Official Newsletter of the National Energy Regulator of South Africa Volume VII, Edition I, 2013 NEWS Contents 1 Editor’s Note Hitting the ground running in 2013 2 From the desk of the CEO Ready for 2013’s challenges INSIDE OUT, reflecting our outward-bound activities... 3 Public hearings NERSA holds public hearings on MYPD 3 6 Review of MYPD Methodology MYPD Methodology undergoes obligatory revision 7 Rules and procedure Presenting at public hearings – written or oral submissions 8 Conferences Celebrating ten years of regional energy regulation 10 Public hearings NERSA approves 19 licences for window 2 of the REIPP Procurement Programme 11 Capacity Building NERSA hosts Botswana and Zimbabwe Energy Regulator delegates 12 Exhibition NERSA participated in Department of Energy electricity switch-on function in Emjindini village in Barberton OUTSIDE IN, a glimpse at our internal activities… 13 Employees Event NERSA celebrates its achievements in 2012 14 HR Issues Appearance is only skin deep 15 Calendar of Events Programme for February – March 2013
Transcript
Official Newsletter of the National Energy Regulator of South Africa Volume VII, Edition I, 2013
NEWSContents
1 Editor’s NoteHitting the ground running in 2013
2 From the desk of the CEO Ready for 2013’s challenges
3 Public hearingsNERSA holds public hearings on MYPD 3
6 Review of MYPD Methodology MYPD Methodology undergoes obligatory revision
7 Rules and procedure Presenting at public hearings – written or oral submissions
8 ConferencesCelebrating ten years of regional energy regulation
10 Public hearings NERSA approves 19 licences for window 2 of the REIPP Procurement Programme
11 Capacity BuildingNERSA hosts Botswana and Zimbabwe Energy Regulator delegates
12 Exhibition NERSA participated in Department of Energy electricity switch-on function in Emjindini village in Barberton
OUTSIDE IN,a glimpse at our internal activities…
13 Employees Event NERSA celebrates its achievements in 2012
14 HR IssuesAppearance is only skin deep
15 Calendar of Events Programme for February – March 2013
Volume VII, Edition I, 20131
Editor’s NoteHitting the ground running in 2013– focusing on Eskom’s MYPD3 and other projects
Mr Charles Hlebela Mr Charles Hlebela
Newsletter contributors:
Our thanks goes to:
Lehuma Masike
Priya Singh
Lebohang Makekeng
Wanda Langenhoven
Faizal Karani
Tamai Hore
Welcome to the first edition of NERSA News for 2013. The last month of 2012 was a very busy one for the Energy Regulator and we have kept up the pace in the new year, with many projects already well underway.
NERSA approved the revised Multi-Year Price Determination (MYPD) Methodology on 29 November 2012. This Methodology was developed for the regulation of Eskom’s required revenue and forms the basis on which the Energy Regulator will evaluate applications such as Eskom’s MYPD3. We hope that the reviewed MYPD Methodology will set an even higher standard in order to fairly analyse Eskom’s price increase applications.
One of the key projects for early 2013 is Eskom’s MYPD3 application. NERSA has recently completed the public hearings on this application, which entails a five-year price determination with an average yearly increase of 16% for the period 2013/14 to
2017/18. The hearings have raised heated debates among various stakeholders, and NERSA is now in the process of considering the comments received and analysing the Eskom application to the benefit of all concerned. The Energy Regulator will announce its decision on 28 February 2013.
Recently NERSA approved 19 bidders in the second bidding window of the Renewable Energy Independent Power Producer (RE IPP) Procurement Programme. The programme aims to procure 3,725 MW from independent power producers by 2016 through five bidding windows.
In the Outside In section, we report on the NERSA year-end function, which took place in November 2012. We also have a very interesting article on how to avoid discrimination when interviewing people for a position in your department.
As always, your input to and feedback on NERSA News is much appreciated. Send an email to Poppie Mahlangu ([email protected]) with your comments or to contribute to the next issue.
Wishing you all the best for the year ahead
Charles Hlebela
Visit our website at www.nersa.org.za for updates on our activities, public hearings and events calendar.
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After a year which presented numerous challenges and great achievements, the National Energy Regulator is looking forward to the many opportunities 2013 might bring. Halfway through the current financial year, we can look back with pride at our achievements to date. An analysis of our key performance indicators (KPIs) showed that we have met 80% of our targets, or 59 of the 74 KPIs. I urge our NERSA employees to ensure that all these activities are implemented as planned.
In August 2012, government launched the first National Development Plan for South Africa up to 2030. In this plan, the role of key sector regulators in the country’s economic infrastructure was analysed, particularly the role of energy, water, transport and ICT regulators. The plan envisages a 2030 energy sector that promotes economic growth and development, social equity and environmental sustainability. It also envisages that more than 90% of the population should enjoy access to grid-connected or off-grid electricity.
In order to achieve this vision, NERSA will have to improve its performance and build on its capacity in the next few years to ensure better regulation of price, supply and quality energy products. We are ready to take our first strides towards achieving these goals and hence contribute to our nation’s socio-economic development.
Electricity DivisionOne of the first projects for 2013 is the processing of Eskom’s Third Multi-
Year Price Determination (MYPD3) application, which is due for finalisation in February. Eskom is proposing a five-year determination with an average yearly increase of 16%.
The application was published on the NERSA website on 22 October 2012 for public and stakeholder comment, after which public hearings were held in January 2013 for further input. The aim of these hearings was to broaden public consultation and accessibility to the application process.
After considering the feedback received through both written comments and the public hearings, the Energy Regulator will announce its decision on Eskom’s MYPD3 application on 28 February 2012.
Furthermore, we revised the MYPD Methodology in November 2012, necessitated by the introduction of the Electricity Pricing Policy and the revision of some of the rules governing the Methodology. The revised Methodology was approved following due public engagement processes.
Petroleum Pipelines DivisionThe Energy Regulator recently published an invitation to comment on the proposed changes to its Tariff Methodology for the setting of petroleum pipeline tariffs. All stakeholders as well as members of the public are invited to review the proposed changes and to submit their written comments by no later than 14 February 2013.
We have received several tariff applications for petroleum loading storage facilities. A public hearing was held on 11 January to discuss these tariff applications submitted by Single Buoy Mooring, Hammertone Fuels and BP Drakensberg. NERSA has also received BP Southern Africa’s 2012 to 2014 multi-year storage tariff application for a number of its facilities, and stakeholders and the public were invited to submit their written comments by 20 January 2013.
Piped-Gas DivisionIn December 2012, the Piped-Gas Subcommittee approved the schedule for maximum price applications submitted by Sasol Gas, Novo, VGN and Spring Lights Gas, as well as the Sasol Gas transmission tariff application.
In essence, these applications conclude, for the first time, the implementation of maximum prices for all customer classes and the Tariff Guidelines. The Energy Regulator will approve the final schedules on 26 March 2013.
It is clear that many of our projects for the coming year are already well under way, and I believe that we are ready to face the challenges that 2013 might bring through the continued hard work and dedication of each NERSA employee.
Warm regards
Phindile NzimandeCEO
From the desk of the CEOReady for 2013’s challenges– and achieving our set goals
Ms Phindile Nzimande
Volume VII, Edition I, 20133
INSIDE, REFLECTING OUTWARDS ...In the front section of our quarterly newsletter we provide readers with an ‘inside, reflecting outwards’ perspective of NERSA’s challenges and achievements, as well as our work-in-hand and the status of our regulatory activities as they affect our stakeholdes and the public at large.
Public hearingsNERSA holds public hearings on MYPD 3In January 2013, NERSA held various public hearings across the country to obtain public and stakeholder input on Eskom’s proposed revenue application, also referred to as the Multi-Year Price Determination (MYPD), for the period 2013/14 to 2017/18 (MYPD3).
The MYPD was first introduced in 2006 and runs concurrently with Eskom’s financial years. MYPD1 was introduced for the period 01 April 2006 to 31 March 2009, while MYPD2 was implemented for the period 01 April 2010 to 31 March 2013.
The MYPD is cost-of-service-based and incentivises cost savings, efficient procurement, as well as service quality. In contrast to MYPD1 and MYPD2, each of which spanned three years, Eskom has applied for a five-year price determination in its MYPD3, with an average yearly increase of 16%.
NERSA received Eskom’s application on 18 October 2012 and followed due process in considering the application. The application was first published for written comments on NERSA’s website on 22 October 2012. Public hearings were
held from 15 to 31 January 2013 in order to solicit further public and stakeholder inputs and oral representations. Public hearings are in line with its commitment to being transparent in its decision-making process. This is aimed at broadening public consultation.
After considering the inputs/comments received through written submission, public hearings and analysis of the Eskom application, the Energy Regulator will announce its decision on the MYPD3 application on 28 February 2013.
Public hearing – Cape Town
The Official Newsletter of the National Energy Regulator of South Africa
Public hearing – Nelspruit
Public hearing – Potchefstroom
Public hearing – Bloemfontein
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Volume VII, Edition I, 20135
Public hearing – Port Elizabeth
Community of Durban preparing to hand over a memorandum
Public hearing – Midrand
6The Official Newsletter of the National Energy Regulator of South Africa
Review of the MYPD MethodologyMYPD Methodology undergoes obligatory revisionThe Multi-Year Price Determination (MYPD) Methodology, developed for the regulation of Eskom’s required revenue, was recently revised by the Energy Regulator. The Methodology forms the basis on which the Energy Regulator evaluates applications such as Eskom’s MYPD3 price increase application.
The Energy Regulator is mandated to review the MYPD Methodology as and when required through the National Energy Regulator Act, 2004 (Act No. 40 of 2004) and the Electricity Regulation Act, 2006 (Act No. 4 of 2006) in order to ensure that it reflects the current regulatory circumstances, or any special circumstances which may arise and which could necessitate change.
The current revision of the MYPD Methodology was required as a result of the introduction of the Electricity Pricing
Policy (Electricity Pricing Policy GN 1398 of 19 December 2008) by the Department of Energy, as well as the revision of the rules on the primary energy cost variances, capital expenditure cost variances, valuation of the regulatory asset base and triggers for a re-opener as approved by NERSA on 26 March 2009.
The Energy Regulator published a stakeholder consultation paper on the proposed review on 14 October 2011, which was republished on 04 September 2012 for additional comment. Written comments were received from 14 stakeholders, broaching the following key issues:
• Weighted Average Cost of Capital (WACC);
• Regulatory Asset Base (RAB) and Capital Expenditure (CAPEX);
• Operating Expenditure (OPEX);
• Primary Energy (PE); and
• Purchases from Independent Power Producers (IPPs).
These comments were collated and considered in the analysis of the MYPD Methodology. Furthermore, NERSA held a public hearing on 01 November 2012, through which interested and affected parties could voice their thoughts on the issues raised in the published consultation paper.
The Energy Regulator approved the revised Methodology on 29 November 2012. NERSA hopes that the reviewed MYPD Methodology will set an even higher standard in order to analyse Eskom’s price increase applications in a just manner to the benefit of all concerned.
Public hearing – Polokwane
Volume VII, Edition I, 20137
Rules and proceduresPresenting at public hearings – written or oral submissions
In this article in the series about NERSA’s rules and procedures for public meetings and hearings, we look at:
• Types of representation; and
• Requirements for oral presentations.
Representations at public hearings by members of the public are integral to the transparency and participative nature of such hearings.
When publishing a notice for a public hearing, NERSA is required, amongst other things, to invite members of the public who have an interest in the hearing and who are willing to act as representatives, to register their interest with the Energy Regulator. Representations can be made either in writing or orally at the public hearing.
A person who wishes to make an oral representation at the public hearing must indicate the following:
• Their intention to make an oral representation;
• The amount of time required for the representation; and
• The language preference for the representation.
In exceptional circumstances, an oral representation can be made through
a two-way video link, on condition that images are clearly visible and that the sound is audible to those present at the hearing.
Where written submissions or representations are allowed, the Energy Regulator may state the date by which such submissions or representations must be received, and may refuse any submission or representation received after the closing date.
8The Official Newsletter of the National Energy Regulator of South Africa
From 5–9 November 2012, the Regional Electricity Regulators Association of Southern Africa (RERA) celebrated ten years in Windhoek, Namibia. The theme of the conference was ‘Fostering electricity regulation in Southern Africa’.
RERA was established under the auspices of the Southern African Development Community (SADC) in September 2002, underpinned by various SADC policies such as the Protocol on Energy (1996), the Energy Co-operation Policy and Strategy (1996), the Energy Sector Action Plan (1997) and the Energy Activity Plan (2000).
Through RERA, the region’s energy regulators pursue the broader initiatives of the New Partnership for Africa’s Development (NEPAD) and the African Energy Commission, and its activities are geared towards realising SADC’s socio-economic goals.
During the conference, several relevant topics were addressed, including the recently approved SADC Regional Infrastructure Development Master Plan (RIDMP), power supply and demand in the region, power investment challenges and opportunities, consumer protection
and increasing energy access, among others.
In her welcoming address, NERSA’s CEO and RERA Chairperson, Ms Phindile Nzimande, discussed RERA’s strategic objectives for 2013–2017, which were reduced from ten to a more streamlined four strategic objectives in the new strategic plan. These objectives are:
• Developing energy regulatory frameworks, instruments and methods to promote regional integration and harmonisation.
• Developing the capacity of regulators
• Promoting universal access to modern/clean energy services.
• Positioning RERA to proactively influence developments in the energy sector within southern Africa.
ConferencesCelebrating ten years of regional energy regulation
Delegates at the RERA 10th Year Anniversary Conference
NERSA’s CEO and RERA Chairperson, Ms Phindile Nzimande
Volume VII, Edition I, 2013
Ms Nzimande stated that these objectives will assist in elaborating regional programmes and projects, and urged members to continue to participate in RERA-related activities. Furthermore, Ms Nzimande expressed her gratitude towards the Association’s co-operating partners, USAID, and the Southern African Trade Hub for their support, especially in engaging a facilitator to assist in developing the RERA Strategic Plan 2013–2017.
With the RERA Final Strategic Plan 2013–2017 approaching finalisation, NERSA is looking forward to incorporating these regional objectives into its long-term planning in order to ensure more effective and efficient energy regulation in South Africa and the region in general.
Ms Phindile Nzimande (fifth from the left) and distinguished delegates attending the
conference
From left: Dr Rod Crompton (NERSA Regulator for Petroleum-pipelines), Ms Phindile Nzimande (NERSA CEO and Chairperson of RERA),
Mr Willem Isaacs (Deputy Minister of Mines and Energy of Namibia) and Mr Oupa Komane (NERSA Regulator)
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The United Nations declared 2012 the ‘Year of Sustainable Energy Access for All’ and NERSA and the Department of Energy (DoE) made a concerted effort during this period to realise strategies aimed at eliminating long-term energy deficiency in South Africa.
The South African Government acknowledges that the country faces many challenges due to energy constraints, and that the procurement of alternative energy resources from the private sector is fundamental to new energy generation capacity. In August 2011, in line with its Integrated Resource Plan (2011), which takes into account the different energy mixes necessary to ensure stability and security of electricity supply, the DoE published its Request for Proposal (RFP) for the procurement of renewable energy up to 2016.
The Renewable Energy Independent Power Producer (RE IPP) Procurement Programme aims to procure 3,725 MW from independent power producers by 2016. This Programme will be implemented through five bidding windows and is estimated to attract project proposals to the value of R100 billion. NERSA issued licences to 28 successful bidders for Window 1 in June 2012. These bidders are expected to start generating power by 2015 (26 to start by mid-2014 and the last two by June 2015).
79 bids were received for Window 2, of which 51 met the qualification criteria as set out by the RFP. However, since limited Megawatts were provided for in this window, only 19 bidders were selected.
In order to issue electricity generation licences to these applicants, NERSA held various public hearings regarding the 19 successful Window 2 bidders. These bidders hailed from the wind, solar photovoltaic, concentrated solar thermal power and small hydropower sectors. After analysing the available information, public comments and licence applications to ensure compliance with the Electricity Regulation Act, 2006 (Act No. 4 of 2006), and the National Energy Regulation Act, 2004 (Act No. 40 of 2004), the Energy Regulator approved all 19 applications.
Most of these licensees will be establishing community trusts, which will be monitored by the DoE. Through this commitment to the community, the Programme not only ensures the sustainable use of natural resources, but also makes a socio-economic contribution to our country.
To date, the overall bidding process has attracted bids from international developers and funders and has been hailed as highly successful. Through this Programme, NERSA and the DoE hopes to meet the growing demand for access to modern energy sources by all sectors of the population, and to utilise the country’s bountiful natural resources in an environmentally friendly manner.
The full list of preferred bidders can be viewed at http://www.energy.gov.za/IPP/Renewables_IPP_ProcurementProgram_WindowTwoAnnouncement_21May 2012.pptx.
Public hearingsNERSA approves 19 licences for window 2 of the REIPP Procurement Programme
IPP Window 2 public hearing
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In an effort to build and maintain relationships with energy regulators in neighbouring countries, NERSA was invited by the Department of Energy to co-host the delegation from the Ministry of Minerals, Energy and Water Resources (MMEWR) in Botswana and the Zimbabwe Energy Regulatory Authority (ZERA) to discuss issues pertaining to energy regulation in their respective countries and South Africa. The hosting of the delegation is based on the Memorandum of Understanding (MOU) signed between the Government of the Republic of South Africa and the Government of the Republic of Botswana on co-operation in the field of energy.
The MMEWR delegates visited NERSA on 25 and 26 September 2012 and presented an informative overview of the progress made to date in the establishment of the Botswana Energy and Water Regulatory Authority. NERSA and the Department of Energy followed with an overview of the energy sector in South Africa, the policy position and
development, and the regulation of the sector.
On the second day of the workshop, the delegates took a more in-depth look at the legislation used in the regulation of the energy sector, with an overview of NERSA and its mandate and of each energy sub-sector, namely electricity, petroleum pipelines and piped-gas. The DoE shared details of the current policy position and policy developments for the energy sector. This was followed by a discussion on the further future collaboration for both countries.
On 29 to 30 November 2012, the Zimbabwe Energy Regulatory Authority (ZERA) Board Members visited NERSA. They attended the 82nd Energy Regulator Meeting as observers. The delegation was welcomed by NERSA CEO, Ms Phindile Nzimande, and Acting Chairperson, Ms Khomotho Mthimunye, as well as other regulator members present at the meeting. NERSA gave its Zimbabwean visitors an overview of its structure,
discussing its governance structure, the management of regulatory bodies, performance management and the creation of a conducive environment for attracting private and public investments, among others. This was followed by a presentation by the Regional Electricity Regulators’ Association of Southern Africa’s Executive Secretary, Mr Elijah Sichone. On 30 November, NERSA senior management shared their presentations on NERSA’s divisions and units with the ZERA members, and also addressed regulatory questions raised on the South African energy sector. The visit ended with the invitation of the ZERA members to the NERSA year-end function.
NERSA believes that interactions such as these contribute to the capacity building of regulators within the region, which will in turn contribute to the development of common energy frameworks within the regulatory structures that will facilitate cross-border trade of energy with Southern African Development Community (SADC) countries.
Capacity Building NERSA hosts Botswana and Zimbabwe Energy Regulator delegates
12The Official Newsletter of the National Energy Regulator of South Africa
Exhibition NERSA participated in Department of Energy electricity switch-on function in Emjindini village in BarbertonOn 26 October, the Deputy Minister of Energy, Ms Barbara Thompson, and the Mayor of the Emjindini Municipality hosted the electricity switch-on function for Emjindini village in Barberton, as part of the Department’s Public Engagement Programme.
NERSA was invited to partake in the event since such events serve as a platform for the Department and relevant stakeholders to listen to the challenges faced by local communities, while also sensitising these communities to the energy programmes and projects aimed at improving the socio-economic wellbeing of all South Africans. The Programme forms part of Government’s strategy to engage communities at a local level.
Deputy Minister of Energy, Ms Barbara Thompson, delivering her speech at Emjindini
Community of Emjindini in Barberton during the electricity switch-on event
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After a year of great achievements in a challenging environment, NERSA personnel celebrated these accomplishments at the Energy Regulator’s year-end function, held at Sorex Estate in Centurion on 30 November 2012. The employees and their spouses where joined by honorary guests, Mr Canada Malunga, Chairman of the Zimbabwe Energy Regulatory Authority Board, and his fellow board members.
Guests were entertained by the well-known DJ and MC, Ashifashabba, as well as sassy shebeen queen Mam’Spinza and her charismatic team of actors, actresses and dancers who put on a slick show of township life and culture, with
1950s jazz, township songs and dance performances.
In her welcoming address, NERSA’s CEO, Ms Phindile Nzimande, mentioned that the Energy Regulator conducted a critical review of its key performance indicators (KPIs) after the first two quarters of the 2012/13 financial year, taking into account a number of critical questions:
1. How adequately had the 2012/13 Annual Performance Plan been implemented by the end of the second quarter?
2. Was the original Annual Performance Plan too ambitious?
3. Has the NERSA business environment changed?
The review showed that the Energy Regulator had met 80% of its targets, in other words 59 of the 74 KPIs. Of those not met by the end of the second quarter, 5% were due to external dependencies.
One of the major projects taking precedence at the moment is the processing of Eskom’s application for the Third Multi-Year Price Determination (MYPD3). Eskom has applied for an average annual increase of 16% between 2013/14 and 2017/18, and a five-year determination, in contrast to the three years for MYPD1 and 2. A final decision will be made in February 2013.
NERSA also continued to play an active role in a regional and continental context by participating in the activities of the
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OUTSIDE, LOOkING IN ...The second section of our quarterly newsletter provides readers with an ‘outside in’ perspective of NERSA’s people and their activities during the previous quarter and how NERSA’s values and goals drive its vision of being a world-class energy regulator.
Employees EventNERSA celebrates its achievements in 2012
NERSA employees joining in the fun at the year-end function
African Forum of Utility Regulators (AFUR) and the Regional Electricity Regulators’ Association of Southern Africa (RERA).
Ms Nzimande pointed out that the Energy Regulator has to be ready for the challenges it will have to address in 2013 and beyond, by continuously reviewing and improving the effectiveness and efficiency of its mandated function. She thanked all Regulator Members for their ongoing support and commitment in achieving NERSA’s goals, and gave special thanks to all NERSA staff for their dedication and drive.
14The Official Newsletter of the National Energy Regulator of South Africa
HR IssuesAppearance is only skin deep – avoiding discrimination in the workplace
Evidence is mounting that the decision to appoint someone is made within the first few minutes of the interviewer meeting the interviewee and is therefore almost entirely based on first impressions. This is despite extensive developments in interview methods during recent years to try to ensure that the selection process is conducted in a fair manner.
Since employers tend to appoint someone based on first impressions, it is possible that people with physical imperfections, such being overweight or having facial disfigurements, are often the victims of discrimination in the workplace, unjust as this may be. According to Network Recruitment, this is simply because the imperfection can distract the interviewer from what the candidate is saying. The interviewer then recalls less information about the applicant after the interview and hence ranks them lower.
To ensure that the most skilled person for the position, and not merely the best-looking person, gets the job,
companies need to ensure that all line managers are equipped with the tools to be fair and unbiased in their selection processes. It is critical that, at the very least, all candidates are given the same opportunities during their interviews.
In a recent media article, Network Recruitment Managing Director, Niteske Marshall, had the following advice for managers:
• Guard against stereotyping. Instead of allowing yourself to be distracted by a candidate’s physical appearance, mentally discipline yourself to recognise your reaction and focus on other skills and attributes.
• When confronted with distracting physical characteristics, purposefully take more time to do the interview. This will enable you to learn more about the person and to focus on the qualities relevant to the job.
• Maintain eye contact and remember that appearance is skin deep.
• Evaluate the candidate on specific skills rather than on a general impression.
By following the above guidelines, it becomes easier to look beyond that initial impression and truly make an objective recruitment decision.
Source: How to stop discriminating
against people who look different. In
Business Times. http://www.bdlive.co.za/
businesstimes/2012/08/19/how-to-stop-
discriminating-against-people-who-look-
different. Accessed 30 November 2012.
Shebeen Experience performance by Drum Cafe
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Calendar of EventsProgramme for February – March 2013Meeting dates and times are subject to change. Visit our website at www.nersa.org.za for the latest updates and to verify the information below.
