SOUTHERN AFRICA ENERGY PROGRAM Y2.02.07.01.REG: DEVELOPMENT OF REGIONAL KEY PERFORMANCE INDICATORS (KPIS) FOR RERA FINAL REPORT November 26, 2018 DISCLAIMER This report is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Deloitte Consulting LLP and do not necessarily reflect the views of USAID or the United States Government. This report was prepared under Contract Number AID-674-C-17-00002. ACRONYMS Acronym Definition ARENE Energy Regulatory Authority of Mozambique (Previously CNELEC) CAIDI Customer Average Interruption Duration Index CNELEC National Electricity Council of Mozambique (Now ARENE) DSCR Debt Service Cover Ratio Dx Distribution EAF Energy Availability Factor EBIT Earnings Before Interest and Tax ECB Electricity Control Board of Namibia ERB Energy Regulation Board of Zambia EWURA The Energy and Water Utilities Regulatory Authority of Tanzania Gx Generation IRSEA Institute for the Regulation of Electricity Services of Angola KPAs Key Performance Areas KPIs Key Performance Indicators LEWA Lesotho Electricity and Water Authority LTIR Lost Time Injury Rate MERA Malawi Energy Regulatory Authority MW Megawatt MWh Megawatt Hour NERSA National Energy Regulator of South Africa O&M Operational and Maintenance Cost PCLF Planned Capability Loss Factor PEL Planned Energy Losses RED Regional Electricity Distributor REG Reference Energy Generation RERA Regional Electricity Regulators Association of Southern Africa ROCE Return on Capital Employed USAID SOUTHERN AFRICA ENERGY PROGRAM (SAEP) REGIONAL RERA KPI REPORT FINAL | 1 RSI Recordable Safety Incident SADC Southern African Development Community SAEP Southern African Energy Program SAIDI System Average Interruption Duration SAIFI System Average Interruption Frequency SAPP Southern African Power Pool SERA Swaziland Energy Regulatory Authority Tx Transmission UCLF Unplanned Capability Loss Factor UEL Unplanned Energy Loss USAID United States Agency for International Development USD US Dollar XEL External Energy Loss ZERA Zimbabwe Energy Regulatory Authority USAID SOUTHERN AFRICA ENERGY PROGRAM (SAEP) REGIONAL RERA KPI REPORT FINAL | 2 TABLE OF CONTENTS LIST OF TABLES .............................................................................................................................................. 4 LIST OF FIGURES ............................................................................................................................................ 5 1 EXECUTIVE SUMMARY ........................................................................................................................ 6 2 BACKGROUND .................................................................................................................................... 14 2.1 Scope of Work.............................................................................................................................................. 14 2.2 Using KPIs to Gauge Utility Performance .............................................................................................. 15 2.3 The Role, Mandate and Membership of RERA ...................................................................................... 15 2.4 Focus Area for Performance Monitoring in Southern Africa ............................................................ 16 2.5 Factors to Consider When Interpreting KPIs ....................................................................................... 17 3 METHODOLOGY ................................................................................................................................. 17 3.1 Identification and Selection of KPIs .......................................................................................................... 17 3.1.1 Criteria for KPI Selection ...................................................................................................................... 18 3.1.2 Process for Developing a KPI Set ........................................................................................................ 19 3.1.3 Expected Impact ....................................................................................................................................... 20 3.2 Key Performance Indicator Framework ................................................................................................. 20 3.2.1 Utility Key Performance Areas ............................................................................................................. 21 3.2.2 Utility Key Performance Indicators ..................................................................................................... 22 3.3 Approach for Collection of Data for Quantification of KPIs ............................................................. 25 3.3.1 Utilities Surveyed ..................................................................................................................................... 25 3.3.2 Process Followed for Data Collection ............................................................................................... 26 4 RESULTS .................................................................................................................................................. 26 4.1 Phase 1 Results – Developing the Priority KPI Set .............................................................................. 27 4.1.1 Outcome from the KPI Ranking Process ........................................................................................... 27 4.2 Phase 2 Results – Quantifying KPI Set..................................................................................................... 30 4.2.1 Financial ...................................................................................................................................................... 30 4.2.2 Customer Services .................................................................................................................................. 38 4.2.3 Technical .................................................................................................................................................... 44 4.2.4 Safety ........................................................................................................................................................... 52 4.2.5 Socio-Economic and Environmental .................................................................................................... 54 4.2.6 Efficiency and Sustainability .................................................................................................................... 57 5 PROCESS AND TOOLS FOR MANAGING AND PUBLICIZING KPI DATA ...................... 64 5.1 Process for Updating Top 30 KPIs ........................................................................................................... 64 USAID SOUTHERN AFRICA ENERGY PROGRAM (SAEP) REGIONAL RERA KPI REPORT FINAL | 3 5.1.1 Process Ownership ................................................................................................................................. 64 5.1.2 Intervals ...................................................................................................................................................... 64 5.1.3 Reevaluation of Selected KPIs ............................................................................................................... 64 5.1.4 Governance Process for Change ......................................................................................................... 64 5.2 Process for Continued Data Collection ................................................................................................. 65 5.2.1 Process Ownership ................................................................................................................................. 65 5.2.2 Intervals ...................................................................................................................................................... 65 5.2.3 Reevaluation of Selected KPIs ............................................................................................................... 65 5.3 KPI Toolkit ..................................................................................................................................................... 65 5.3.1 KPI Selection and Evaluation Tool ....................................................................................................... 65 5.3.2 KPI Data Processing Tool ...................................................................................................................... 65 5.3.3 Maturity Curve ......................................................................................................................................... 65 6 KPI MATURITY CURVE ....................................................................................................................... 66 6.1 Purpose ........................................................................................................................................................... 66 6.2 Maturity Dimensions ................................................................................................................................... 66 6.3 Draft Maturity Curve .................................................................................................................................. 67 6.4 Assessment of Current