Public Hearing Presenter: D Matsheketsheke Designation: CFO (act) Date: 9 June 2011

Transcription

1 Public Hearing Presenter: D Matsheketsheke Designation: CFO (act) Date: 9 June 2011 MOE: City Power 1

2 Introduction: Strategic Priorities SERVICE 1. Social transformation (public lighting/ electrification) 2. NRS SHEQ WORLD CLASS ELECTRICITY DISTRIBUTOR PEOPLE 1. Performance Management 2. Customer centric 3. Right people in right places 4. Training & Development 5. Staff Security 6. SHEQ INFRASTRUCTURE 1. Network refurbishment 2. Network development 3. Asset maintenance management 4. Demand-side management 5. Alternative energy sources 6. Infrastructure Security 7. SHEQ 2

3 Introduction: Financial Drivers Revenue Collections Repair & Maintenance Costs Cost of Sales KEY DRIVERS General Expenses Revenues (Volumes/ Tariffs) Financing costs The key drivers of financial performance were used as a basis for analysing primary problem areas as well as identifying and prioritising strategic actions. 3

4 Strategic focus areas 2011/12 Revenue Maximisation Improve meter reading performance Ensure accurate billing on large power users Management of the agency agreement Roll out pre paid metering inline with strategy Obtain unqualified audit Improve Public Lighting performance Human Capital Investment Staff training and development Filling of critical vacancies in line with budget provisions Review business model in line with migration of revenue and customer services functions Improve Asset Management Implement condition monitoring Implement DSM and energy efficiency program 4

5 Proposed programs and activities 2011/12 5 Year Program Delivery / Outcome (to include measurable indicators) 11/12 Approve d 2010/11 R 000 Propose d 2011/12 R 000 % Incr. Propos ed 2012/13 R 000 Propos ed 2012/13 R 000 Implementation of Electrification programme to 95% of formalized households Provide street lighting to formal and informal Areas 98% Maintenance of Public light 4,000 households planned but final target to be determined Movement from 62% to 63% and this converts to public lights 97% Lights maintained 56,212 66, % 65,430 69,029 77, , % 105, ,890 Allocation of Free basic electricity to poor households and those with special needs Provide households that consume up to 500kWh with FBE as per extended social package 174, , % 149, ,000 Reduce total energy losses to 10.58% by 2014 Total losses to reduce down to 1% 135, , % 256, ,000 5

6 Proposed programs and activities 2011/12 Program Project / Activity Delivery / Outcome (to include measurable indicators) Approved 2010/11 R 000 Proposed 2011/12 R 000 % Incr. Propose d 2012/13 R 000 Propose d 2013/14 R 000 Reduce electricity outages by 50% by year 2014 Reduce bulk ( HV )outages - 85 MV) outages Design and implement long terms assets management strategy and plan for energy 277, , % 386, , , , % 375, ,890 Reduce illegal electricity connections Ongoing annual strategic plan to address the challenges on illegal connections with the assistance of SAPS and JMPD 16,998 29, % 38,740 40,871 Develop and implement comprehensive demand side management programme for waste, water and energy services Continue installation of prepaid meters on electricity Enforce by-laws support for installation of ripple relays in hot water geysers in new developments. 6,339 6, % 8,888 10,987 19,663 19, % 28,567 30,138 6

7 Proposed programs and activities 2011/12 Program Project / Activity Delivery / Outcome (to include measurable indicators) Approved 2010/11 R 000 Proposed 2011/12 R 000 % Incr. Proposed 2012/13 R 000 Proposed 2013/14 R 000 Participate in activities that lead up to the establishment of RED 4 Introduce and maintain quality service monitoring system for at least three years that can inform regular stakeholder engagement EDI restructuring has been terminated Develop key performance indicators that are measurable All other support services or departments % 0 0 4,868 8, % 9,500 11, , , % 274, ,784 Total budget (to agree with budget submitted) 1,305,139 1,597, % 1,699,295 1,918,597 7

8 Computation of Bulk Purchases 2011/12 Bulk Purchases GWh Rm c/kwh Eskom 12,952 7, Kelvin Gas Turbines Total 13,839 8,256 The average energy purchase cost is 60c/kWh Volumes vs bulk purchases cost Change in Eskom Tariff Structure Fixed Surcharges 8

9 R'000 Capital Programs: Investments Capital Expenditure (7YRS) 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Previous 2 Fin Yrs 2004/5 2005/6 2006/7 2007/8 2008/9 2009/ /11 Total CAPEX Actual 612, , , ,025 1,034,909 1,063, , ,058 6,020, ,178,084 Financial YRS 2010/11 is year-to-date

10 R'000 Capital Programs: 6 year expenditure per category 450, , , , , , , ,000 50, /6 2006/7 2007/8 2008/9 2009/ /11 Electrification 10,112 43,992 66,023 60,553 74, ,217 40,423 Service Connection 66,135 80, , , , ,266 45,192 Upgrade of Electrical Network 225, , , , ,861 55,940 46,989 Township and Network Development 5,234 8,755 34,362 12,093 35,283 13,044 3,293 Meters 27,984 23,160 50,629 85,706 68,749 26,650 10,159 Public Lighting 57,651 77,762 64,796 55,238 68,578 78,096 37,998 Bulk Infrastructure 41, , , , , , ,853 10

11 Benefits The following benefits have being realized over the past 4 to 5 years, in areas where investments have been made: - Over customers have been added into the electrical network infrastructure in response to new township developments and sub -division applications (combination of customers < 56kVA and >56kVA) - Over previously disadvantaged (RDP houses) have been electrified, in response to the universal access to electricity targets (in partnership with DoE) - Significant reduction in unplanned outages for both HV and MV levels - Additional infrastructure has been constructed and commissioned to cater for short to medium developments - Significant investment has been made into SAP, SCADA, Protection, GIS, network data improvement and work management solution (WMS) - Additional 80MW of generation has been introduced into the network through refurbishment of GAS turbines in response to load shedding threat - Through our Expanded Public Works Program,(EPWP) City Power has created over jobs in areas where we execute our projects 11

12 12 Capital Programs: Bulk Infrastructure (CAPEX vs. Outages)

13 Capital Program: Expected Growth The current City Power Demand has reached 3.6 GW in 2010, The predicted future demand (excluding efficiency improvements and power saving strategies) will be in excess of 5.4 GW in 2030, The average transmission infrastructure has reached 63 % of accepted useful life, City Power has over the past years invested approximately R6.02bn on the reinforcement, expansion and rehabilitation of the network infrastructure 13

14 Capital Programs: Forecasted Growth

15 Capital programs: 20 year plan Years Total R x bn 4,00 3,71 4,21 4,13 3,51 1,69 1,78 1,18 0, ,77 R26.77 bn R mil City Power Proposed CAPEX City Power Capex Distribution 1,600 1,400 1,200 1, Prospect Princess Lulamisa Kelvin Fordsburg Etna Delta Craighall Dx Refurb 35% Dx Exp 28% Tx Exp 23% Tx Refurb 14% Tx Exp Tx Refurb Dx Exp Dx Refurb 15

16 Summary Capital Programs: Table below highlights the total funding requirements over the next three (3) years R 1,3bn, proposed budget is based on multiple year (existing) projects already started and new critical projects to commence in 2011/12 financial year The proposed budgets takes into consideration the following sources of funding: CoJ Funding (i.e. Loans) and other sources of funding (i.e. DSM levy, Grants and Contributions) Program/ Project Proposed 2010/11 R 000 Proposed 2011/12 R 000 Estimate 2012/13 R 000 Estimate 2013/14 R 000 Total Funding requirements Sub total existing projects (CoJ funding) 295, ,100 Sub total existing projects (Other Sources of Funding) 140, ,300 Sub total new projects (CoJ funding) 287, ,305 Sub total new projects (Other Sources of funding) 358, ,695 Grand Total: Funding Requirements 1,081,581 1,278,400 4,130,912 3,507,440 16

17 Capital programs/projects for 2010/11 1. Summary of the Capital Programs/Projects for 2011/12 within indicatives and the impact on OPEX 1.1. Based on the Business Plan and CIMS indicative budgets for 2011/12 in (R 000): CoJ Loans R m City Power own funding R250 m Other funding R 443,1 m Total R1,278.4m Programme/Project Total Funding requirements Proposed 2011/12 R'000 Current 20010/11 R'000 Increase/ Decrease R'000 Subtotal projects (CoJ funding plus Own Funds) R 835,300 R 799,000 R 36,300 Subtotal projects (Other Sources of Funding) R 443,100 R 282,581 R 160,519 Grand Total: Funding requirements R 1,278,400 R 1,081,581 R 196,819 17

18 Capital programs: Current Backlog Description (R'000) 2011/12: Committed and Critical Needs R 1,278, /12: Essential needs R 2,933,059 Total Requirements R 4,211, /12 Indicative R 1,139, /12 Backlog R 3,071,544 18

19 Revenue Maximization Initiatives 2010/11 Customer type Meter type Quantity Nature of challenges Proposed solution Cost Estimates Conventional Access to property and Replace all conventional meters R 110,742, meters with pre-paid meters Domestic Pre-paid 4786 Faulty or damaged meters Replace all meters with new pre-paid meters R 9,356,720 Large Power Users (LPU) Demand 4038 Domestic and LPU Access to property and meters. Incorrect information. No meters installed. AMR 3031 Faulty or damaged meters No locks. Private locks. Metering Kiosk 1575 Tampering and vandalism No protective structures Protective installed. Structures 2470 Tampering and vandalism. Replace all meters with AMR meters Replace all meters with new AMR meters Replace all locks with City Power orange locks Install protective structures R 20,007,900 R 15,003,450 R 396,875 R 3,858,500 TOTAL R159,365,945 19

20 Some of the Key Capital Projects Program Area Description 2010/11 Rm 2011/12 Rm 2012/13 Rm Intake Points Sebenza Substation To strengthen the north eastern supply of the city and to provide additional capacity to allow development especially in the Modderfontein area and eastern side of the city Overhead Line Upgrade Orlando - Hursthill Line Line upgrade to strengthen supply to the Hursthill and Aukland Park area and to provide for additional power requirement in these areas. 60 Kelvin - Greswold Line upgrade to strengthen supply to the Greswold and surrounding area and to provide for additional power requirement in these areas. 75 Lufhereng Supply Upgrade the existing Etna supply to cater for provision of supply to Lufhereng development Bulk Electrification Alexandra Upgrade of Alexandra Substation to strengthen the existing supply and cater for additional supply in Alexandra and surrounding Electrification Alexandra Lufhereng Normalisation of existing supply and provion of additional connections with new metering Provision of new connections to new houses 59, ,360 Total 213,

21 Some of the Key Capital Projects Cont Program Area Description 2011/12 Rm 2012/13 Rm DSM Total ALL ALL Roll out of Smart Metering (1c/kWh recovery) including AMI Telecommunication Infrastructure SWH Ripple Controls Energy Efficiency Programs There will be an impact on Opex: Telecommunication, Salaries, Third party vendor commission, Repairs & Maintenance, etc 21

22 Key challenges Finding a balance between satisfying the ever increasing development requirements (Additional capacity for new township development and rezoning application) and energy savings/reduction requirements Continue to reduce the average age of installed equipment to an acceptable technical useful lives (Refurbishment Programs) Meeting electrification targets by 2012 /14 Continue to build electricity infrastructure to support major projects. Roll out of DSM/ Load management and introduction of alternative energy sources Meeting the Mayoral priorities i.e. Inner City, alignment with the City GDS Billing and revenue collection Public lighting performance Technical and non technical losses Theft and vandalism Funding (Ability to raise additional funds) Network automation through smart technologies Skill shortages 22

23 Measures to improve financial sustainability Issues Revenue Maximisation Alternative sources of revenue Cost saving initiatives City Power Interventions Improve meter reading performance Ensure accurate billing on large power users Management of the agency agreement Roll out pre paid metering inline with strategy Use existing infrastructure to generate revenue Improve operational efficiencies Up-skill internal staff & minimize usage of contractors 23

24 24 THANK YOU