NIGERIAN ELECTRICITY SUPPLY INDUSTRY (NESI) PERFORMANCE MEASUREMENT,

EVALUATION AND REPORTINGFRAMEWORK OF PERFORMANCE MONITORING IN NIGERIA

A PRESENTATION TO THE NARUC GROUP

BY

ENGINEERING, STANDARDS & SAFETY DIVISION

OUTLINE OF PRESENTATION

A. IntroductionB. What we need to know about

PerformanceC. Achievements so farD. Next StepsE. Expected OutcomesF. Conclusion

A: SECTION ONE

1. Mandate of the Commission

2. Legal Status of Performance Standards and Codes

A1: Mandate of the Commission

“ENSURE THAT ELECTRICITY IS ADEQUATE, SAFE, RELIABLE, AND

AFFORDABLE”

A2: LEGAL STATUS OF PERFORMANCE STANDARDS AND CODES

Part VI, Section 81 (1),(2),(3) of the EPSR Act 2005 Empowers the Commission to Develop, in consultation with licensees and other interested parties Performance Standards and Codes:

a) Standards of overall performance in connection with the provision of electricity supply services and in connection with promotion of the efficient use of electricity by consumers;

b) Such technical codes and manuals as may be required for the safe, reliable, and efficient operation of the system; and

c) Such other standards, codes and manuals as the Commission may require.

Standards, codes and manuals approved by the Commission pursuant to above shall be binding on the applicable licensees and

shall be published by the applicable licensees in such manner as the Commission may direct.

Different Standards may be determined for different licensees.

B: SECTION TWO

1. What is Performance?2. Why is Performance Measurement

necessary?3. Where doe we apply Performance

Management.4. How do we measure Performance?

B1: What is Performance?

Performance can be defined as:

“The result obtained at the end of a given task” - Larouse, 1989

“The result of an action” - Webstar Dictionary

B2: Why is Performance measurement necessary?

We need Performance measurement for the following reasons:

Standards are set and adhered to by all Stakeholders (Generators, TCN and Distributors)

Set proper objectives that are clearly understood by all stakeholders and at all levels are taken into account

Measures real success or otherwise and Aids decision making process by the Commission when intervention is required

Allows for follow up, Feedback and Monitoring

Facilitates communication between stakeholders

Ensures specific accountability

Facilitates production of reports and documentation

Activities of the Stakeholders are aligned to the mandates of the Commission in ensuring that Electricity is Adequate, Safe, Reliable and Affordable.

Performance Measurement cuts across all the Divisions of the Commission. It can be applied to any activity or project.

Enterprise Performance Monitoring:

Internal operational activities of the employees at all levels are synchronized, aligned and aggregated into the strategic mandates of the Commission. This aspect shall be handled by the Finance & Human Resources Division.

Regulatory (Industry) Performance Monitoring:

Operational activities of industry participants in Generation, Transmission, Distribution and Retail are monitored and targeted to ensure compliance with standards for efficient and effective service delivery to customers.

B3: Where do we apply Performance Management?...Cont’d

B4. How do we measure performance?

ENVIRONMENT

INPUTS

CLIENT

CLIENT

PROCESS OUTPUTS

RESOURCES, MGT, TRAINING

ACTIVITIES, OPERATIONS, MGT.RESULTS, DELIVERABLES, SERVICES

ECONOMY EFFICIENCY IMPACTSEFFECTIVENES

RESULTS, CUSTOMER SATISFACTION, SUSTAINABILITY

B5: How do we measure performance? Cont’d…

Benchmarking, Industry Best Practices and Target Setting

In the process of Performance monitoring, comparison is made between International Best Practices and Industry or Company Best practices to set appropriate Targets.

Targets must be “SMART” i.e. Sensible, Measurable, Achievable, Realistic and have Timescale.

Targets are usually “stretchy” and re-viewable after certain attainment of performance level.

Applicable to both Regulatory and Entrepreneurial Performance

Monitoring.

B6: What are Performance Indicators?

Performance Indicator is an element, or group of elements of meaningful information, or a phenomenon linked to the functioning of an Organization

A performance Indicator can otherwise be defined as a measure to verify the reach of a specific Target.

An Indicator must be specific, understandable, measurable, qualitative and quantitative.

In summary, the objective of Performance Indicator is to evaluate a given activity and identify critical situation, description of situation and indication of where to react.

B7. Some Examples of Performance Indicators.

Regulatory (Industry) Indicators:Measure of Customer Service:

• Number of Complaints per 1000 customers• Average waiting time for customer service connection• Reliability of Supply i.e. Average no of hours of supply per day• Availability of Generation plants and Transmission Lines• Additional Capacities in Generation, Transmission and Distribution• Etc.

Enterprise Level Indicators:Measure of Accounting Efficiency:

• Revenue / Expenses• Debt / Total Revenue

Human Resources support:• Training Cost per Employee• Employee Turnover in terms of time it takes to produce a given

assignment

C: SECTION THREE

1. What are our responsibilities?2. Why do we need performance

tools?

C1: What are our Responsibilities?

Our global responsibility is to achieve the Mandates of the Commission.

The Mandates can only be achieved through individual and collective contributions of staff / employees.

Individual tasks together make the success of the global Objectives and Mandates of the Commission.

C1: What are our Responsibilities?…Cont’d

The Commission shall development policies in line with the Goals, Objectives and Mandates of the Commission

Implementation of these Policies, Goals and Objectives of the Commission by Divisional Heads

Achieving Tasks that are directly responsible for actualizing the Goals and Objectives of the Commission by Units and individual employees

Continuous Performance review to ensure achievement and alignment of individual tasks with set goals and objectives of the Commission.

C2: Why we need Performance Measuring Tools!

We need tools like Performance Software packages (such as PerformanceSoft, Oracle, and other Softwares) to enable:

o Processing of large volumes of Data / Information to meaningful, readable and understandable formats.

o Minimize Errors from manual inputs.

o Ensure Prompt Reporting to enable timely intervention.

o Disseminate information to those that need it on real-time basis.

o Provide effective historical / achieving facility like Data Bank.

o etc.

D: SECTION FOUR

1. Achievements so far2. Where we want to be3. Challenges4. Next Steps5. Prospects6. Expected Outcomes7. Conclusion

D1: Achievements are so far…

So far, We have: Developed Technical and Commercial Key Performance Indicators

(KPIs) Developed appropriate Reporting Formats Called for inputs from the various Divisions of the Commission – Some

have responded Industry Performance Managers meeting held on 24th & 25th of

January 2008 that:• Reviewed and harmonized the draft KPIs submitted by NERC with inputs from other

Stakeholders.• Reviewed the Reporting Formats.• Established Industry Best Practices.• Agreed on frequency and deadline for submission of reports from the Companies to NERC.• Discussed on other related issues like incentives (rewards and penalties) that will help drive

the project as envisioned by the Commission.• Proffer ways to achieve smooth implementation.

A follow-up meeting is proposed to take place between 24th and 25th July 2008.

Obtained a Case number for the project (NERC/CN06508)

D2: Where we want to be…

World Class Performance Monitoring / Management System in place at both Regulatory and Enterprise Levels that enables on-line Real Time Monitoring

A workforce that is Performance driven and targeted towards achieving the mandates of the Commission

Compliance-able Industry Participants Complete achievement of the Commission’s set

Mandates Have a Competitive Power Sector that is

Performance driven.

D3: Next Steps

Circulation of the outcome of the reviewed and harmonized KPIs and Reporting Formats to the Commission for consideration.

Take comments from the stakeholders and members of the public on the project.

Issuance of NERC order. Launching and publicity. Implementation of the harmonized and agreed

documents. Establishing of a Reward System. The Reward

System will incentivise good performance and reprimand non-performance. It is proposed that an inter-divisional Task Team be set up to establish the proposed Reward System for the Commission to implement in order to stimulate good practices that will ensure excellent performance in the power industry.

NOTES:

It is important to note that:• Performance Measurements in respect of

Transmission and Distribution Losses have a lot to do with the current MYTO structure.

• R&D, Government & Consumer Affairs and Engineering Divisions should work together in the area of Data Evaluations, Analysis and Reporting.

• An Enforcement Unit should be formed with membership from the Engineering, M.R&C, G&CA, L.L.&E. Divisions.

D4: Challenges

Performance measurement is usually frightening and we all must overcome the “Fear”

Resistance from the Staff and other Industry Players

High Precision is required for performance measurement. We must avoid subjective measures!

Performance measurement is normally heavy and difficult to implement. It requires Investment in Training and Tools

Requires buy-in and involvement of all Stakeholders.

Establishment of a viable Reward System to encourage good performance and punish non-performance.

So, we must all be ready to get involved !!!

D5: Expected Outcomes Performance measurement will result to:

Achieving Mandates of the CommissionProper strategic planning and alignment of activities and

FeedbackAccountability of UtilitiesCompliance with set Standards and CodesEffective information flow through data exchangesForecasting and warning BenchmarkingHigh motivation and work quality in the IndustryIncentives for performing Companies and Reprimands for

the non-performing ones. Performance driven IndustryBetter Customer Satisfaction etc.

E: Conclusion

It is necessary to accept performance measurement in order to ensure Safety, Reliability, Adequacy and Affordability of Electricity Supply in Nigeria

All useful information must be effectively and openly shared amongst staff (transparency)

We must effectively manage our resources (allocate resources and set targets)

We must be accountable for all our actions or in-actions.

We all must work together to achieve the mandates of the Commission.

And always remember that we all have rights to share information.

Thank you for the attention !

NERC

For more information, please log on to: www.nercng.org

nesiperformancemgt@nerc.org – official e-mail for Performance Management