 DSM/Load Management 202,500 15,000 45,000 262,500 Meters 55,500 100,000 0 155,500 Network Development 300 104,400 0 104,700 Operating Capital 17,500 0 24,760 42,260 Plant and Equipment 0 3,000 0 3,000 Protection 24,000 10,000 0 34,000 Public Lighting 59,516 71,700 0 131,216 SCADA 0 11,350 0 11,350 Service Connections 128,065 0 0 128,065 Telecommunications 22,750 23,500 0 46,250 Training Facilities 0 10,000 0 10,000 Upgrading of the Network 69,160 595,575 4,000 668,735 Buildings (OMC) 0 45,000 0 45,000 Support Services 0 10,000 0 10,000 Oth er (Fencing, Hostels, COJ Bldg's etc) 0 0 90,000 90,000
Total 1,081,581 1,317,525 695,940 3,095,046
2010/11 Allocation of budget Table 6.8 the comparison of the total budget requirements for 2010/11 vs. the proposed indicative budget allocation. If only the indicative budget is allocated, it must be noted that a further R 2.013 bn backlog will be created which will put more pressure on 2011/12 financial year budget requirements and might result in some commitments not being honoured by City Power.
2010/11 allocations Description Budget (R'000) Total Requirements 3,095,046 Ind icatives budget allocation 1,081,581 Deficit 2,013,465
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CAPEX Fund Allocation The allocation of funding is largely driven and prioritized by the City’s Capital Investment Management System (CIMS). This looks at Mayoral initiatives i.e. Inner City, Bus Rapid Transport (BRT), 2010, Gautrain, Social Projects etc. From a City Power perspective we also use the following criteria: • Quality of Supply • Safety • Return on investment • Interdependence • Increasing network availability – visible reduction in outages • Decrease in maintenance costs • Social benefits of project • Revenue generation
CAPEX Allocation impact
Based on the indicative budget allocation the following projects will have to be deferred. The table 6.8 indicates projects to be deferred and the associated risks.
Bulk Infrastructure
Table 6.9: shows the deferred bulk infrastructure projects . Substation/ Description 2010 / 2011 Motivation / Risk Township Transmission: Orlando Switching Station - Replace all 88kV switchgear Voltage instability of the 88 kV grid Quattro 100,000,000 with compact gas insulated switchgear will prevail by 2010. and introduce 275kV The transformers are purchased and Install additional 45 MVA Transformer, paid for. The sub station has reached Mulbarton 30,000,000 refurbish and re-configure busbar it’s firm capacity and cannot supply new customers We will not be able to proceed with the refurbishment and replacement of Transformer Capital Programme to high risk transformers. A commitment All 10,000,000 eliminate high risk transformers. was made to Exco and the Board to improve system performance and to reduce outages. We will not be able to proceed with the refurbishment and replacement of Switchgear Capital Programme to high risk and aged switchgear. A All 25,000,000 replace aged and critical switchgear commitment was made to Exco and the Board to improve system performance and to reduce outages. Only a very limited amount was allocated to purchase servitudes. We The acquisition of servitudes and sub will not be able to acquire servitudes Servitudes 20,000,000 station sites timeously for future transmission lines and sub stations. This will have a cost implication. Business Planning & Strategy - (Fifth Draft Business Plan) Page 72
Substation/ Description 2010 / 2011 Motivation / Risk Township Safety risk, continuity of supply and Replacement of obsolete 88 kV surge All 2,500,000 risk of damage to equipment due to arresters at major sub stations lightning. The HV equipment in the sub station Earthing and lightning protection at all is prone to lightning damage which All 5,500,000 major sub stations can result in unnecessary outages and equipment failure. Mo ndeor Finalise Riverlea servitude 3,000,000 switch yard Beyers Sub Install two additional 88/11 kV Unable to deload Christiaan de Wet Station transformers and one 11 kV 25,000,000 Rooseveld sub stations. phase 2. feederboard New 88/11 kV substation, 2 X 40 MVA Fourteenth Unable to support new developments transformers, feeder board and 88 kV 110,000,000 Avenue in Constantia area. cables from Beyers sub station. Transmission: Install 3 rd transformer, Exceed fim capacity, Busbar must be extend the existing switchroom and created to accept 88 kV supply from Nirvana install additional 11kV switchgear. 30,000,000 Eskom to improve the system Install 88 kV busbar to accommodate stability to Orlando switching station. infeed from Etna. Unable to transport transformers in Lotus Construct Access Road 5,000,000 case of a fault. Unable to transport transformers in Lunar Construct Access Road 2,000,000 case of a fault. Devland sub - New 88/11 kV 2 X 45 MVA substation to replace Devland Baragwanath, Soweto and Soweto 12,000,000 Local and acquire substation servitude (Required to feed JDA Ikhaya Project) Lenasia South Sub. Do away with Lenasia Jericho scheme. Additional 40 MVA Firm capacity exceeded and unable 17,000,000 South transformer. Extend 11 kV to supply new electrification projects. feederboard. Transmission: Establishment of Isidleke 1,000,000 88/11kV substation Phase 1 Laying of 11kV from Westfield to Isidleki and provision of Isidleke 15,000,000 17 x panel 11kV switchroom & switchboard Transmission: Provision of servitudes Unable to support new developments Newmarket and establish of new 2x45MVA 6,000,000 in Kyasands. 88/11kV S/S Transmission: Establish new 88/11 kV Oakdene S/S Columbine off the M2 Motorway 55,000,000 Phase 1 Transmiss ion: Establish new 88/11kV Edgardale 5,000,000 S/S (2 x 45MVA TRX's)
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Substation/ Description 2010 / 2011 Motivation / Risk Township The firm supply to Rand Water Board New Mondeor Switching Station if supply at risk. Also to provide Mondeor 75,000,000 fourth intake point is at Orlando. interconnectivity between Prospect and Orlando. Transmission: Replace "Dumpy" Wilro Park 2,000,000 Safety risk. feeder board Transmission: Provision of servitudes, build new 88 kV Zebra line from the Princess existing Roodetown - Kloofendal New developments in the area 49,000,000 Crossing circuit and Build new 88/11 kV 2 X 40 cannot be supplied. MVA sub station with 1x11kV feederboard. Transmission: Install 1X40MVA New developments in the area Robertville 30,000,000 transformer and feeder board. cannot be supplied. Roodepoort Sub - replace 5x33kV CB Roodepoort replace 10x33kV IL replace 15x6,6kV 15,000,000 switchgear, refurbishment. Construct the interconnecting lines. Lutz - Dalkeith. New twin Zebra lines The transmission lines between Lutz from Peter Road to Lutz and Dalkeith 54,000,000 Kloofendal and Peter Road are at sub station. risk (over firm capacity).
Lutz Sub Construct new 88/11 kV 3 X 45 MVA 55,000,000 station sub station .
Cleveland Sub - Busbar reconfiguration, replace I high risk Aged 20 kV transformers and Cleveland transformer and install additional 25,000,000 switchgear cannot be 45MVA transformer and feeder board. decommissioned. Decommission 20 kV networks. Pre Engineering design of sub Consultants cannot be appointed to All stations design new sub stations 6,000,000
Meters Table 6.10: shows the deferred meters projects.
Substation/ 2010 / Description Risk Township 2011 Metering: Replace obsolete energy kwh meters & purchase of energy All areas 30,000,000 meters for new installations (single, three phase and prepaid)
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Substation/ 2010 / Description Risk Township 2011 The routers have been purchased and installed at the Revenue Generation Efficiency customer's mini subs. Project. Pre-paid system installation of All 30,000,000 Communication has been done. Semi automated pre-paid & There are customers on free automated pre-paid mode in both Dainfern and Eagle Canyon. The installation of statistical meters on All 20,000,000 distributors All areas City wide pre paid roll out 70,000,000 All areas Domestic AMR roll out 30,000,000 Reduced from R 30 M to R 10 M Eldor ado Park Installation of pre paid meters and 40,000,000 Reduced from R40 M to R 10 M and Lenasia protective structures. Installation of pre paid meters in Naturena 20,000,000 Reduced from R20 M to R 10 M Naturena and sectional title flats.
Upgrade of Network
Table 6.11: shows the deferred network upgrade projects .
Substation/ 2010 / Description Motivation / Risk Township 2011 The MV networks must be Alexandra Upgrading of MV upgraded to accommodate new Alexandra 2,000,000 infrastructure developments. This affects revenue generation. Can be postponed to 2011/12. Temporary relief was achieved through another project. There are Load relief interconnectors between Alexandra 12,000,000 however a number of Vasco Da Gama and Rooseveld developments in the area which must be supplied.
Khanyisa substation in Bryanston is complete and no load is connected Replace feeder cables and 6.6kV load to it. The 6.6 kV network in the area Bryanston centres with dual ratio mini's and transfer 33,000,000 must be converted to 11 kV and load to Khanyisa sub station. transferred to the new sub station. This will relieve load off Brynorth sub station where we exceed the allocated capacity from Eskom. Rembrand Build new switching station and feed The existing sub station is at full Park & existing distributors from new switching 4,000,000 capacity and no new developments Lyndhurst stn. can be supplied. East Replacement of 95 mm (0.15") cables The existing distributors are Gresswold 1,500,000 between N694 & Bramley G TSS (Erf derated due to the 95 mm cable in
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Substation/ 2010 / Description Motivation / Risk Township 2011 157 New Av & Helen Rd) in Kew Central the circuit. This limits the load with 185 mm due to overload transfer. The existing distributors are Replacement of 95 mm (0.15") feeders derated due to the 95 mm cable in Hyde Park with 185 mm between Hyde Park 6th 2,000,000 the circuit. This limits the load Road and Hyde Park TSS transfer. Elton Hill Replace bare OHL with ABC 2,500,000 Large trees make line maintenance Waverley Replace bare OHL with ABC 1,000,000 difficult. Hyde Park Underground bare overhead mains. 4,500,000 No double earthing on the lines Large trees make line maintenance Bramley Park Underground bare overhead mains. 2,500,000 difficult. The overhead lines must b e Kew Underground bare overhead mains. 7,000,000 undergrounded to reduce theft of electricity. Replacement of link cabinets in the Kew Public and operator safety is a Alexandra 4,000,000 Depot area. serious concern. These pillar boxes are on the pavement and have been Siemert Elimination of MV pillar boxes 3,000,000 damaged. They pose a serious safety risk to the public. New developments and upgrading of supply is not possible in Halfway Third Leg required between Fabric City Richards Drive and Old Pretoria 2,100,000 House and Midas std 365 Road south of Le Roux Drive. This has an impact on revenue generation. Split back to back feed cables between Bekker St and Boulders S/S at James This is a critical part of the James Crescent. Install additional feeder 2,000,000 feedback system and restoration Crescent between Grand Central and James times are affected. Crescent Unable to cater for new developments. The existing system Kyalami Upgrade the MV and LV network in is severely overloaded and 8,000,000 Estates Kyalami Estates. excessive outages occur in winter. There are a number of sensitive customers in this area. Northern Closing of spurs 3,000,000 Region Northern Re inforcement of overloaded MV 12,000,000 Region infrastructure (winter load readings) Turnkey project to replace LV o pen wire Northern overhead systems with ABC in 15,000,000 Region problematic areas. Complete U/G of LV OHL Bryanston Road widening affects the safety of Bryanston Drive (Theft of O/H mains prevalent in 2,000,000 our overhead lines. This project this area) also contributes to the general Business Planning & Strategy - (Fifth Draft Business Plan) Page 76
Substation/ 2010 / Description Motivation / Risk Township 2011 upliftment of the area. The LV networks are overloaded, Upgrading single phase LV networks Maroeladal 1,500,000 resulting in damage to equipment Maroeladal and customer appliances. Selkirk Feeder overloaded - Randburg 3,000,000 Same as Kelland reconfiguration & upgrade Garden feeder Overloaded - strengthen Unable to cater for new Bordeaux 1,320,000 feeder developments. We do not have N -1 Contingency Westminster and Brynorth Main feeders on the 6.6 kV network which result Bryanston overloaded - reconfiguration and 3,800,000 in extended restoration times under upgrade fault conditions. New developments are also curtailed. We do not have N -1 Conti ngency on the 6.6 kV network which result Kingswood & Country Life feeders Bryanston 6,000,000 in extended restoration times under overloaded - reconfiguration & upgrade fault conditions. New developments are also curtailed. Borrowdale feeder ring not firm - Bryanston 5,000,000 Extended restoration time upgrade Belgrave & Chesterfield Ring not firm - Bryanston 3,200,000 Extended restoration time upgrade St Audley & Cresant Flats ring not firm - Bryanston 2,500,000 Can be postponed to 2010/11 upgrade Baker & Portman feeders overloaded - Brynorth 7,000,000 Can be postponed to 2010/11 reconfiguration and upgrade Goede Hoop/Culemburg Ring not firm - Hurlingham 5,000,000 Extended restoration time strengthening Morningside Parkmore feeder overloaded - upgrade 4,134,000 Extended restoration time River Club feeder overloaded - Morningside 3,871,000 Extended restoration time reconfiguration and upgrade Alon feeder overloaded - reconfiguration Randburg 4,300,000 Can be postponed to 2010/11 and upgrade Randburg Conrad Feeder overloaded - Randburg 4,000,000 Can be postponed to 2010/11 upgrade Malanshof and Annie feeder overloaded Randburg 2,500,000 Can be postponed to 2010/11 - upgrade Underground LV overhead lines in Robindale 4,000,000 Can be postponed to 2010/11 Robindale/Hills Underground LV overhead lines in Bordeaux 5,000,000 Can be postponed to 2010/11 Bordeaux & Blairgowrie Underground LV overhead lines in Malanshof 2,600,000 Can be postponed to 2010/11 Malanshof and Fontainebleau The sub station and feeder loads are above firm capacity and Bordeaux Bordeaux 11 kV conversion. 5,000,000 constitutes a safety risk and extensive restoration times for customers under fault conditions.
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Substation/ 2010 / Description Motivation / Risk Township 2011 Underground 11 kV OHL in Critical part of feedback system - Northriding Northumberland Ave with 1600 m 185 x 3,000,000 restoration time 3 cable Northriding Close A scot & Hans Strydom ring 11,000,000 Restoration time Establish standby supply, Conduit, Northriding Amsterdam & Johannesburg North from 19,000,000 Restoration time School Street N-1 will no t be reinstated on the 6.6 kV distributors which may result in Reinforce and reconfigure Kelland Randburg 6,200,000 extended restoration times under distributor fault conditions. Additional capacity is required for new developments. Preparation of MSS's and Load Centres Central 8,250,000 for 11kV conversion ( 0 MSS & 71 L/C) Preparation of MSS's and Load Centres Van Beek for 11kV conversion ( 5 MSS & 75 L/C) 12,000,000 plus upgrade cables Ellis Park LV and MV upgrade phase 1 12,500,000 Precinct New Jeppe standby distributor for Cleveland 3,000,000 Jeppestown and Troyville Replace 95mm (0.15 inch) on Houghton Cydna 1,000,000 Dx with 185mm and close spur. Replacement of 95 mm (0.15") cables Orchards 1,000,000 with 185 mm - Norwood Dist. Overload Bruma Upgrade LV networks 1,100,000 Bez Valley Upgrade LV networ ks 10,000,000 Cyrildene Upgrade LV networks 6,400,000 Bellevue Upgrade LV networks 3,000,000 Oaklands Upgrade LV networks 1,000,000 Fordsburg Upgrade LV networks 2,000,000 Fairwood Upgrade LV networks 1,800,000 Fairview Upgrade LV networks 540, 000 Cleveland Upgrade LV networks 3,500,000 Upgrade and reinforce various Cleveland 9,000,000 distributors in Cleveland Cydna Upgrade Houghton Golf Course network 4,200,000 Fort Upgrade Girton Road distributor 1,800,000 Siemert Project to reduce outages by 50% 10,000,000 Replace 50 mm cable between MSS N401 & MSS N562 and between TSS Melrose 3,000,000 Oxford Road & Cecil Road on the North Distributor from Cydna sub station Establish new Fordsburg Central Fordsburg 1,000,000 distributor Herri otdale Upgrade MV network 3,600,000 Denver Upgrade MV network 8,000,000 Cleveland Establish RMU's and reconfigure 7,000,000
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Substation/ 2010 / Description Motivation / Risk Township 2011 distributors Establish standby distributor for Parktown 2,000,000 Parktown West Upgrade MV distributors and sub rings Observatory 20,000,000 from Observatory sub station. All areas Replace Service Cables 2,000,000 Elimination of spur feeds to reduce All areas 4,000,000 outage restoration time Substations & Install maximum demand meters 1,000,000 Satelite S/S's Decommision Vrededorp Satellite sub Vrededorp station and replace with outdoor 6,000,000 switchgear. Upgrade of MV and LV infrastructure: Hursthill 10,000,000 Master plan Replacement of cable sections with 185 Dunkeld 2,000,000 mm - Dunkeld W Dist Replace 0.06 cable between TSS Norman Cres & TSS Joseph Ave (6 Northcliff MSS's) and between HVC2 & TSS 3,000,000 North Joseph Ave on Berrario standby distributor with 185 mm Install new distributors to strengthen the Newlands 2,500,000 MV network in Newlands. Strengthening of MV network in Craighall Craighall Park 4,500,000 Park Vlakfontein - Provision of Sectionalisers Vlakfontein 3,000,000 and backfeed Eldorado Park Klipspruit West Ext 2 Dist backfeed req 1,200,000 Ennerdale Unaville O/H line Backfeed re q 600,000 Preparation of MSS's and Load Centres Lenasia 5,000,000 for 11kV conversion ( 48 MSS & 52 L/C) Lotus Kiasha Park Distributor overloaded 4,000,000 Relocate MV cable between MSS 3 and Nirvana 1,500,000 HVC 54 Preparation of MSS' s and Load Centres Baragwanath for 11kV includind Baragwanath 25,000,000 Hospital.conversion ( 1 MSS & 8 L/C) LV Pole and overhead line replacement Lenasia 4,000,000 (with ABC) Upgrade overloaded 315 kVA MSS's to Lenasia 2,000,000 500 kVA (32) Install s ectionalisers, autoreclosers & Unaville pathfinders on Lenasia/Unaville 2,000,000 overhead line. Eldorado Replace loop in system 4,000,000 Lenasia X 5 Replace pillar boxes and loop in system 5,000,000 Lenasia X 2 Replace loop in system 5,000,000
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Substation/ 2010 / Description Motivation / Risk Township 2011 Prepa ration of MSS's and Load Centres Selby 11,000,000 for 11kV conversion ( 2 MSS & 95 L/C) Kibler Park 11kV overhead line to Concru SHEQ s 5,000,000 Meredale. Preparation of MSS's and Mondeor Load Centres for 11kV conversion (18 6,500,000 MSS & 16 L/C) Upgrade overloaded load centres. TSS Forest Hill 2,000,000 112, TSS 114 & MSS 42 Relieve overload on Zinnia/Prairy sub Rosettenville 4,000,000 ring. 1. TSS 82 overloaded, upgrade from 2 X 315 kVA to 1 MVA. 2. Data Cres Robertsham distributor overloaded, install extra 5,000,000 distributor. 3. Complete ring to MSS 93 on Ridgeway distributor. Rossetenville, Haddon & Turffontein Wemmer South distributors overloaded. Install 5,000,000 extra distributors. Install new 185 mm distributor from Wemmer Wemmer to the Hill (South Rand 6,000,000 Hospital) Upgrade and reconfigure network to Robertsham 1,500,000 allow additional capacity at Evans Park. Upgrade and reconfigure network to Mulbarton 5,000,000 allow for new service connection Replace MSS wi th no switchgear at Roodepoort 2,000,000 strategic points initially Local rings need to be strengthened due Penny Street 1,200,000 to loading Penny Street General Pienaar sub Distributor 600,000 Penny Street Witpoortjie Gardens 450,000 Penny Street Barbara Fl ats distributor 450,000 Transmission: Dumpy feeder board Panorama 4,000,000 needs replacement Poortview Upgrade / underground MV OH line 10,000,000 Florida, Discovery, Replace oh lines with ABC 3,000,000 Georginia Short str ss Replace switchgear & transformer 1,000,000 Maraisburg Replace existing circuit breakers 1,500,000 park 6,6 kv ss Replace existing feeder from Florida Florida Glen Glen Switcing station to Drakens 7,180,000 switching stn, 7th Avenue & Banfield Florida North switching ss to Replace existing feeder cables 3,000,000 Maraisburg Park
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Substation/ 2010 / Description Motivation / Risk Township 2011 Florida Replace existing MV areas < 70mm al 365,000 Replace 70 mm Al from Fredenharry to Florin 1,500,000 Lone creek with 95 mm cu Refurbish Honeydew North and Bothma Honeydew 4,000,000 Str OHL Replace OHL with underground cable. Maraisburg Capacity of OHL exceeded and 1,500,000 Park unreliable. Install 4 MV cables from Kloofendal Kloofendal substation to Helderkruin switching 4,000,000 station. Close spur between Progre ss No 3 MSS Penny Street 500,000 and Elm Street MSS - Station distributor Geldenhuis Upgrade LV network. Low voltage during 4,000,000 Street Winter Replace all overhead service Roodepoort 4,000,000 connections Replace the 11 kV OCB's at Helderkruin Helderkruin 1,000,000 switching station with vacuum breakers Install a 3rd 11 kV cable from JG JG Strydom Strydom switching station to reinforce 2,000,000 the ring with 31 MSS's. Protect exposed MV cables. Roodepoort Wilgeheuwel, Christiaan de Wet & 5,000,000 Bergbron Replace unreliable 35 mm PEX cables in Bergbron 8,000,000 the Bergbron area. Upgrade the supply to Spokeshave switching station by installing a 300 mm Spokeshave 25,000,000 Cu cable from Robbertville to Spokeshave CBD 11 kV conversion 8,000,000 Southern Closing of spurs 3,000,000 Region Southern Reinforcement of overloaded MV 12,000,000 Region infrastructure (winter load readings) Turnkey project to replace LV open wire Southern overhead systems with ABC in 15,000,000 Region problematic areas. Preparation of MSS's and Load Centres John Ware 4,000,000 for 11kV conversion (5 MSS & 88 L/C) Inner City MV master plan for the Inner City 1,500,000 Ebury & Cowley Feeders ring not firm - This project forms part of the Brynorth 6,310,000 upgrade Bryanston Master plan. Van Beek Transmission: Decommission 20,5/6,6kV 5,000,000 Siemert Provision to close spurs 2,000,000 Siemert 1,000,000
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Substation/ 2010 / Description Motivation / Risk Township 2011 Upgrade 50 mm cable between Melrose Cydna TSS Cr Oxford Rd & Cecil Ave and MSS 2,500,000 N405 Install 2 X 300 mm Cu XLPE cables from Halfway Waterval to Halfway House 41 satellite 5,000,000 House 41 sub station
Other Critical Projects
Table 6.12: shows other deferred projects.
Substation/ 2010 / Description Risk Township 2011 City Power to take over the This is in line with the City's maintenance of all COJ commitment to reduce power All areas buildings. Install DSM, Solar 40,000,000 consumption and to align with the geysers and lighting, CLF's, pre National PCP initiative. paid meters etc City Power to take over the This is in line with the City's maintenance of all hostels. commitment to reduce power All areas Install DSM, Solar geysers and 50,000,000 consumption and to align with the lighting, CLF's, pre paid meters National PCP initiative. etc The control centre is the "heart" of City Power's network. The existing arrangement consists of separate rooms with severe space and noise Establishment of a Control and All areas 45,000,000 challenges posing serious safety Outage Management Centre risks, and it's not scalable in terms of future expansion. In fact, it is totally unacceptable as a control centre for City Power. Purchase three standby All 3,000,000 generators A large amount of theft an d vandalism Install alarm systems in load occurs in City Power's load centres. All 1,500,000 centres. An alarm system linked to the Risk Control room will reduce this. This is an important project to reduce Tunnel security alarm and CBD 9,000,000 vandalism and the theft of cables in surveillance system the tunnels City Powers depots and major sub Integrated security, fire detection stations does not have a reliable & suppression systems for major security and fire detection system to All areas 20,000,000 substations. Including fibre optic protect against illegal entry, theft or links (+- 50 % of budget). severe damage due to fire. The work will be phased over a number of years
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Substation/ 2010 / Description Risk Township 2011 to reduce the impact per financial year. This p roject can be deferred until Establish a new standby Sandringham sub station is built or Sandringham 1,000,000 distributor for the Linksfield area. until capacity can be made available from an alternative source. New distributor from Cydna to Cydna HVC130 due to North street 3,000,000 Will be done in 2008/9 feeder overload Ne w feeder from Alex sub (clean Gresswold Lombardy East standby 1,000,000 distributor) Add 1x new ring to relief Unable to support new developments Bordeaux 3,200,000 overload from existing feeders resulting in loss of revenue. The project started in 2008/9 will not Randburg Add 1x new ring to relief 3,200,000 give full benefit without the second 11kV overload from existing feeders phase being done. Reinforcing master plan for the N-1 is not available which result in Kyasands area. Supply to and extended restoration times under fault Kyasands 23,900,000 between the various switching conditions. Additional capacity is stations not firm required for new developments.. No N -1 contingency resulting in Create new standby dist from Orchards 2,500,000 extended restoration time under fault Orchards to HVC109 conditions. To optimise the capacity of this Replace 95 mm (0.15") sections Cleveland 1,610,000 distributor, the 95 mm sections must with 185 mm- Jeppe East Dist be replaced. The existing distributors are severely overloaded resulting in insulation Observatory Upgrade Bruma distributor 4,500,000 damage. This will result in an increase in faults in future. Reinforce and install various distributors from Beyers sub Beyers 50,000,000 station to Berario and Fairlands. Phase 2. Carina/ Mss 203 Dist complete the ring 700,000 Lenasia To be fed from Beyers on completion of Transformer Without upgrade. Cables previously 11,500,000 installed to be checked if still intact Bridal Veil - Lone Creek ring not firm - Create two new rings from Florin 1,500,000 Florin ss, connect at Wasbank & Weiling mini subs. Boloop - Almond Rock Ring not Florin 1,600,000 firm - replace70 Al from
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Substation/ 2010 / Description Risk Township 2011 Fredenharry to Lone Creek with 95 mm Cu. Create two rings from Florin when load increase sufficiently. Minisubs on spur feed - install 95 mm Cu cable from Florin Witwatersrand 3 to Pennyweight 800,000 2 and Fredenharry to Witwatersrand 1 to extend ring. Yacht feeder overload - install Ridge Road new 185 Cu ring to take load off 2,000,000 Yacht feeder. Substation supply not firm. Ruimsig Install 2 185 Cu cables from 6,500,000 Peter Road to Ruimsig. Constantia Establish temporary 6.6/11 kV 33,000,000 Kloof sub station Install earth fault indicators on All areas 5,000,000 MV load centres We made a commitment to Exco and the Board to replace obsolete equipment to improve system Replace obsolete relays and performance and to eliminate provision for protection on unnecessary outages and damage to All areas 5,000,000 various feeders in existing plant. The existing relays cannot substations accommodate SCADA and also cannot record system disturbances making it difficult to do proper fault investigations. All SCADA: RTU Installations 15,000,000 MV Load Centre and mini sub All 7,000,000 monitoring system Alexandra Establishment of new townships 2,000,000 Midrand Establishment of new townships 2,000,000 Randburg Establishment of new townships 2,000,000 Siemert Establishment of new townships 2,000,000 Hursthill Establishment of new township s 2,000,000 Lenasia Establishment of new townships 2,000,000 Reuven Establishment of new townships 2,000,000 Roodepoort Establishment of new townships 2,000,000 Roodepoort Establishment of new townships 2,000,000
From the above tables it can be seen that a major contribution comes from the network related projects which, in turn, impose a significant contribution towards service delivery. Therefore, there is no doubt that this reduction will have significant impact in service delivery and, due to the nature of these projects, natural load growth and network deterioration, the required investment will have to be made sooner or later. It is most likely that this reduction will put pressure on future capital budget allocations.
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The following are some of the areas which will see the impact in the near future: • Impact in the reduction of unplanned outages • Impact in the improvement of restoration times • Provision of new service connections will be negatively impacted • There will be an increase in OPEX (R&M) due to emergency repairs • Stock Levels will be impacted negatively (most likely to be high) • Township developments will slow down due to capacity constraints • N-1 contingency will be violated, impacting negatively on network reliability • Deferred budgets will place additional burden on future financial year budgets
Focus Areas • The construction / upgrading of substations to alleviate loading problems and the elimination of non-standard voltages • Upgrade of all transmission and / distribution equipment in order to alleviate the current overloading situations • Upgrade all equipment where safety of personnel is jeopardised • Upgrade / replace all un-maintainable cable networks • Upgrade of protections systems with modern technology equipment • The expansion of the SCADA system to make it possible to monitor / operate substations remotely • Roll out of DSM / Load Management
Major Infrastructure Initiatives Major Intake Points The upgrading of Delta 275/88kV intake point in the North West which commenced in 2007/08 will be completed mid 2009. Two new Eskom intake points are being planned to provide security of supply and to provide the capacity required to support development into the future. These are major projects, and will take approximately two to three years to complete. “Sebenza” will be situated in the North-East of Johannesburg adjacent to Kelvin Power Station and “Quattro” in the South West of Johannesburg adjacent to the old Orlando power station site. The identification of funding for these two projects is now critical, so tenders can be placed to ensure that long lead items can be ordered. Eskom Upgrades To support of our immediate and future capacity upgrades our load projections have been communicated to Eskom. Eskom have indicated that to provide the capacity required they will have to upgrade their transmission networks. Initial payments have been made to Eskom for some of these upgrades. Upgrades to support development in the Randburg, Midrand and Roodepoort areas are currently in progress and are planned for completion at the end of 2009. Further upgrades are necessary to support the planned growth across the city. Eskom’s transmission networks will also need to be extended to supply our planned 275/88kV intake points at both Quattro and Sebenza. Project Status This section highlights the status of payments for applications made to Eskom for the upgrade of their substation and backbone infrastructure in order to cater for additional backbone capacity requirements.
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Table 6.13: Project status Eskom paymen ts towards the Infrastructure upgrade for additional capacity
Project Name Total(Budget quote) Amount Paid Outstanding Harley 9,466,823.76 2,366,706 7,100,117.82 North Riding 3rd Trx 17,504,047.95 6,902,823 10,601,224.95 Olivedale 13,016,886.06 3,254,2 22 9,762,664.54 Randburg 11kV 14,493,238.81 10,869,929 3,623,309.70 Lutz 32,078,703.95 16,039,652 16,039,051.97 New Road 16,121,522.53 12,091,142 4,030,380.63 Khanyisa (Brywest) 32,883,291.00 8,220,823 24,662,468.25 Randburg Backbone 20,000,000.00 8,0 78,386.56 11,921,613.44 Crown 580,253.00 580,253.00 0 Delta Upgrade 19,662,000.00 4,787,866.60 14,874,133.40 Noordwyk 19,000,000 0 19,000,000 Totals 194806767.06 73,191,805.16 121,614,964.70
Substations Upgrade of Existing Substations The upgrading of eight substations which commenced in 2007/08 and 2008/9 will continue, and be completed in 2009/10. The planning and design for a further seven upgrades is at an advanced stage, and these upgrades will commence towards the end of 2008/9 and be completed in 2009/10. The upgrading of Siemert Road, Crown and Braamfontein Substations, which support 2010 and Gautrain respectively, have commenced. New Substations The construction of two substations which commenced in 2007/08 will continue and be completed in the latter part of 2008. The planning and design of four new substations has been completed, three of which are pending GDACE approval. The construction of Crown Substation which will supply Soccer City, host to both the opening and closing ceremonies for 2010 and will be completed during 2009/10. Project Status Table 6.14: indicate the status of upgrade and new substation projects, aimed at addressing capacity constraints and refurbishment backlog as alluded to above. No. Substation Area to Benefit Progress 1 Khanyisa Substation, Bryanston area Construction stage 2 New Road Substation, Midrand area Construction stage 3 Crown Substation, Nasrec Area Construction stage 4 Nirvana Substation Lenasia Area Design Stage 5 Westfield Substation, Modderf ontein Area Construction stage 6 Fort Substation, Inner City Area Tender Stage Turfontein, Rosettenville 7 Wemmer Substation, Area Planning Stage 8 Grand Central Substation Midrand Construction Stage North Cliff, Rooseveldt Park 9 Rooseveldt Park Substation Area Final Design Stage 10 Delta Substation Rosebank, Parkhurst Area Construction Stage 11 Gresswold Substation Greswo rld Area Tender Stage
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No. Substation Area to Benefit Progress Pennyville, Noordgesig 12 Pennyville Substation Area Tender Stage 13 Hope sfield Substation Lawley, Ennerda le Area Commissioned 14 Hursthill Substation Hursthill Construction Stage 15 Randburg Substation Randburg Construction Stage 16 Olivedale Substation Olivedale Construction Stage 17 Rosebank Substation Rosebank Construction Stage 18 Crown Substation Cr own Construction Stage 19 Siemert Rd Doornfontein Construction Stage 20 Eikenhof Eikenhof Tender Stage 21 Parkhurst Parkhurst, Hyde Park, Tender Stage Rosebank 22 Ennerdale Ennerdale, Lenasia South Tender awarded 23 Christiaan de Wet Strubens Valley, Final Design Stage Weltenvreden Park 24 Peter Road Ruimsig, Honey Dew Final Design Stage 25 Noordwyk Noordwyk, Randj iespark, Final Design Stage
It should be noted that the committed budget requirements for the 2009/10 financial year includes some of the above projects.
Overhead and Underground Transmission networks We are currently experiencing transfer capacity problems on our transmission line networks and significant upgrades are required to support capacity upgrades at existing and new substations being planned. These upgrades need to be undertaken before the load reaches a critical level, whereby we will no longer be able to take these lines out of service to do the upgrades. In areas where we are no longer able to get servitude corridors, underground cables are being planned. The cost of underground networks in comparison to overhead lines is approximately five fold. Where new overhead lines are being planned the acquisition of land and the environmental process that has to be followed has proven to be a major challenge and is delaying projects.
Refurbishment of the Transmission Networks The refurbishment of existing substations and replacement of high risk transformers and switchboards will continue to be implemented, in order to bring the network within the acceptable average age. In many instances these transformers are replaced as part of planned upgrades.
Upgrading & Refurbishment of the Medium & Low Voltage networks This still presents a major risk and is where the majority of outages occur. However, due to limited funds being made available and the need to first upgrade the transmission networks with the majority of the available funds, the backlog on refurbishment and upgrading of these networks is growing each year. As soon as the transmission networks have been upgraded the focus will change to the refurbishment and upgrading of the medium and low voltage networks.
Township Establishment, Densification and New Service Provision This remains our single biggest risk, and a source of frustration for City Power staff, developers and Consultants. Considering that City Power has seen an overall natural growth in maximum demand of approximately 5% over the last few years, our networks in a growing number of areas have been placed under severe strain and have become overloaded. This has been further compounded by the
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demand for housing which has resulted in an exponential boom in many areas due to densification and natural load growth. In many areas, particularly the Midrand, Randburg and Roodepoort areas, the growth has been in excess of 30%. As a consequence we have no capacity to support further development, and have for some time now been forced to turn down applications for densification, township establishment and the provision of new service connections. This will have to continue until these networks have been upgraded. This will ensure that our networks are not further overloaded and will protect the existing customer base
Sources of Funding Table 6.15: gives the breakdown of the anticipated sources of funding: Engineering CRR Public Adopt-a- Service 2010 / 2011 Loans CASH Contributio light DOE Contributio CMIP/MIG Province DoRA Type of project RX1000 RX1000 RX1000 ns RX1000 RX1000 RX1000 nsRX1000 RX1000 RX1000 RX1000 Bulk Infrastructure 301,855 277,855 24,000 Bulk Infrastructure Electrification 56,800 56,800 Electrification 123,635 53,635 70,000 DSM/ Load Management 202,500 176,500 26,000 Fire and Security 20,000 20,000 Meters 16,500 16,500 Meters - Revenue Protection 38,000 37,000 1,000 Network Development 300 300
Operating Capital 17,500 17,500
Protection 24,000 24,000 Public Lighting 59,516 5,000 54.516 Service Connections 129,065 129,065 Telecommunication s 22,750 22,750 Upgrading of network 69,160 69,160 TOTAL 1,081,581 542,000 230,000 129,065 5,000 70,000 24,000 54,516 0 27,000
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Revenue and Tariff Analysis
Tariff Plan The long term tariff plan is critical for financial objective planning and strategic planning. The tariffs are subject to detailed NERSA tariff approval.
The key objectives of the tariff plan are: • To meet the requirements of the Shareholder; • To meet the requirements of National Energy Regulator of South Africa (NERSA); • To sustain company viability; • To align tariffs with national benchmarks; • To minimise the impact of tariff increases in order to meet customer needs; • To move towards cost reflective prices in all categories in a phased approach; • To maximise customer tariff choice; • To send the right signal for DSM. • To encourage PCP
Background Direct costs contribute 67 percent of City Power’s operating budget, any increase on direct costs impacts on the efficient and effective running of the company. The two major sources for the direct costs are energy purchases from KELVIN and ESKOM, with the latter supplying over the energy.
Kelvin is expected to increase its costs by 56 percent and this increase is mainly due to primary (coal) energy costs. On the 24 th February 2010 National Energy Regulator (NERSA) announced a 24, 8% revenue increase for ESKOM for the 2010/11 financial year. On the 24 th March 2010 National Treasury send circular 51 advising Municipalities to increase their budget to 28.9 % as per ESKOM submission to NERSA.
Proposed tariff increase The following is a summary of proposed tariff structure
Free Basic Electricity (FBE) In line with the City’s Expanded Social Package, City Power will provide FBE as follows : Band Score on Allocation of additional Monthly allocation cap of Prevailing COJ free electricity per free electricity per Poverty Index person per month household in which at least (kilowatt hours) 50% of registered social package recipients qualify for the band in question (Kilowatt hours) Band 1 1-34 10 50kWh Band 2 35 -70 20 100kWh Band 3 70 -100 30 150kWh
They above mentioned bands will replace 100 kWh free basic electricity as it is currently provided.
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Life line tariff The proposed increase on this tariff is 15 %; this is in line with the NERSA proposals for low consumption customers. The total impact on the customer will be 8 cents from 2009/10 tariffs. Customers on this tariff may not be poor as those that have will be on the Siyasizana programme (ESP).
Description 2009/2010 2010/2011 % increase Domestic Life -line 1 - Energy (c/kWh) 0 < 300 kWh 56.78 65.30 15% Domestic Life -line 2 - Energy (c/kWh) 300 < 500 kWh 56.78 65.30 15%
Domestic Life -line 1 - Conventional (c/kWh) 0 < 300 kWh 59.81 68.78 15% Domestic Life -line 2 - Conventional (c/kWh) 300 < 500 kWh 59.81 68.78 15%
Single and three phase Tariff A total impact on increase of this tariff wills 22 % more . The reason behind the low increase on the service charge is to reduce the breakeven point between the prepaid and conventional customers. This is to make prepaid cheaper than the conventional in line with the strategy to be a prepaid City. Description 2009/2010 2010/2011 % increase Domestic single phase - Service Charge (R/m) 60 A 226.56 274.14 21% Domestic single phase - Service Charge (R/m) 80 A 237.04 286.82 21% Domestic single phase - Energy (c/kWh) 0 < 500 kWh 47.38 58.75 24% 500 < 1 000 kWh 48.18 59.74 24% 1000 < 2000 kWh 48.98 60.74 24% 2000 < 3000 kWh 50.17 62.21 24% > 3000 kWh 50.77 62.95 24% Domestic three phase - Service Charge (R/m) 60 A 260.73 315.48 21% Domestic three phase - Service Charge (R/m) 80 A 278.28 336.72 21% Domestic three phase - Energy (c/kWh) 0 < 500 kWh 47.38 58.75 24% 500 < 1 000 kWh 48.18 59.74 24% 1000 < 2000 kWh 48.98 60.74 24% 2000 < 3000 kWh 50.17 62.21 24% > 3000 kWh 50.77 62.95 24% Domestic single phase -(Seasona l) -Service charge(R/m) 60 A 226.56 274.14 21% Domestic single phase-(Seasonal) -Service 80 A 237.04 286.82 21% Business Planning & Strategy - (Fifth Draft Business Plan) Page 90
Description 2009/2010 2010/2011 % increase charge(R/m) Domestic single phase -(Seasonal) - Energy(c/kWh) summer 0 < 500 kWh 49.69 61.62 24% 500 < 1 000 kWh 50.46 62.57 24% 1000 < 2000 kWh 51.23 63.53 24% 2000 < 3000 kWh 52.00 64.48 24% >3000 kWh 52.77 65.43 24%
winter 0 < 500 kWh 74.78 92.73 24% 500 < 1 000 kWh 75.94 94.17 24% 1000 < 2000 kWh 77.1 95.60 24% 2000 < 3000 kWh 78.26 97.04 24% > 3000 kWh 79.42 98.48 24% Domestic three phase -(Seasonal) -Service charge(R/m) 60 A 260.73 315.48 21% Domestic three phase -(Seasonal) -Service charge(R/m) 80 A 278.28 336.72 21% Domestic three phase -(Seasonal) - Energy(c/kWh) summer 0 < 500 kWh 49.69 61.62 24% 500 < 1 000 kWh 50.46 62.57 24% 1000 < 2000 kWh 51.23 63.53 24% 2000 < 3000 kWh 52.00 64.48 24% >3000 kWh 52.77 65.43 24% winter 0 < 500 kWh 74.78 92.73 24% 500 < 1 000 kWh 75.94 94.17 24% 1000 < 2000 kWh 77.10 95.60 24% 2000 < 3000 kWh 78.26 97.04 24% > 3000 kWh 79.42 98.48 24%
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Prepaid Due to the drive to bring citizens of the City of Johannesburg to prepayment metering system, City Power is making it acceptable through keeping the price very low ( meaning 15% increase on Prepaid ) Description 2009/2010 2010/2011 % increase Domestic 2 - prepaid 500 < 1 000 kWh 78.52 90.30 15% Domestic 3 - prepaid 1000 < 2000 kWh 80.12 92.14 15% Domestic 4 - prepaid 2000 < 3000 kWh 82.06 94.37 15% Domestic 5 - prepaid > 3000 kWh 83.05 95.55 15%
Agriculture Proposed increase of 24 %. Description 2009/2010 2010/2011 % increase Agricultural - Service Charge (R/m) <50 kVA 286.09 354.75 24% >50 kVA 334.39 414.64 24% Agricultural - Energy (c/kWh) summer 46. 63 57.82 24% winter 70.21 87.06 24%
Business and Industrial A proposed increase of 33, 5 %, this tariff category heavily subsidize the life line and portion of single phase and three phase residential customers. Description 2009/2010 2010/2011 % increase Robot Intersections - Energy (c/kWh) 77.79 103.85 33.5% Streetlight and Billboard per luminaire 87.21 116.43 33.5%
Business - prepaid 1 (<50 kVA) Flat 82.00 109.47 33.5% Business - prepaid 2 (<100 KVA) Flat 82.00 109.47 33.5%
Business - Service Charge (R/m) <50 kVA 280.69 374.72 33.5% Business - Service Charge (R/m) <100 kVA 327.92 437.77 33.5% Business - Service Charge (R/m) <500 kVA 440.44 587.99 33.5% Business - Service Charge (R/m) >500 kVA 651.11 869.23 33.5% Business - Energy (c/kWh) summer 0 < 500 kWh 62.35 83.24 33.5% 500 < 1 000 kWh 65.38 87.28 33.5% 1000 < 2000 kWh 62.78 83.81 33.5% 2000 < 3000 kWh 67.73 90.42 33.5% > 3000 kWh 68.20 91.05 33.5% Business Planning & Strategy - (Fifth Draft Business Plan) Page 92
Description 2009/2010 2010/2011 % increase
winter 0 < 500 kWh 98.97 132.12 33.5% 500 < 1 000 kWh 99.97 133.46 33.5% 1000 < 2000 kWh 101.97 136.13 33.5% 2000 < 3000 kWh 103.55 138.24 33.5% > 3000 kWh 104.24 139.16 33.5%
Reactive energy for LPU (c/kVArh) 6.71 8.96 33.5%
kVA L PU Low Voltage - Service Charge (R/m) 788.14 1052.17 33.5% kVA LPU Low Voltage - Energy (c/kWh) summer 33.17 44.28 33.5% winter 49.06 65.50 33.5%
kVA LPU Low Voltage - Demand Charge (R/kVA) summer 102.47 136.80 33.5% kVA LPU Low Voltag e - Demand Charge (R/kVA) winter 107.6 143.65 33.5%
kVA LPU Medium Voltage - Service Charge (R/m) 1576.26 2104.31 33.5% kVA LPU Medium Voltage - Energy (c/kWh) summer 30.95 41.32 33.5% winter 45.78 61.12 33.5%
kVA LPU Medium Vol tage - Demand Charge (R/kVA) summer 102.47 136.80 33.5% kVA LPU Medium Voltage - Demand Charge (R/kVA) winter 106.48 142.15 33.5%
Time Of Use kVA LPU Low Voltage - Service Charge (R/m) 5773.68 7707.86 33.5% kVA LPU Low Voltage - Energy (c/kWh) summer peak 51.70 69.02 33.5% standard 38.16 50.94 33.5% off peak 31.61 42.20 33.5% winter peak 119.9 160.07 33.5% standard 46.59 62.20 33.5%
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Description 2009/2010 2010/2011 % increase off peak 33.38 44.56 33.5%
kVA LPU Low Voltage - Demand charge (R/m) summer 84.34 112.59 33.5% kVA LPU Low Voltage - Demand charge (R/m) winter 89.14 119.00 33.5%
kVA LPU Medium Voltage - Service Charge (R/m) 7100.48 9479.14 33.5% kVA LPU Medium Voltage - Energy (c/kWh) summer peak 46.5 62.08 33.5% standard 34.31 45.80 33.5% off peak 28.44 37.97 33.5% winter peak 107.83 143.95 33.5% standard 41.87 55.90 33.5% off peak 30.02 40.08 33.5% kVA LPU Medium voltage - Demand charge summer 75.87 101.29 33.5% kVA LP U Medium voltage - Demand charge winter 80.18 107.04 33.5%
kVA LPU High Voltage - Service Charge (R/m) 7159.32 9557.69 33.5% kVA LPU High Voltage - Energy (c/kWh) summer peak 36.76 49.07 33.5% standard 27.12 36.21 33.5% off peak 22.48 30.01 33.5% winter peak 85.22 113.77 33.5% standard 33.1 44.19 33.5% off peak 23.73 31.68 33.5% kVA LPU High Voltage - Demand charge (R/m) summer 62.72 83.73 33.5% kVA LPU High Voltage - Demand charge (R/m) winter 65.85 87.91 33.5%
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Tariff Determination Guidelines In terms of the guiding principles of tariff methodology and model, City Power tariffs has to comply with the following:
a. Social The social package will provide up to 150 kWh per month per family. The life line tariff is still heavily subsidized by the industrial customers even though the free basic is not given per tariff but as per Siyasizana programme.
b. Economic Within the NERSA approved framework, the City has structured its tariffs to promote electricity conservation for various categories of customers. Higher consumers will pay higher tariffs for the same unit of electricity consumed by lower consumers. This will contribute towards the conservation of the limited electricity supply capacity in the country.
c. Financial The tariffs will reflect the actual costs incurred by City Power and will therefore be in line with NERSA cost reflectivity principle. This however means that on average, the cost increases by ESKOM and Kelvin Power will be passed through to the customers. Lifeline and Indigent customers will receive also a somewhat cost reflective but preferential increase.
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Section 7: Human Capital
Staff Establishment Table 7.1: Staff Estimates
ESTABLISHMENT Departmental Total DESIGNATION Approved Vacancies Plan Variance 09 /10 09/10 10/11 10/11 Number of posts Executives Directors 1 0 1 0 Directors 5 1 5 1 General Managers / Senior Managers 29 6 28 4 Specialists / Managers / Professionals 320 30 156 24 Skilled Technical / Supervisors / Technicians 250 54 239 49 Artisans (All types) 366 42 366 42 Administrative 308 10 264 8 Semi -skilled 569 60 569 60 Elementary positions 284 43 284 43 TOTAL (Permanent and Contract) 2132 246 1932 231
Human Capital Expenditure Table 7.2: Staff Expenditure
TOTAL STAFF EXPENDITURE SALARIES AND Actual Projected Percentage WAGES 08/09 Plan 09/10 Plan 10/11 Growth/Decrease 529,796,881 611,780,000 633,866,000 3.61%
529,796,881 611,780,000 633,866,000 3.61% TOTALS
Table 7.3: Expenditure on Contracted Services
CONTRACTED SERVICES (Consultancy Services) SERVICES Projected Percentage RENDERED Actual 08/09 Plan 09/10 Plan 10/11 Growth/Decrease 200,805,854 16,641,143 189,505,000 5.75% TOTALS 200,805,854 16,641,143 189,505,000 5.75%
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Table 7.4: Staff Expenditure vs. Operational Expenditure
RATIO OF STAFF TO OPERATING EXPENDITURE Projected Percentage Actual 08/09 Plan 09/10 Plan 10/11 Growth/Decrease STAFF EXPENDITURE 529,796,881 611,780,000 633,866,000 3.61% OPERATING EXPENDITURE 1,668 ,251,758 1,653,624,000 1,877,584,000 15.39. % RATIO 31.76% 36.99% 33.75
Employment Equity Table 7.5: Employment Equity - Actual 08/09 Male Female Categories A C I W A C I W Total Executives Directors 1 0 0 0 0 0 0 0 1 Directors 1 0 0 1 2 0 0 0 4 Genl Managers / Snr Managers 11 0 3 6 5 1 1 0 27 Specialists / Managers / Professionals 64 7 4 50 44 2 1 8 180 Skilled Technical / Supervisors / Technicians 100 16 8 40 38 4 2 4 212 Artisans (All types) 220 18 3 76 30 4 4 4 359 Administrative 60 4 0 8 152 11 2 35 272 Semi-skilled 450 13 1 10 80 0 0 2 556 Elementary positions 270 5 5 0 30 2 0 0 312 TOTAL (Permanent and Contract) 1177 63 24 191 381 24 10 53 1923
Staff Turnover / Movement during previous financial year Table 7.6: Staff Turnover – Actual 08/09
Staff African Coloured Indian White Movements Male Female Male Female Male Female Male Female Totals
Recruitment 62 50 1 0 0 0 2 1 116
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Staff African Coloured Indian White Movements Male Female Male Female Male Female Male Female Totals
Resignation 26 18 1 3 1 1 9 5 64
Retirement 33 2 1 0 0 0 2 0 38 Early retirement, deceased, termination of contract and medical boarding 182 45 5 0 1 1 11 1 246
Grand Total -179 -15 -6 -3 -2 -2 -20 -5 -232
Promotion 140 32 5 1 1 1 9 1 190
Employee Wellness Programmes City Power has implemented an in-house HIV / Aids programme and deliverables that are aligned to that of the City of Johannesburg. The possible impact of HIV / Aids has been identified as one of the company risks that need tight monitoring and support. Key to the successful implementation of the programme is the ongoing education of all the employees including management in effective management of infected and affected people.
A total of 91 employees have declared their status and have subsequently been incorporated into the in-house program. o Total number of employees on supportive therapy - 18 o Total number of employees on ARV’s – 73 o Eleven (11) partners on supportive therapy o Five (5) family members on supportive therapy o Four contractors on supportive therapy
Distribution of micronutrients: o Immune Boosters – 130 o Vitamin supplements – 55 o Insta-meal provision– 52 o Employees on TB Supervision – 12 o Clients registered on SDSL – 4
The following are some of the key focus areas of the programme: 1. Voluntary Counseling and Testing 2. Disease Management 3. Care and Support 4. Education and Awareness 5. Counseling 6. Program Governance
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Section 8: Ward Projects & Dependency Matrix
Wards issues
Table 8.1: Rollout of Electrification Projects for 2010/11 financial year
Quarterly Work In Progress Projection Ward Start End Project Budget No. Ward Issues Date Date Status Allocation Q1 Q2 Q3 Q4 Electrification of 500 houses in 32,81 10-Jun 11-Jul D 7,500, 000 200 100 100 100 Alexandra(Hybrid Reticulation) Electrification of 53 1290 connections 10-Jun 11-Jul D 10, 000, 000 200 300 500 290 in Lufhereng Normalization of approx 1500 53 10-Jun 11-Jul P 14, 000, 000 500 500 500 0 connections in Tshepisong Electrification of 70 1500 connections 10-Jun 11-Jul D 10, 000, 000 200 300 500 500 in Fleurhof Removal of service connections from a shack to a newly all 10-Jun 11-Jul D 15,000,000 2000 2000 3000 3000 built RPD house on all electrification project
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Table8.2: Public Lighting Projects 2009/2010
PUBLIC LIGHTING PROJECTS 2009/2010 Number of MIG Project Name Ward Number Lights Funding Public Lighting new Ivory Park Ward 641 5,140,000 Public Lighting new Orange Farm Ward 1-3 861 7,512,000 Public Lighting new Diesploot Ward 95 300 3,212,000 Public Lighting new Alexandra Ward 75,107 300 3,449,000 Public Lighting new Dobsonville Ward 47,50,53 979 12,216,000 Public Lighting new Meadowlands Ward 31,38,45 334 4,003,000 Public Lighting Cosmo City Ward 100 100 1,039,000 Public Lighting Johannesburg F Ward 23 140 1,450,000 Energy efficiency All 21,000,000 2010 projects All
Table 8.3: Public Lighting Projects 2010/2011
PUBLIC LIGHTING PROJECTS 2010/2011 Specific Number Area (Ext or of New Area Region Suburb Zone) Lights Project Cost Wards
Soweto D Thulani Extention 1 299 R2,565,772.82 44
Soweto D Thulani Extention 2 223 R1,913,603.14 44
Soweto D Dooronkop Extention 3 123 R1,576,242.54 44
Soweto D Emdeni Extention 1 146 R1,870,987.08 52 Soweto D Emdeni Extention 2 93 R1,191,793.14 52 30 Soweto D Orlando Proper 11 R140,964.78 &31 Soweto D Orlando West Proper 90 R1,153,348.20 39 Soweto D Orlando West Extention 1 20 R256,299.60 39 Soweto D Orlando West Extention 2 28 R358,819.44 39 Soweto D Orlando West Extention 5 5 R64,074.90 39
Soweto D Orlando East(Ward 30) Proper 633 R8,111,882.34 30&31 Soweto D Moroka Proper 93 R1,191,793.14 33 Moroka Soweto D Moroka North 52 R666,378.96 33
Soweto D Naledi Extention 2 160 R2,050,396.80 20 Soweto D Protea South(Ward 13) Extention 1 5 R64,074.90 10
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PUBLIC LIGHTING PROJECTS 2010/2011 Specific Number Area (Ext or of New Area Region Suburb Zone) Lights Project Cost Wards
Soweto D Chiawelo Proper 182 R2,332,326.36 11&12 Soweto D Chiawelo Extention 1 42 R538,229.16 11&12 Soweto D Chiawelo Extention 3 55 R704,823.90 11&12 Soweto D Chiawelo Extention 4 1 R12,814.98 11&12 Soweto D Chiawelo Extention 5 50 R640,749.00 11&12 Soweto D Dlamini Extention 1 41 R525,414.18 37 Soweto D Dlamini Extention 2 15 R192,224.70 37 Soweto D Dlamini Extention 3 17 R217,854.66 37 Soweto D Dlamini Extention 4 7 R89,704.86 37 Soweto D Pimville Zone 1 4 R51,259.92 25 Soweto D Pimville Zone 2 17 R217,854.66 25 Soweto D Pimville Zone 4 56 R717,638.88 22 Soweto D Pimville Zone 6 13 R166,594.74 25 Soweto D Pimville Zone 8 14 R179,409.72 22 Soweto D Klipriviersoog Extention 1 17 R217,854.66 10
Soweto D Moletsane Proper 290 R3,716,344.20 21
Soweto D Molapo Proper 199 R2,550,181.02 34 Soweto D Jabulani Proper 45 R576,674.10 34
Total 3,046 R36,824,385.48 Orange Farms G Orange Farms Extention 1 350 R3,003,413.00 4 Orange Farms G Orange Farms Extention 2 232 R1,990,833.76 4 Orange Farms G Orange Farms Extention 3 105 R901,023.90 4 Orange Farms G Orange Farms Extention 4 39 R334,666.02 4 Orange Farms G Orange Farms Extention 6 142 R1,218,527.56 4 Orange Farms G Orange Farms Extention 7 410 R3,518,283.80 4 Orange Farms G Orange Farms Extention 8 213 R1,827,791.34 4 Orange Farms G Lakeside Extention 3 57 R489,127.26 4 Orange Farms G Lakeside Extention 5 69 R592,101.42 4
Total 1,617 R13,875,768.06 Business Planning & Strategy - (Fifth Draft Business Plan) Page 101
PUBLIC LIGHTING PROJECTS 2010/2011 Specific Number Area (Ext or of New Area Region Suburb Zone) Lights Project Cost Wards Ivory Park A Kaalfontein Extention 1 89 R763,725.02 92
Ivory Park A Kaalfontein Extention 4 107 R918,186.26 92
Ivory Park A Kaalfontein Extention 5 112 R961,092.16 92 Ivory Park A Kaalfontein Extention 7 79 R677,913.22 92 Ivory Park A Kaalfontein Extention 9 25 R214,529.50 92
Ivory Park A Ivory Park(Ward 78) Extention 6 158 R1,355,826.44 78 Ivory Park A Ivory Park Extention 7 65 R557,776.70 79
Ivory Park A Ivory Park Extention 8 169 R1,450,219.42 78
Ivory Park A Ivory Park Extention 9 203 R1,741,979.54 77 Ivory Park A Ebony Park Extention 3 12 R102,974.16 92 Ivory Park A Ebony Park Extention 5 3 R25,743.54 92 Ivory Park A Rabie Ridge Proper 12 R102,974.16 80
Total 1,034 R8,872,940.12
TOTAL 5,697 R59,573,093.66
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Table 8.4 below outlines the City Power projects that have been included in the Draft 2009/10 Budget and the duration of the project.
City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
New 88/11 kV substation, 2 X 40 MVA B 68 Roodepoort Pennyville 1,800,000 2008/9 2010/11 transformers and feeder board Transmission: Upgrading of the existing C & E 101 Randburg Olivedale switchboard and 2,400,000 2008/9 2010/11 intstalation of 1X20MVA - 88/11kV transformer Third transformer plus switchboard. Refurbish E 61 Siemert Siemert 4,500,000 2009/10 2010/11 11 kV breakers and reconfigure bus bar. Establishment of 88/11 kV , 45MVA S/S (2 x 45 MVA transformers and A 92 Midrand New Road 5,500,000 2008/9 2010/11 11kV switchroom and feederboard) (also see P0563) 132 kV Interconnector B 92 Midrand New Road between Grand Central 3,500,000 2008/9 2010/11 and New road
E 74 Siemert Gresswold Replace Transformer 1B 2,500,000 2010/11 2010/11
Establish 132kV/11kV B & F 58 Reuven Crown substation comprising of 2,000,000 2008/9 2010/11 2 x 45MVA trx's Transmission: Orlando Switching Station - Replace all 88kV All 40 All Quattro switchgear with 375,000 2007/8 2014/15 compact gas insulated switchgear & introduce 275kV
Southern Southern Southern Refurbishment of LV All 1,000,000 Multi year Region Region Region infrastructure
Refurbishment of MV Southern Southern Southern All infrastructure(Switchgear 1,000,000 Multi year Region Region Region and transformers)
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City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
Metering: Replace obsolete energy kwh meters & purchase of All All All All areas energy meters for new 5,500,000 Multi year installations (single, three phase and prepaid) 23, 24, Installation of new F Reuven Reuven 14,500,000 Multi year 54-58, service connections 70, 71, Installation of new C 83-86, Roodepoort Roodepoort 12,800,000 Multi year service connections 89, 97 Install third transformer Soweto, and split 88 kV bus bar Soweto/Orlando D 24 Reuven to get second incomer. 5,000,000 2008/9 2010/11 Local & Additional 11 kV feeder Baragwanath board.
Northern Northern Northern Refurbishment of LV All 1,000,000 Multi year Region Region Region infrastructure
Northern Northern Northern Upgrading of Load All 1,000,000 Multi year Region Region Region Centres
Southern Southern Southern Upgrading of Load All 1,000,000 Multi year Region Region Region Centres
D 44, 50 Soweto Soweto Thulani Ext 1 & 2 4,000,000 2010/2011 2010/2011 D 44 Soweto Soweto Doornkop Ext 3 1,600,000 2010/2011 2010/2011 D 52 Soweto Soweto Emdeni Ext 1 & 2 2,600,000 2010/2011 2010/2011 D 30, 31 Soweto Soweto Orlando Proper 141,000 2010/2011 2010/2011 Orlando West Proper, D 39 Soweto Soweto 1,850,000 2010/2011 2010/2011 ext 1, 2 and 5 D 30, 31 Soweto Soweto Orlando East Proper 7,100,000 2010/2011 2010/2011 Moroka proper and D 34 Soweto Soweto 1,900,000 2010/2011 2010/2011 North D 20 Soweto Soweto Naledi Extension 2 2,035,078 2010/2011 2010/2011 D 10 Soweto Soweto Protea South 64,075 2010/2011 2010/2011 Chiawelo proper, Ext 1, D 11, 12 Soweto Soweto 4,000,000 2010/2011 2010/2011 2, 3, 4 & 5 D 37 Soweto Soweto Dlamini Ext 1, 2, 3 & 4 1,000,000 2010/2011 2010/2011 Pimville Zone 1, 2, 4, 6 D 22, 25 Soweto Soweto 1,350,000 2010/2011 2010/2011 & 8 D Soweto Soweto Kliriviersoog Ext 1 217,000 2010/2011 2010/2011 D 21 Soweto Soweto Moletsane Proper 3,400,000 2010/2011 2010/2011 D 34 Soweto Soweto Molapo Proper 2,350,000 2010/2011 2010/2011 D 34 Soweto Soweto Jabulani Proper 576,000 2010/2011 2010/2011
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City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
1-4, 6, Orange Farm Extension G Lenasia Orange Farm 11,000,000 2010/2011 2010/2011 7 1, 2, 3, 4, 5, 6, 7 & 8 G 3, 5 Lenasia Orange Farm Lakeside Ext 3 & 5 1,100,000 2010/2011 2010/2011
Transmission All All Operations Emergency Work 1,000,000 Multi year and Distribution
Transmission: Kelvin - Build a new 275/ 88kV All 32 All Sebenza 100,000,000 2007/8 2014/15 yard at Sebenza and demolish existing yard Christiaan de Wet sub - busbar reconfiguration,Replace Christiaan de C 97 Roodepoort damaged switchboard, 18,000,000 2010/2011 2010/2011 Wet expand 11x11kV switchgear, refurbishment. City wide pre paid roll All All All All areas 6,000,000 Multi year out Installation of pre paid Eldorado Park G 7 Lenasia meters and protective 10,000,000 Multi year and Lenasia structures. All All All All areas Domestic AMR roll out 15,000,000 Multi year Transformer Capital Program to eliminate All All All All high risk transformers. 5,000,000 Multi year Completion of projects commenced in 2009/10. Installation of pre paid D&F 24 Lenasia Naturena meters in Naturena and 8,000,000 Multi year sectional title flats. Lo ad Management: All 74 Cydna installation of Ripple 1,500,000 2010/2011 Control transnitters Protection: Replacement of Obsolete Relays and All All All Kelvin 4,000,000 2009/10 2010/11 cables, build new control room Alexandra Far Electrification of 500 E 81 Alexandra East Bank ext Houses in Alexandra. 14,200,000 2009/10 2010/11 10 (Hybrid reticulation) 1500 Houses - G 50 Lenasia Lufhereng 20,650,000 2009/10 2010/11 Doornkop Fleurhof ext 2 & 6524 Houses - G 68 Lenasia 12,625,000 2009/10 2010/11 3 Pennyville 20 year service for 88 kV All 57 All Prospect 8,000,000 2009/10 2010/11 switchgear
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City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
Fort Sub. Replace 1 X 30 MVA transformers E 60 Siemert Fort with a 45 MVA. Replace 4,500,000 2009/10 2010/11 11kV switchgear with standard feeder boards. Transfer service All All All All connection from informal 10,000,000 Multi year structure to RDP house. Metering; Replacement All All All All areas of obsolete pre-paid 11,000,000 Multi year meters.
Strengthen Harley Street B 102 Randburg Harley Street 1,200,000 2009/10 2010/11 Feeders
Ennerdale Sub - Upgrade the existing 3 X 10 MVA transformers to 3 X 40 MVA. Build new G 5 Lenasia Ennerdale building and control 10,000,000 2009/10 2010/11 room to accommodate 2 X 17 panel feeder boards.Upgrade the 88 kV yard.
Bryanston North B 104 Randburg Bryanston 3,000,000 2009/10 2010/11 upgrade
Installation of Sergi fire All All All All protection system on 2,000,000 2009/10 2010/11 major transformers Braamfontein Sub. Reconfigure bus bar, F 60 Siemert Braamfontein 600,000 2008/9 2010/11 Extend switch room & install - 8x11kV switches Normalisation: 75, 76, Continuation of the E 108, Alexandra Alexandra 16,000,000 Multi year norrmalisation program 108 5000 stands
G 23 Lenasia Eikenhof Replace transformer 2,500,000 2010/11 2010/11
Replace batteries and All All All All areas battery chargers in sub 8,000,000 Multi year stations Upgrade 88 kV OHL between Cydna and E 102 Alexandra Cydna/Kelvin 68,000,000 2009/10 2010/11 Kelvin and between Delta and Delbank. Preparation of MSS's and Load Centres for F 26 Lenasia Baragwanath 11kV including 1,000,000 2008/9 2011/12 Baragwanath Hospital.conversion ( 1
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City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
MSS & 8 L/C) Transmission: Extend building and install new switchboard. E 76 Alexandra Alexandra 50,000,000 2009/10 2010/11 Reconfigure 88 kV busbar and install additional transformer. Reconfigure the 88 kV double busbar and install OPGW between E 74 Siemert Cydna 2,000,000 2009/10 2011/12 Cydna and Kelvin for the protection to function correctly. Transmission: Upgrade Randburg, Eskom backbone to feed B 104 Randburg Bordeaux, Bond Randburg Area 16,200,000 2008/9 2010/11 & Beyers S/S's (Randburg, Bordeaux, Bond & Beyers S/S's)
Electrification of 3000 Alexandra Far E 32 Alexandra Houses in Alexandra. 16,760,000 2008/9 2010/11 East Bank ext 9 (Hybrid reticulation)
All All Operating Capital 17,500,000 Multi year
Forest Town Satelite s/s to be replaced.Install F 87 Hursthill Forest Town 1,000,000 2010/11 2010/11 MSS and join cables through. Installation of double earthing on MV and LV overhead lines and the Northern Northern Northern All installation of SEF and 1,000,000 Multi year Region Region Region ARC Relays to meet statutory and safety requirements Refurbishment of MV Northern Northern Northern infrastructure All 1,000,000 Multi year Region Region Region (Switchgear and transformers) Transmission: Provision of servitude for proposed C 97 Roodepoort Lutz 88kV transmission lines: 5,000,000 2009/10 2011/12 Dalkeith / Lutz / Peter Rd T-point Install dual ratio devices on Norwood - Houghton distributor to prepare for E 73 Alexandra Cydna 3,500,000 2009/10 2011/12 11 kV conversion allow for the replacement of joints and cables.
Business Planning & Strategy - (Fifth Draft Business Plan) Page 107
City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
32, 80, Installation of new A 81, 93, Midrand Midrand 26,600,000 Multi year service connections 94 96, 98, 100- Installation of new B Randburg Randburg 34,100,000 Multi year 102, service connections 104 74 -76, 91,105, Installation of new E Alexandra Alexandra 995,000 Multi year 107, service connections 108 7, 8, 10, 11, Installation of new G Lenasia Lenasia 14,500,000 Multi year 17, 18, service connections 24, 26 68, 69, Installation of new B 82, 87, Hursthill Hursthill 8,520,000 Multi year service connections 88, 99 59 -63, Installation of new F 65, 67, Siemert Siemert 17,050,000 Multi year service connections 72, 73 Observatory Load Management: B 65 All 2,000,000 2010/11 2010/11 and Cleveland Reciever installation Telecommunications: All All Telecom Telecomms Multiplexer equipment 2,750,000 2010/11 2010/11 (Umux) Load Management: F 65 Reuven Cleveland lnstallation of ripple 300,000 2010/11 2010/11 control transnitters Kaalfontei Ext 1, 4, 5, 7 A 78, 79 Midrand Ivory Park 3,500,000 2010/11 2010/11 &9 A 77-79 Midrand Ivory Park Ivory Park Ext 6, 7, 8 & 9 4,500,000 2010/11 2010/11 A 92 Midrand Ivory Park Ebony Park Ext 3 & 5 130,000 2010/11 2010/11 A 80 Midrand Ivory Park Rabie Ridge Proper 102,847 2010/11 2010/11 Replacement of aged Northern Northern Northern All and/or faulting MV 3,500,000 Multi year Region Region Region cables Integrated security, fire detection & suppression All All All All areas systems for major 15,000,000 2010/11 2012/13 substations. Including fibre optic links Installation of double earthing on MV and LV overhead lines and the Southern Southern Southern All installation of SEF and 1,000,000 Multi year Region Region Region ARC Relays to meet statutory and safety requirements
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City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
Replacement of aged Southern Southern Southern All and/or faulting MV 3,500,000 Multi year Region Region Region cables The acquisition of All All All Servitudes servitudes and sub 4,000,000 Multi year station sites
Energy efficient F 58 Reuven Reuven-Central 5,000,000 Multi year buildings
Tunnel security alarm F 60 Siemert CBD 5,000,000 2010/11 2011/12 and serveilance System Turnkey project to replace LV open wire Northern Northern All All overhead systems with 2,000,000 Multi year Region Region ABC in problematic areas. Turnkey project to replace LV open wire Southern Southern All All overhead systems with 2,000,000 Multi year Region Region ABC in problematic areas.
Elimination of MV pillar F 61 All Siemert 2,000,000 2011/12 2013/14 boxes
Replace 400 W MV All All 10,000,000 2010/11 2012/13 All All luminairs with 250 HPS Replace 125 W MV All All 5,000,000 2010/11 2012/13 All All luminairs with 75 HPS All All All All CFL roll out 6,000,000 2010/11 2012/13 Install capacitor banks at All 40 All All 6,000,000 2010/11 2010/11 Orlando Normalisation of 1500 Tshepisong D 49 Roodepoort connections - Vlei 15,700,000 2010/11 2010/11 West (Eskom) Install Public Lights in formal areas based on All All All All 5,000,000 Multi year petitions received and ad hoc requests Install new IED's in sub All All All All stations with grading 5,000,000 Multi year problems Refurbish obsolete All All All All protection relays in 5,000,000 Multi year various sub stations Refurbish inter tripping All All All All 2,000,000 Multi year equipment
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City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
Convert Birdhaven E 74 Alexandra Birdhaven 1,500,000 2010/11 2010/11 distributor
Convert the 6.6 kV B 102 Randburg Khanyisa 7,500,000 2010/11 2010/11 network in Bryanston
Alternative supply to G 18 Lenasia Nancefield Boschkoppies (new 300,000 2010/11 2010/11 chamber) Olivedale, Randburg 11 Outstanding Eskom kV, Northriding, B All All payments for work in 21,000,000 2008/9 2010/11 New Road, progress. Newmarket, Delta
All All All All Plant out of service 10,000,000 Multi year
Replace faulty cable between Strydom Street C 83 Roodepoort Witpoortjie switching station and 360,000 2010/11 2010/11 Dirkie Uys no 2 miniature sub station 11 kV Conversion: E 74 Siemert Cydna Melrose - Birdhaven 1,300,000 2010/11 2010/11 distributor
11 kV Conversion: E 73 Siemert Cydna Houghton - Melrose 2,300,000 2010/11 2010/11 distributor
11 kV Conversion: E 73 Siemert Cydna Riviera Shopping Centre 3,500,000 2010/11 2010/11 Distributor
11 kV Conversion: E 73 Siemert Cydna Motorway Lighting 5,000,000 2010/11 2010/11 Distributor.
Telecommunication All All All All 10,000,000 2010/11 2010/11 platform Electrification of Cosmo C 100 Roodepoort Cosmo City 33,700,000 City Demolish and rebuild 11 kV switch room and E 76 Alexandra Alexandra 8,000,000 2009/10 2010/11 replace damaged feeder board and transformer. Installation of 3rd A 92 Midrand Grand Central 132/88/11kV 30MVA 280,000 2008/9 2010/11 transformer
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City Admin Substation/ Ward Power Description 2010 / 2011 Start Finish Region Township Region
All All All All City wide DSM Initiatives 172,700,000 Multi year
1,081,581,000
Dependency
Table 8.5: Dependency
No Inter -Departmental/ Sectoral Departmental Response Joint Action (Provide Dependency Description details on how the dependency will be managed) 1 Housing Department (local Infrastructure coordination Alignment of electrification and Provincial) committee(ICC) with housing master plan.
2 Provision of grant funding for Electrificat ion and public Sourcing Of funding from DE electrification & public lighting. lighting from DOE & DPLG &MIG by city power.
3 Approval environmental Gauteng department of Compliance with the impact assessment for agriculture GDACE environmental impact infrastructure projects. Assessment (EIA) act.
4 Way Leave application JRA Processing of way leaves prior to project execution. 5 Approval of township Township Planning Participate in the establishment/ subdivision department commenting process for township establishment (compliance to turnaround times).
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Section 9: Appendices
Detailed budget as per Budget Office / National Tresure.
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