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EMNAMBITHI/LADYSMITH MUNICIPALITY MOTIVATION FOR AN INCREASE IN TARIFF FOR 22.38% PRESENTED TO NERSA ON 09 JUNE 2011
EMNAMBITHI/LADYSMITH MUNICIPALITY
MOTIVATION FOR AN INCREASE IN TARIFF FOR 22.38%
PRESENTED TO NERSA ON 09 JUNE 2011
EMNAMBITHI/LADYSMITH MUNICIPALITY
MOTIVATION FOR AN INCREASE IN TARIFF FOR 22.38%
PRESENTED TO NERSA ON 09 JUNE 2011
PRESNETED BYMr S Mathew, Executive Manager
Mrs. R Sompersad, Asst Manager (Finance)Mr P Ramsunder, Asst Manager (Electricity)
INTRODUCTION
Emnambithi/Ladysmith local municipality in KZN
under uThukela DM.
A nodal point in the Western Inland development
corridor along N3 highway identified by the Kwazulu
Natal Provincial Growth and Development strategy.
Strategically positioned to attract investment.
Increase in tariff 22.38% for 2011-12
No structural change in tariff
GEOGRAPHIC LOCATION
CUSTOMER AND LOAD INFORMATION
Domestic Prepaid – 10126
Domestic Credit meter - 7800
Business/Commercial - 1193
Industrial – 85
NMD Ladysmith - 60MVA
NMD Colenso - 1.8MVA
TARIFF TYPES 2011/2012
Scale 1 : All Domestic/Prepaid and Life Line Supply
Scale 2: Domestic supply Credit metering
Domestic Supply Prepayment
Scale 3: Businesses Credit and Prepaid
Scale 4: Medium Businesses and Industrial Premises –Credit meters and TOU tariff
Scale 5: Large Businesses and Industrial Premises
Credit meters and TOU tariff
HISTORICAL TARIFF INCREASES
BUDGET 2011/2012Electricity
2010/2011 2010/2011 2011/2012 2012/2013
budget Actual Budget budget
Salaries 18,876,074 17,527,028 21,749,503 23,272,090
General Expenses 151,514,585 128,677,962 183,383,355 222,456,705
Repairs and Maintenance 4,147,819 5,739,638 4,304,745 4,475,970
Contribution 5,247,440 5,247,440 2,461,188 2,559,640
Capital Charges 8,139,019 8,139,019 16,319,581 15,221,840
Total Expenditure 187,924,937 165,331,087 228,218,372 267,986,245
Recoveries and Charge outs
Recoveries 5,358,970 5,358,970 10,111,325 10,111,325
Charge outs (11,192,069) (6,253,259) (12,758,697) (12,689,570)
Total Recoveries and charge outs (5,833,099) (894,289) (2,647,372) (2,578,245)
Nett Expenditure 182,091,838 164,436,798 225,571,000 265,408,000
-
Income
Electricity 178,459,164 170,788,994 215,325,707 265,735,820
Surplus/(Deficit) (3,632,674) 6,352,196 (10,245,293) 327,820
Unfunded depreciation 16,319,581
Nett Surplus/(Deficit) 6,074,288
BUDGET INDICATORS
Salary increase : 6.8%
Bulk purchase cost : 77.7%
Bulk Purchase cost increase : 26.71%
REVENUE BY TARIFFREVENUE 20.38% 22.38%
Domestic prepaid R 27,074,854 R 27,627,402
Domestic conventional R 50,593,977 R 51,626,507
Manufacturing/Industrial
LV - Bulk R 17,853,571 R 18,217,930
HV- Bulk R 68,786,319 R 70,190,121
Commercial R 29,020,879 R 29,613,142
Other- Vacant land R 825,507 R 842,354
Total revenue R 194,155,107 R 198,117,456
ADDITIONAL REVENUE REQUIRED
Repairs and maintenance R 3,123,621
Appointment of additional staff R 838,728
Interlinking Jantha and Settler's Switch House R 3,571,330
Percentage for repairs and Maint. and 6.6%
refurbishment
Admin R 27,000
Distribution R 2,984,165
Metering and Services R 1,293,580
Refurbishment of substations R 8,756,500
R 13,061,245
INFRASTRUCTURE UPGRADE AND REFURBISHMENTS
Capacity constraints in the lower CBD and no further
expansion of business will be possible.
The planning and installation of electrical services was
done ± fifty years ago and most of the infrastructure has
exceeded its design life. Revised Master Planning in
progress.
Major industrial and commercial developments in pipeline
for which infrastructure upgrades are needed.
Expansion of an existing major industry with additional
load requirement from 6.5 MVA to 8.5 MVA from July
2011.
Insufficient existing capacity to provide new connections
as well as to sustain current load growth needing
infrastructure upgrades.
CAPITAL PROJECT
A new substation at the lower end of the
CBD has been constructed.
Interconnection of the existing 132 kV
substation to the newly constructed
Settler’s substation.
CAPITAL AND REFURBISHMENT PLAN
– 2011/2012 Newcastle Rd Switch house circuit breakers
Eric Trautman Switch house
Replacement/refurbishment of several 11 kV Circuit Breakers and Ring Main Units
Approximate costs - R8 756 500
Interlinking of Jantha and – R3 571 330.
Settlers substation (Capital)
TOTAL R12 327 830
IBT
Implementation challenges
Poor combined households with single point of supply
unfairly treated.
Sale of prepaid electricity to customers will be confusing
Prepayment customers purchasing for more than one
month or in bulk will pay higher tariff.
Wider consultation and roll out and education needed on
the concept to prevent dissatisfaction.
Cross-subsidization will drive businesses away from
Ladysmith with broader impact on local economy
IBT
Financial challenges
Not adequately staffed to read meters every month.
Customers will demand monthly reading of meters which
the municipality is not able to do at the current state.
Majority of the customers falls under the first three blocks
leading to revenue loss.
Higher end users able to afford other energy sources
leading further revenue loss.
Prepayment vending Third party vending
A convenience fee of 5% on customers
preferring to buy electricity from third party
vendors.
CONCLUSIONMain drivers for increase :
Additional technical manpower to keep the networks
running efficiently (operation and maintenance).
Capital and refurbishment costs mainly due to
ageing infrastructure, theft and vandalism.
Capital infrastructure and maintenance costs
increasing above inflation rates.
THANK YOU
