NATIONAL ENERGY REGULATOR

Transcription

1 In the matter regarding NATIONAL ENERGY REGULATOR DETERMINATION OF THE MUNICIPAL TARIFF GUIDELINE FOR THE FINANCIAL YEAR 2015/16 AND THE REVISION OF MUNICIPAL TARIFF BENCHMARKS DECISION On 27 January 2015 the Natinal Energy Regulatr (NERSA) decided as fllws: 1. A guideline increase f 12.20% will be apprved fr the 2015/16 municipal tariff review prcess. The guideline increase is based n the fllwing assumptins: 1.1 bulk purchases have been increased by 14.24% in line with Eskm s tariff increase t municipalities; 1.2 a cnsumer price index (CPI) f 6.3%; 1.3 salary and wage increases f CPI plus 1%; and 1.4 repairs and maintenance, capital charges and ther csts have been increased by the CPI. 2. That the fllwing benchmarks be apprved fr implementatin as fllws: 2.1. Dmestic ( Blck 1 4) Table 1: The 2015/16 Average Dmestic Benchmark Blck kwh Dmestic Inclining Blck Tariffs ( IBTs) Blck 2 Blck kwh kwh Blck 4 >600 kwh Page 1 f 22

2 2.2. The alternative dmestic IBT benchmarks Dmestic Lw Table 2: Average Dmestic Lw ( cmprises energy charge nly) Dmestic Inclining Blck Tariffs (IBTs) Blck kwh Blck kwh Dmestic High Table 3: Average Dmestic High(cmprises energy charge and basic charge) Dmestic Inclining Blck Tariffs (IBTs) Blck kwh Blck 2 > 350kWh Basic Charge (R/mnth) 2.3. Dmestic Nn-IBT Benchmark Table 4: Average Dmestic Nn-IBT Benchmarks Dmestic Nn - IBTs Dmestic Lw 400 kwh Dmestic High 800 kwh Cmmercial Benchmarks Cmmercial Prepaid Single - Phase Benchmarks Table 5: Average Benchmarks fr Cmmercial Prepaid Single Cmmercial (2000 kwh) Page 2 f 22

3 Cmmercial Cnventinal Cmmercial Lw Table 6: Average Benchmarks fr Cmmercial Lw Single Phase Cmmercial - Lw (2000 kwh) Cmmercial Medium Table 7: Average Benchmarks fr Cmmercial Medium Single Phase Cmmercial - Medium (3000 kwh) Cmmercial High Table 8: Average Benchmarks fr Cmmercial High Single Phase Cmmercial - High ( 7000 kwh) Cmmercial Three-Phase Cmmercial Prepaid Table 9: Average Benchmark fr Cmmercial Prepaid Three-Phase Cmmercial - Prepaid (5500 kwh) Cmmercial Cnventinal Three-Phase Cmmercial Lw Table 10: Average Benchmark fr Cmmercial Lw - Three-Phase Cmmercial Lw (5500 kwh) Page 3 f 22

4 Cmmercial Medium Table 11: Average Benchmark fr Cmmercial Medium - Three-Phase Cmmercial Medium (11500 kwh) Cmmercial High Table 12: Average Benchmark fr Cmmercial Medium - Three-Phase Cmmercial High (22000 kwh) Agriculture Benchmarks Agriculture Lw Table 13: Average Benchmark fr Agriculture - Lw Agriculture - Lw (2000 kwh) Agriculture Medium Table 14: Average Benchmark fr Agriculture - Medium Agriculture- Medium ( 3000 kwh) Agriculture High Table 15: Average Benchmark fr Agriculture - High Agriculture - High (7000 kwh) Page 4 f 22

5 Industrial Benchmark Industrial Lw Table 16: Average Benchmark fr Industrial - Lw Industrial - Lw ( kwh) Industrial Medium Table 17: Average Benchmark fr Industrial - Medium Industrial - Medium ( kwh) Industrial High Table 18: Average Benchmark fr Industrial - High Industrial - High ( kwh) Industrial Time-f-Use Benchmark Table 19: Average Benchmarks fr Industrial TOU Industrial Industrial (Based n Eskm s Nightsave) (Based n Eskm s Megaflex) kwh kwh The Industrial Time f Use (TOU) tariff will be benchmarked with the apprved Eskm s Megaflex tariff plus a maximum f 20% until a decisin is made by the Energy Regulatr n Eskm's 2015/16 TOU structural adjustment. 4. The Energy Regulatr will cnsider IBT structures that are different frm the NERSA Inclining Blck Tariff (IBT) structure. Page 5 f 22

6 5. NERSA acknwledges that municipalities shuld recver csts frm smewhere fr example the demand charge, but is als mindful that these charges shuld nt be excessive such that they prhibit custmers frm being energy efficient. 6. Municipalities are required t undertake a Cst f Supply (CS) study as it is als in line with the Electricity Pricing Plicy (EPP). This will assist municipalities t develp apprpriate tariff structures and tariff levels t ensure sustainability and send the crrect pricing signals t influence custmer behaviur. 7. The csts deemed nt t be in the direct supply f electricity will be dealt with n a case-by-case basis frm each municipality. These will be determined by cmparing the municipalities average cst t supply electricity t the average price charged by all ther municipalities. The difference will then be used t adjust the verall increase awarded t the municipality. In determining the average cst t supply the fllwing, amng thers, will be taken int accunt: 7.1 bulk purchases; 7.2 bad debts; 7.3 reasnable energy lsses; 7.4 direct and indirect charges; 7.5 salaries and wages; and 7.6 capital charges 8. Furthermre, the municipalities verall financial and technical perfrmance will be reviewed prir t a final decisin n the verall increase. Indicatrs t be cnsidered in this regard mainly include: 8.1 percentage surplus; 8.2 percentage energy lsses; 8.3 percentage pwer csts; 8.4 repairs and maintenance; 8.5 bad debt prvisin; and 8.6 average selling price/average purchase price rati. 9. Municipalities applying fr an increase that is abve the guideline will have t justify their increases t the Energy Regulatr and the fllwing actins are required: 9.1 a full analysis f additinal funds requested needs t be presented t NERSA as part f the mtivatin fr the abve-guideline increase (the municipality must give a detailed revenue analysis whereby it indicates the revenue based n the apprved guideline percentage increase and the revenue which incrprates the list f items, i.e. repairs and maintenance, where the extra funds will be allcated); Page 6 f 22

7 9.2 the apprved funds must be ring-fenced t ensure that it is strictly utilised fr the identified prjects; 9.3 municipalities must reprt t NERSA n a six-mnthly basis n hw the additinal funds are utilised; and 9.4 funds nt utilised fr the purpse fr which they were apprved will be clawed back in the fllwing financial year. 10. Municipalities applying fr tariffs that are utside the apprved benchmarks must justify such increases and the fllwing infrmatin must be submitted: 10.1 the ttal number f custmers per tariff categry municipalities that d nt have an apprpriate custmer base must submit the full detail f its custmer prfile, as well as the assciated revenues; 10.2 expected revenues per tariff categry; 10.3 the frecasted ttal sales; 10.4 the average maximum demand per tariff (where applicable); 10.5 the average lad factr (where applicable); and 10.6 the lad prfile in percentages (bth summer and winter, where applicable). End. Page 7 f 22

8 REASONS FOR DECISION BACKGROUND AND INTRODUCTION 1. The Natinal Energy Regulatr (NERSA) apprves a percentage guideline increase each year. The guideline is issued t municipalities prir t them preparing their budgets and tariff adjustment applicatins. 2. This guideline des nt preclude a distributr frm the legal bligatin t apply t the Energy Regulatr fr tariff increases befre implementatin. 3. NERSA als reviews the tariff benchmarks and recmmends new benchmarks that wuld be used in the evaluatin f the municipal tariff applicatins. 4. On 30 September 2014, Eskm was granted an average increase f 12.69% after taking int cnsideratin the Regulatry Clearing Accunt (RCA) fr the 2015/16 financial year. Furthermre, the increase fr municipalities amunts t 14.24% which is due t the Municipal Finance Management Act, 2003 (Act N.56 f 2003) (MFMA) time lag (i.e municipalities' implementatin date is 01 July whereas Eskm's financial year starts n 01 April). 5. NERSA will nt hld a public hearing n the key issues highlighted in the cnsultatin paper but will fllw the ntice and cmment prcedure in terms f Sectin 4 (3) f the Prmtin t Administratin Justice Act, 2000 (Act N. 3 f 2000). This is due t the fact that in the past, few t n presenters attended the public hearing t make representatins t NERSA. 6. The Energy Regulatr will make decisins n the fllwing matters: the determinatin f the 2015/16 municipal tariff guideline and ; the revisin f the municipal tariff benchmarks that are used in guiding average tariff levels. THE DECISION-MAKING PROCESS 7. NERSA, cmmunicates n an annual basis an apprpriate tariff guideline increase, t municipal distributrs as a guide in determining their annual electricity tariffs. 8. On 30 September 2014, Eskm was granted an average increase f 12.69% after taking int cnsideratin the Regulatry Clearing Accunt (RCA) fr the 2015/16 financial year. The increase fr municipalities amunts t 14.24%, which is due t the Municipal Finance Management Act, 2003 (Act N. 56 f 2003) (MFMA) time lag (i.e. municipalities Page 8 f 22

9 implementatin date is 01 July whereas Eskm's financial year starts n 01 April). 9. On 18 Nvember 2014 the Energy Regulatr apprved the publicatin f the municipal tariff guideline and benchmarks cnsultatin paper. This was published n the NERSA website n 19 Nvember 2014 with an invitatin t stakehlders fr cmments. The clsing date fr cmments was 18 December NERSA did nt hld a public hearing n the key issues highlighted in the cnsultatin paper but fllwed the ntice and cmment prcedure in terms f Sectin 4(3) f the Prmtin t Administratin Justice Act, 2000(Act N. 3 f 2000). This is due t the fact that in the past, few t n presenters attended the public hearing t make representatins t NERSA. THE OBJECTORS AND OTHER INTERVENING PARTIES 11. NERSA published an advert in natinal newspapers n 22 Nvember 2014 which was fllwed by a wrkshp/meeting with Suth African Lcal Gvernment Authrity (SALGA), Natinal Treasury the Assciatin f Municipal Electricity Undertakings (AMEU) and five municipalities n 02 December Written cmments n the published NERSA cnsultatin paper were received frm a ttal f eight stakehlders: five municipalities namely, Gerge, Swartland, ethekwini, Saldanha Bay and Drakenstein, AMEU, and tw individuals. 13. The key cmments received have been summarised in Annexure 1. APPLICABLE LAW 14. The Natinal Energy Regulatr is the regulatry authrity ver the energy sectr in Suth Africa and its mandate includes the regulatin f the electricity supply industry. In terms f sectin 4(ii) f the Electricity Regulatin Act, 2006 (Act N. 4 f 2006) ( the ERA ), the Energy Regulatr must regulate electricity prices and tariffs. Page 9 f 22

10 METHOD USED IN DETERMINING THE MUNICIPAL GUIDELINE Determinatin f the municipal guideline 15. In develping the guideline increase, NERSA takes int cnsideratin the prpsed Eskm bulk price f electricity t municipalities, and the increase n the municipalities cst structures. 16. When determining the guideline fr the 2015/16 financial year, the fllwing issues were als cnsidered: the infrmatin frm the 2012/13 distributin frms (D-frms) cmpleted by municipalities (based n the latest available infrmatin) was used t determine the changes t the cst structures the selectin f which D-frms t use was based n the availability f the required data develped in the mdel that was used fr the revisin f the municipal cst structure weights a stratified randm sampling was dne n the D-frms. The initial number selected was 104 municipalities ut f 174. After the validatin f the data the final sample used cnsisted f 79 D-frms. It is fr this reasn that municipalities are urged by NERSA t submit accurate D-frm data the chsen sample is useful in determining whether the weights f the cst drivers that have been develped can still be maintained r must be changed. 17. The tables belw indicate the findings frm the analysis dne frm the sample f municipalities. Table 20: The Current Average Cst Structure % Purchases %Salaries & Wages % Repairs % Capital Charges % Other Csts Table 21: The Revised Average Cst Structure % Purchases %Salaries & Wages % Repairs % Capital Charges % Other Csts the data frm the sample f municipalities indicated a change in the weights f the cst structures. The municipal bulk purchases have increased frm 70% t 73%. This increase results frm higher electricity prices. Page 10 f 22

11 17.2 the average share fr salaries and wages has been maintained at 10% in rder fr municipalities t incrprate the skilled staff, recruitment f additinal staff and the allwance fr paying scarce skills allwance NERSA requires municipalities t spend 6% f their ttal revenue n repairs and maintenance t ensure a sustainable electricity supply system. Therefre, municipalities are urged t cnsider the Energy Regulatr's decisin the capital csts remain unchanged at 4%. Other csts have been reduced frm 10% t 7%, due t an increase in the weight f bulk purchases. 18. In develping the guideline, the fllwing assumptins n cst increases were made: 18.1 bulk purchases will increase by 14.24% 1 as per the Energy Regulatr decisin fr the 2015/16 financial year; 18.2 Cnsumer Price Index (CPI) 6.3% 2 ; 18.3 salary increases CPI plus 1% 3 ; 18.4 repairs and maintenance, capital charges and ther csts will increase by CPI. 19. The guideline is calculated as fllws: Table 22: Calculatin f the guideline fr the 2015/16 financial year REVISED MUNIC EXPECTED % OF TOTAL INCREASE % COST COST LINE ITEM WEIGHTED AVERAGE EXPECTED INCREASE % Purchases Salaries and wages Repairs & Maintenance Capital charges in ttal Other Csts % increase The decisin is in line with Eskm s Standard Retail Tariff fr the 2015/16 financial year as apprved by the Energy Regulatr 2 The Cnsumer Price Index is 6.3% in line with the Medium Term Budget Plicy Statement 2014 ( MTBPS) 3 As indicated in Circular N.6/2012: Salary and Wage Cllective Agreement. Page 11 f 22

12 20. The frmula fr calculating the guideline is as fllws: MG = (B x BPI) +(S x SI)+(R x RI)+(C x CCI)+(OC x OCI) = (73 x 14.24)+(10 x 7.3)+(6 x 6.3)+(4 x 6.3)+(7 4 x 6.3) = = 12.20% Where:- MG = % Municipal Guideline increase B = % Bulk purchases BPI =% Bulk purchase increase S = % Salaries SI = %Salary increase R = % Repairs RI = %Repairs increase C = % Capital charges CCI =% Capital charges increase OC = % Other Charges OCI =% Other Charges increase THE REVISED MUNICIPAL ELECTRICITY TARIFF BENCHMARKS FOR THE 2015/16 FINANCIAL YEAR 21. The current municipal electricity tariff benchmarks Dmestic (Blck 1 4) Table 23:The 2014/15 Average Dmestic Benchmarks Dmestic Inclining Blck Tariffs ( IBTs) Blck 1 Blck 2 Blck 3 Blck kwh kwh kwh >600 kwh The ther csts has been reduced due t increase in the weight f bulk purchase. The bulk purchases needs t be increase by the decrease in ther csts Page 12 f 22

13 The alternative dmestic Inclining Blck Tariff (IBT) structures and benchmarks are as indicated belw Dmestic Lw Table 24: Average Dmestic Lw (cmprises energy charge nly) Dmestic Inclining Blck Tariffs (IBTs) Blck 1 Blck kwh kwh Dmestic High Table 25: Dmestic High (cmprises energy charge and basic charge) Dmestic Inclining Blck Tariffs (IBTs) Blck 1 Blck kwh > 350kWh Basic Charge (R/mnth) Dmestic Nn-IBT Benchmark Table 26: Average Dmestic Nn-IBT Benchmarks Dmestic Nn - IBT Dmestic Lw Dmestic High 400 kwh 800 kwh Cmmercial Benchmarks Cmmercial Prepaid Table 27: Average Benchmarks fr Cmmercial Prepaid Single Cmmercial 2000 kwh Page 13 f 22

14 21.6. Cmmercial Cnventinal Cmmercial Lw Table 28: Average benchmark fr Cmmercial Lw Cmmercial - Lw ( 2000 kwh) Cmmercial Medium Table 29: Average benchmark fr Cmmercial Medium Cmmercial - Medium ( 3000 kwh) Cmmercial High Table 30: Average benchmark fr Cmmercial High Cmmercial - High ( 7000 kwh) Agriculture Benchmarks Agriculture Lw Table 31: Average benchmark fr Agriculture Lw Agriculture - Lw ( 2000 kwh) Agriculture Medium Table 32: Average benchmark fr Agriculture Medium Agriculture - Medium (3000 kwh) Page 14 f 22

15 Agriculture High Table 33: Average benchmark fr Agriculture High Agriculture - High (7000 kwh) Industrial Benchmark Industrial Lw Table 34: Average benchmark fr Industrial Lw Industrial - Lw ( kwh) Industrial Medium Table 35: Average benchmark fr Industrial Medium Industrial - Medium ( kwh) Industrial High Table 36: Average benchmark fr Industrial High Industrial - High ( kwh) Time-f-Use Benchmark Table 37: Average benchmarks fr Industrial TOU Industrial Industrial (Based n Eskm s Nightsave) (Based n Eskm s Megaflex)) kwh kwh Page 15 f 22

16 22. The revised municipal electricity tariff benchmarks fr 2015/16 The benchmarks fr the 2015/16 financial year have been develped as fllws fr the different tariff categries Dmestic Benchmarks (Blck 1 4) Blck 1 The 2014/15 benchmarks were increased by CPI 5 f 6.3%. Blck 2 The 2014/15 benchmarks were increased by CPI plus 1% (6.3 % + 1% 6 ). Blck 3 and 4 The 2014/15 benchmarks were increased by the municipal tariff guideline increase f 12.20% 7. Table 38: The 2015/16 Average Dmestic Benchmarks Dmestic Inclining Blck Tariffs ( IBTs) Blck 1 Blck 2 Blck 3 Blck kwh kwh kwh >600 kwh The alternative dmestic IBT benchmarks Dmestic Lw & High Blck 1 The 2014/15 benchmarks were increased by 6.80%. Blck 2 The 2014/15 benchmarks were increased by the municipal tariff guideline increase f 12.20%. Table 39: Average Dmestic Lw (cmprises energy charge nly) Dmestic Inclining Blck Tariffs (IBTs) Blck 1 Blck kwh kwh The 6.3% is the current CPI as indicated in the MTBPS The secnd blck has been increased by 7.3% t align it t the Eskm Hmelight tariffs. 7 The 12.20% is in accrdance with the municipal tariff guideline increase fr the 2015/16 financial year. Page 16 f 22

17 Table 40: Dmestic High (cmprises energy charge and basic charge) Dmestic Inclining Blck Tariffs (IBTs) Blck 1 Blck kwh > 350kWh Basic Charge (R/mnth) The dmestic Nn-IBT tariffs This tariff is develped fr thse municipalities that are unable t implement IBTs. The 2014/15 dmestic nn-ibt tariff benchmarks were increased by the municipal tariff guideline increase f 12.20%. Table 41: Average Dmestic Nn-IBT Benchmarks Dmestic Nn - IBT Dmestic Lw Dmestic High 400 kwh 800 kwh Cmmercial Benchmarks Cmmercial Single Phase benchmarks The cmmercial single phase tariffs fr the 2014/15 benchmark were increased by the municipal tariff guideline increase f 12.20%. Cmmercial Prepaid Table 42: Average Benchmarks fr Cmmercial Prepaid Single Phase Cmmercial Prepaid (2000 kwh) Page 17 f 22

18 Cmmercial Lw Table 43: Average benchmark fr Cmmercial Lw Single Phase Cmmercial Medium Cmmercial Lw (2000 kwh) Table 44: Average benchmark fr Cmmercial Medium Cmmercial Medium (3000 kwh) Cmmercial High Table 45: Average benchmark fr Cmmercial - High Cmmercial High (7000 kwh) Agriculture Benchmarks The agriculture tariffs fr the 2014/15 benchmarks were increased by the municipal tariff guideline increase f 12.20%. Agriculture Lw Table 46: Average benchmark fr Agriculture Lw Agriculture Lw (2000 kwh) Agriculture Medium Table 47: Average benchmark fr Agriculture Medium Agriculture Medium (3000 kwh) Page 18 f 22

19 Agriculture High Table 48: Average benchmark fr Agriculture High Agriculture High (7000 kwh) Industrial Benchmark The industrial tariffs fr the 2014/15 benchmarks were increased by the municipal tariff guideline increase f 12.20%. Industrial Lw Table 49: Average benchmark fr Industrial Lw Industrial Lw (43800 kwh) Industrial Medium Table 50: Average benchmark fr Industrial Medium Industrial Medium ( kwh) Industrial High Table 51: Average benchmark fr Industrial High Industrial - High ( kwh) Industrial Time-f-Use The benchmarks fr the municipalities that buy at Eskm s Nightsave and Megaflex tariff have been adjusted by allwing a maximum f 20%. Page 19 f 22

20 Table 52: Average benchmarks fr Industrial TOU Industrial Industrial (Based n Eskm s Nightsave) (Based n Eskm s Megaflex)) kwh kwh THE NEW BENCHMARKS 23. NERSA has develped new benchmarks fr the three-phase cmmercial tariffs, hliday hmes, churches, schls, halls, clinics, ld age hmes and similar supplies. A frmula tgether with Eskm s respective rates were used t determine average cnsumptins and benchmark levels. 24. The frmula fr calculating the average cnsumptin: Average Cnsumptin = Lad Factr X Peak Demand / Number f Days X 24 Hurs 25. Cmmercial Prepaid and Cnventinal Three-Phase: When develping the cmmercial three phase prepaid and cnventinal Lw, Medium and High the average cnsumptin levels f 5500 kwh, kwh & kwh per mnth were used respectively. Eskm s Business rates 1, 2 and 3 and the frmula referred t abve were cnsidered. 26. Hliday Hmes Single and Three-Phase: The benchmarks will be cmparable t Eskm s Hme pwer Standard tariff. 27. Churches, schls, halls, clinics, ld age hmes r similar supplies: The benchmark fr churches, schls, halls, clinics, ld age hmes r similar supplies have similar cnsumptin levels t cmmercial and dmestic custmers, therefre, existing benchmarks fr cmmercial and dmestic custmers will be adpted fr these custmers. 28. The cmmercial Three-Phase tariffs have been cmpared t the Eskm s Business rate tariffs as fllws: The average tariff fr cmmercial three phase prepaid tariff has been cmpared t the cmmercial single phase prepaid benchmark as utlined in Table 53 belw: Page 20 f 22

21 28.1 Cmmercial Prepaid - Three Phase Table 53: Average Benchmarks fr Cmmercial Prepaid Three-Phase Cmmercial Prepaid (5500 kwh) Cmmercial Cnventinal Three Phase Cmmercial Cnventinal Three-Phase Lw The average tariff f Eskm s Business rate 1 (i.e. 104) has been increased by the municipal tariff guideline f 12.20% in rder t determine the cmmercial lw three-phase benchmark as utlined in Table 54 belw. Table 54: Average benchmark fr Cmmercial Lw Three-Phase Cmmercial Lw (5500 kwh) Cmmercial Cnventinal Three-Phase Medium The average tariff f Eskm s Business rate 2 (i.e. 99) has been increased by the municipal tariff guideline f 12.20% in rder t determine the cmmercial medium three phase benchmark as utlined in Table 55 belw. Table 55: Average benchmark fr Cmmercial Medium Three-Phase Cmmercial-Medium (11500 kwh) Cmmercial Cnventinal Three-Phase High The average tariff f Eskm s Business rate 3 (i.e. 97) has been increased by adding the municipal tariff guideline f 12.20% in rder t determine the cmmercial high three-phase benchmark as utlined in Table 56 belw. Table 56: Average benchmark fr Cmmercial High Cmmercial (22000 kwh) Page 21 f 22

22 The develpment f Financial Benchmarks 29. The table belw indicates the weights f the financial benchmarks fr the 2015/16 financial year. The municipalities that perate within these benchmarks are cnsidered t run an efficient electricity business. Table 57: Financial benchmarks Current Benchmarks Revised Benchmarks Financial Benchmarks (Tlerable Range) 8 Percentage cst Pwer 70% 73% 9 58% - 78% Percentage Surplus 15% 15% 10 10% - 20% System lsses 10% 10% 11 5% - 12% Average Sales Price/Average Purchase Price rati 1:1.60 1:1.58 1:1.58 1:1.62 Repairs Maintenance & Minimum f 6% Debt cllectin rate 95% 29.1 the municipalities are encuraged t imprve their debt cllectin rate, as this will assist them in cllecting revenue that will enable them t be efficient and effective, as well as sustainable the average sales price/average purchase price rati has been reduced frm 1:1:60 t 1:1:58 t gradually align the municipal increases t thse f Eskm. CONCLUSION : 30. On the cnspectus f the facts and evidence presented t the Energy Regulatr, the determinatin f the municipal tariff benchmarks fr the 2015/16 financial year cmplies with the requirements f the Natinal Energy Regulatr Act, 2004 (Act N. 40 f 2006) and the Electricity Regulatin Act, 2006 (Act N. 4 f 2006). It is thus apprpriate t make the decisin set ut abve. 8 The tlerable ranges are NERSA s allwable ranges. 9 In accrdance with the municipal cst structure as indicated in the municipal tariff guideline cnsultatin paper. 10 The applicable financial benchmark fr municipalities. 11 The applicable technical benchmark fr municipalities. Page 22 f 22