CEDERBERG 2011/2012 TARIFF APPLICATION
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1 CEDERBERG 2011/2012 TARIFF APPLICATION
2 BACKGROUND Cederberg Local Municipality area of jurisdiction includes the areas: Clanwilliam,Citrusdal, Lamberts Bay, Elands Bay, Graafwater, Wuppertal, Algeria, Paleisheuwel, Elandskloof plus a Large Rural area in the Sandveld and adjacent West Coast. Low Capacity Semi Urban / Rural Municipality Project consolidate Municipality (Recovered) Low, limited and stagnant revenue base. Large number of Indigent consumers (20.4% of consumer base) Socio economic profile reflects high unemployment Agricultural sector main contributor to GDP of area
3 ANALYSIS OF ELECTRICITY ASSET BASE Electricity Assets Historical Cost Accumulated Depreciation Carrying value Load Control Equipment 3,048, ,214, ,834, Supply and Reticulation 29,817, ,539, ,278, Switchgear Equipment 1,683, , ,368, Transformers & Kiosks 26,707, ,895, ,811, Total 61,256, ,963, ,292, Budgeted Maintenance cost represents 7.2% of Asset carrying value and equals 4.91% of Budgeted revenue for 2011/2012
4 MAINTENANCE AND CAPITAL SPENDING Year Capital Maintenance 2006/ , /2008 2,203, /2009 4,947, , /2010 1,602, ,994, /2011 2,120, ,699, /2012 3, ,456, Maintenance cost reflects an increase of 45% over the 2010/2011 year and 497% over the 2007 expenditure.
5 ESKOM vs. MUNICIPAL TARIFF INCREASES Year Eskom Granted Eskom Actual Municipality 2007/ / / / / In 2010 all tariffs approved as requested with exceptions: Indigent low reduced from 64.6c/kWh to 62.75c/kWh Domestic conventional high increased from 73.85c/kWh to 90.94c/kWh (Higher than current requested tariff) (Council decided not to implement due to the negative impact on consumers)
6 Municipal vs. Benchmark cost structures ITEM Revised benchmarks (%) WEIGHTED AVERAGE EXPECTED INCREASE Municipal Actual WEIGHTED AVERAGE MUNICIPAL INCREASE Bulk Purchases Salaries Repairs & Maintenance Capital charges Other costs TOTAL % %
7 DISTRIBUTION LOSSES 2009/ % Ascribed to the following: Transformer losses 3.2% (11kV to 420 volt) Theft and illegal connections Possible unmetered consumption 14.3% Faulty metering devices and ageing infrastructure Steps in mitigation Dedicated staff to continuously inspect all metering equipment. Replacement program for old metering devices Appointment of Service providers for complete meter audit Full load analysis on 11 kv to determine accurate technical losses from bulk intake to supply points (R90,000 cost)
8 DISTRIBUTION LOSSES
9 Sustainability of Electricity Service Through maintenance of infrastructure identified through the Electricity Master Plan Replacement of overhead network Clanwilliam R600,000 Repair transformers and medium tension switchgear R 60,000 General maintenance R400,000 Upgrading of overhead network Citrusdal R 600,000 Replacement of overhead network Lambertsbay R410,000 Upgrade of 11kV line Elands bay R 190,000 Through capital investment 2010 to 2016 (MTREF R 28 Mil) Clanwilliam Bulk Feed - R4,5 Mil New Bulk intake Elands Bay - R2.3 Million Housing reticulation networks R 6.1 Million New Bulk intake Clanwilliam R8.3 Million Upgrade of Bulk connection Lamberts Bay R4.5 Million Upgrade of Bulk connection Graafwater R2.5 Million
10 Public Participation and buy-in Needs prioritisation through IDP revision and workshops 1 ST Draft budget tabled 14 March 2011 Electricity tariff increase proposal 14 March 2011 Public participation process on budget; March 2011 Budget and tariffs discussed in 5 public meetings in area of jurisdiction (No objection received against proposed tariff increases) Final budget approved by council 28 April 2011
11 TARIFF MODELING Consumer stats show consumption levels to be in lower interval of proposed IBT s Domestic pre-paid well below 300 units per month Domestic conventional units per month Currently IBT s only for domestic pre-paid and indigent tariffs Implementing of benchmark IBT s will cause a financial loss in excess of R5.1 Million if implemented now. IBT s considered only if financial loss can be prevented and Phasing in approach can be used.
12 Conclusion and way forward Requested increase in tariffs essential to meet operational, maintenance and capital requirements Tariffs were consulted with stakeholders through public participation processes Tariffs compares well with neighbouring municipalities Sound principles upon which we base our above the guideline increase Economic principles necessitates different approach in smaller municipalities Revenue necessary to ensure an economically viable and sustainable service and prevent current infrastructure from deterioration
13 Thank You Q & A
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