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The Late Sheikh Zayed Bin Sultan Al NahyanMay Almighty Allah rest his soul in eternal peace
(1918-2004)
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His Highness Sheikh Khalifa Bin Zayed Al NahyanPresident of the UAE and Ruler of Abu Dhabi
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His Highness General Sheikh Mohammed Bin Zayed Al NahyanCrown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces
and Chairman of the Executive Council
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His Highness Sheikh Diab Bin Zayed Al NahyanChairman of the Abu Dhabi Water and Electricity Authority
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Part 1 - Sector Activities
PART 1Sector Activities
Chairman’s Statement
Sector Overview
Technical Affairs
Safety
Environment
Economic Regulation
Customer Standards
Bureau Specific Matters
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The Regulation and Supervision Bureau (the Bureau) has been in operation since1 January 1999. During this time water and electricity production has more thandoubled, with five independent power and water producers entering the sector.
Also the network companies have undertaken a range of major capital projectswith investments exceeding AED 15 billion, for the transmission and distributioncompanies over the same period. Such investment can have an impact on thesector economic unit costs but has been off-set by more efficient productionplants and steady but substantial demand increases. Overall the unit cost forelectricity and water has reduced, respectively, by twelve percent and twentypercent in real terms over the past six years. This is a considerable achievement.
In order to regulate and supervise such an active sector, the Bureau has increased staff numbers to include therecruitment of a Water Quality Engineer, Senior Metering Engineer, MIS Officer and a replacement Safety Advisor. It is pleasing to report that with a nearly full complement of staff the Bureau has completed over seventy fivepercent of its planned workload for the year, with the completion of thirty four projects in their entirety.
Internationally the Bureau represents the sector as a member of the Arab Regulators Electricity Forum. In additionthe Director General attended the first World Health Organisation (WHO) meeting for the development of WHOGuidance on Desalination for Safe Water Supply.
During the past six years the Emirate of Abu Dhabi’s water and electricity sector has changed beyond recognition,and the Bureau is proud to have played a part in these changes.
I am sure the future will continue to prove successful and wish to welcome you to our 2004 Annual Report.
Zaal Mohammed Zaal Al HameeriChairman
Chairman’s Statement
Zaal Al Hameeri
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DEMAND
Growth in peak demand in 2004 for both water and electricity was in line with expectations of over 10 percentfor water and just under 5 percent for electricity. Of particular significance were the large contributions toelectricity production by SCIPCO and to water production by UWEC, the Fujairah located producer.
SCIPCO and UWEC between them bring an additional 1,500 MW of generation and 200 MGD of water provisionto the Emirate, UWEC’s electricity production does not supply the Emirate of Abu Dhabi.
Ideally, new production capacity should seek to follow incremental load growth, thereby closely matching supplyto demand. In practice, it is generally more economic to finance and build large-scale plants. The short termimplications for this approach are an increase in production costs, as transitory excess capacity must be purchasedby the single buyer (ADWEC), whether it is consumed or not.
Excess generation capacity for 2004 was over 1,500 MW at the time of the system peak.
DOLPHIN
Dolphin Energy Limited (DEL) has continued to make steady progress in implementing its plans for a cross-borderGulf natural gas network. During the year DEL awarded a AED 1.2 billion contract to Italy’s Saipem to install a 370km pipeline linking Qatar and the UAE. When it is completed in 2006, the export pipeline will transport naturalgas from Dolphin’s processing plant in Qatar’s Ras Laffan Industrial City to Taweelah to supply the three powerand water producers at the site, namely ECPC, GTTPC, and Al Taweelah Power Company.
The Dolphin project, when complete, aims to create a regional grid exporting gas by undersea pipeline from Qatarto Abu Dhabi (Taweelah), and then on to Dubai, Oman and possibly Pakistan. Qatar is home to the world’s thirdlargest gas reserves after Russia and Iran.
Also during the year DEL were confirmed as the owner and operator of a new gas pipeline connecting Omanwith Fujairah.
In January DEL began to supply gas from Oman to the Union Water and Electricity Company (UWEC) in Fujairah.The sales agreement is to supply the Fujairah facility for three and a half to five years. The gas will be the mainenergy source for UWEC’s power and desalination plant. Dolphin has laid a 182 km, 24 inch overland pipeline totransport the gas. It is understood that Dolphin Gas from Qatar will eventually replace the gas supplies fromOman to UWEC.
Sector OverviewBy the Director General
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EMIRATES NATIONAL GRID
The Ministry of Electricity and Water (MEW) for the UAE issued letters of award in mid-March to a number of localand international contractors for the main work packages on the estimated AED 800 million Emirates NationalGrid (ENG) project. The awards will result in the interconnection of the UAE‘s separate power systems which isplanned for completion during 2006.
The project will interconnect the power networks operated by TRANSCO, Dubai Electricity and Water Authority(DEWA), Sharjah Electricity and Water Authority (SEWA), and the Federal Electricity and Water Authority (FEWA). Inaddition the grid will permit the electrical connection of UWEC’s output located in Fujairah to supply the NorthernEmirates grid network . It is also an important link in the long-planned interconnection of the GCC power grid.
Electricité de France (EdF) is the main consultant on the project and is being assisted on the transmission lineselement by Germany’s Fichtner.
GCC POWER GRID
The Gulf Cooperation Council (GCC) electricity grid funding was agreed by the initial participants on the basis oftheir respective share holding. The first phase involves the countries of Bahrain, Kuwait, Qatar and Saudi Arabiafunding the Gulf Grid which will cost in excess of AED 7 billion.
The GCC International Authority (GCCIA), as it is known, is based in Dammam, Saudi Arabia and the projectcompletion date is 2010. It is expected that the UAE and Oman will connect to the grid during a later phase.
NON-STANDARD TARIFFS
Under the terms of their licences, the two distribution companies are required to offer special supply terms tolarge customers. Large customers are defined as those customers taking more than 1 MW of demand forelectricity or more than 10,000 litres per day of water (approximately 2,000 gallons). In conjunction with thelicence holders, the Bureau has established a number of special tariffs for such users.
Under these arrangements no Government subsidy is applicable, so a customer will pay the full economic cost ofthe supply. In these circumstances it is likely that only customers connected directly to the transmission system willbenefit from such arrangements. However, where customers are able to manage their load away from the systempeaks then they might also benefit by utilising a non-standard connection from a distribution company’s network.
Publication – ER/P01/006 explains in detail the range of tariffs on offer.Sec
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REMOTE AREAS SERVICES COMPANY
The Remote Areas Services Company (RASCO) continues to diminish in terms of assets. This was illustratedrecently with the closure of the Jebel Dhana desalination unit due to the commissioning and connection ofSCIPCO, located at Jebel Dhana. Some of the old units had been in operation for over thirteen years with a dailyoutput of some 6 million gallons.
Ultimately most of RASCO’s assets will be redundant as more outlying regions are connected to thedistribution companies’ networks. However, RASCO will continue to provide emergency generation units forhospitals and VIP connections. RASCO’s assets are now operated by the distribution companies on the basisof an annual contract.
SCIPCO
The Shuweihat S1 Independent Water and Power Project is currently the largest, private, greenfield power anddesalination plant in the world. Located 250 kilometres west of Abu Dhabi near the town of Ruwais - the S1 Plantutilises the latest, state-of-the-art gas turbine power generation and multi-stage flash desalination technologies.In 2004 each power unit and desalination unit successfully completed its performance and reliability tests andachieved commercial operation. The S1 Plant is designed to supply 1,500 MW of power and 100 MGD ofpotable water to the respective transmissions systems.
START OF PC3 - PRICE CONTROLS
The transmission and distribution of electricity and water are each natural monopoly activities for which it is mostefficient to have a single operator in each geographic area.
A key function of the Bureau is therefore to set price controls for TRANSCO, AADC and ADDC to ensure thatcustomers are treated fairly and that incentives are provided for each business to minimise costs and provide highquality services. Similarly, price controls are also required for ADWEC and RASCO, which have exclusiveresponsibility for procurement and remote areas production respectively.
The present price controls cover the period 2003 – 2005. During 2004, the Bureau began the process ofreviewing the price controls in order to set new controls for January 2006 onwards (to be known as PC3).
The Bureau is committed to a thorough and transparent review process. During 2004, the Bureau published theFirst Consultation Paper and invited the licensees to provide their views and to complete an informationsubmission. The publication of Final Proposals is scheduled for November 2005. S
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TAWEELAH RFP
Taweelah B is the last remaining ADWEA-owned power and water production plant situated at the Al Taweelahcomplex. Bids were submitted by a number of consortia in July of 2004 for the purchase and refurbishment ofthe existing assets and eventual expansion of capacity to 2,000 MW and 160 MGD. At the time of writing aconsortium, led by Marubeni, had been selected as the preferred bidder.
WATER SUPPLIES
With the issue by the Bureau of the Water Supply Regulations in 2003, Al Ain Distribution Company have begunin earnest to pressurise their water network starting with the city of Al Ain. During the year, ten areas in the cityhave been transferred to a continuous supply, which is equivalent to approximately 5,000 customer connections.The changeover from intermittent to continuous supply has been implemented gradually to ensure smoothoperation of the water distribution network and to monitor changes in water demand.
Gradually all areas will have continuous supplies of water, with a target to have more than 50 areas andcommunities in the region on continuous supply before the end of 2005. Complete network pressurisation willdepend upon the removal of transmission and pumping constraints, but is the ultimate aim of the company.
Abu Dhabi Distribution Company already operates substantially on the basis of continuous supply but will alsoseek to abolish remaining timed-supplies over the next few years.
WIND TURBINES
In a pioneering move, the first wind power plant in the UAEwas commissioned on Sir Baniyas Island which is situatedsome 250km West of Abu Dhabi city.
The 850 kW wind turbine is paralleled to an existingsmall RASCO power plant, but is not connected to thegrid system.
The landmark project was undertaken by Germany’sDornier Consulting and GTZ who will operate the plant fortwo years.
Operation began in mid August and the turbine supplied over 180 MWh of energy during 2004.
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ELECTRICITY
DEMAND
The 2004 peak electricity demand occurred in August with a 4.5 percent increase over the preceding year. Thisincrease was consistent with the 10 year trend. However, the peak was earlier than is normally the case wherestatistically this has occurred in September.
Generally, the demand curve has attained a flatter character, over the past few years, in relation to the monthsof June to September. This may explain why the peak occurred in August and might indicate a future trendwhere demographic behaviour and temperature changes may lead to peaks occurring at any time over this fourmonth period.
GENERATION PERFORMANCE
The sector gross energy production in 2004was 24,461,498 MWh, which was 5.4percent greater than the previous year. Asignificant increase in production fromSCIPCO is noted following the completion ofthe 1,500 MW plant in 2004. RASCO, theremote area services company, contributed95,700 MWh to meet the demand in areasnot connected to the grid and the Takreer oilrefining company supplied 222,822 MWh.
The Bureau investigated two generationincidents which caused loss of supply tocustomers during the year. One incidentoccurred during the commissioning of aSCIPCO generation unit, where a fault on thesecondary supply to a generation unitcaused a cascading effect resulting in theshutdown of all power units. The secondincident was initiated from a fault at theTakreer oil refining company which caused agenerator unit to shutdown; the sudden lossof generation triggered the first stage ofdistribution load shedding in order tomaintain system stability.
Technical Affairs
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TRANSMISSION SYSTEM PERFORMANCE
The standard of performance of the electricity transmission system for the Emirate of Abu Dhabi is good andcompares well to other utility companies elsewhere in the world.
A key indicator of performance is SystemUnavailability which reflects the amount oftime that parts of the system are not inoperation due to both planned andunplanned events. The chart indicates thatsystem performance improved in 2004when compared to 2003. However, theperformance did not reach the levelsachieved during 2002.
Analysis of the primary causes for SystemUnavailability show that plannedinterruptions associated with constructionand maintenance works were majorcontributors. However, the number oftransmission system incidents has shown anupward trend although still remaining withinexpectations. The impact of theseinterruptions on customers (as shown by theunsupplied energy chart) has increased.
Seven transmission system incidents wereinvestigated by the Bureau; analysis of theseidentified that five were due to the failure ofkey components of protection equipment within the transmission system and the remaining two were contractorerror and circuit breaker failure. Transco has initiated a review of their transmission protection systems in responseto this analysis.
ELECTRICITY TRANSMISSION CODE
The Bureau, together with the licensee companies, has an obligation to review and update various operatingcodes which govern the sector. A third amendment to the Electricity Transmission Code was made during theyear, with the main objective of improving the effectiveness of the Electricity Transmission Code Review Paneland enhancing the clarity of the document in the area of data provision.
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DISTRIBUTION SYSTEM PERFORMANCE
Customers in the Emirate are supplied via the distribution systems of either Al Ain Distribution Company or AbuDhabi Distribution Company.
AL AIN DISTRIBUTION COMPANY
The performance of AADC’s distributionsystem for 2004 continued the very positivetrend in improvements of the previous yearsaccording to the data provided to the Bureauby the company.
The average number of interruptions tocustomers reduced by 35 percent (from 3.8to 2.51 interruptions per customer), while theaverage minutes lost also reduced by 35percent from 416 to 270 minutes. Therestoration of interruptions within 3 hourshas also improved from 84 percent to 90percent, while 99.9 percent of all customerinterruptions were restored within 24 hours.
ABU DHABI DISTRIBUTION COMPANY
The trend in annual performance for ADDCcontinued the modest improvements ofrecent years, with a 15 percent improvementin the average number of interruptions tocustomers while there was a 12.5 percentpoorer performance in the average minuteslost per 100 customers. The restoration ofinterruptions within 3 hours has only shownmarginal improvement from 85.1 percent to85.8 percent, while 100 percent of allinterruptions were restored within 24 hours.
Note: The Bureau has reviewed the network performance data provided by both distribution companies andhas identified that more robust systems are required before such data can be relied upon forcomparative purposes. Technical audits of both distribution companies’ performance monitoringsystems are planned for 2005.
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WATER
DEMAND
The gross available water production capacity in 2004 increased by 40 percent over the previous year to 651 milliongallons per day while the maximum quantity of water produced on a single day increased by 10.5 percent to440 million gallons.
Water demand is expected to grow at an annual rate of 5.7 percent until 2010. The largest contribution to thisincrease during 2004 was domestic demand followed by agricultural needs.
The distribution companies’ demandmanagement programmes, particularly onAl Ain’s network, combined with largestorage tanks located in customer’s premisesensured that the maximum supply wasequivalent to the actual controlled demand.The diagram represents the water supplypatterns for the last ten years.
PRODUCTION PERFORMANCE
The sector’s water production for 2004increased by 11 percent over the previousyear to 145,732 million gallons. Waterproduced by desalination techniquesrepresented 97.5 percent of the total waterproduced with the remaining suppliescoming from wells in remote areas managedby RASCO; This represents a 50 percentreduction in well water extraction from the2003 level and is part of a deliberate sectorstrategy to reduce aquifer extraction.
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TRANSMISSION SYSTEM PERFORMANCE
System unavailability for the water transmission system was 5 percent for 2004; a minor deterioration inperformance when compared to the previous year. The main contributors being failure of system componentssuch as pumps and surge vessels. An analysis of the causes of system unavailability shows that 71 percent wasdue to unplanned incidents (breakdowns or failures).
This is a significant change from the 2003 performance where only 24 percent were due to unplanned incidents.
From a Security of Supply perspective, therewere 16 interruptions which affected thedistribution system; this is a significantimprovement over the previous year’sperformance (91 incidents) and equates toa total of 33.5 million gallons ofundelivered water. However, givenadequate storage facilities in the system,these events were managed so as not toaffect customers directly.
WATER TRANSMISSION CODE
A revised version (Revision 2) of the WaterTransmission Code was issued during 2004.The main objectives of the revision were toaddress planning data requirements andminor typographical or formatting errorsidentified by Licensees.
WATER QUALITY
Approximately 100,000 water quality tests,which cover 68 physical, chemical andbacteriological parameters, were conductedacross the sector. A 43 percent increase over the 2003 test number. The overall compliance with the Water QualityRegulations’ Sampling Frequency measure was 80.6 percent and 99.14 percent for the Prescribed Concentrationor Values measure. No events that constituted a contamination incident were identified or reported. Te
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DISTRIBUTION SYSTEM PERFORMANCE
The performance of the water distribution system continued to improve during 2004, particularly in pressure andmethod of delivery. Over 98.5 percent of all customers are connected to the distribution network; the remainderare supplied via road tankers.
Pressure in the distribution system remained above the Bureau’s pressure reference in all readings taken.Customers connected to a piped continuous supply of water represent 63 percent of all customers connected tothe network with the remainder receiving an intermittent water supply from their distribution company, normallyaround 8 to 11 hours in every 24.
A major pressurisation programme commenced in Al Ain city during 2004 which connected a number of areasof the city to continuous supply. This programme will continue during 2005 as larger quantities of waterbecome available to Al Ain city from the UWEC production company located in Fujairah.
WATER SYSTEM MANAGEMENT INITIATIVES
The Bureau commissioned Mott McDonald during 2003 to carry out a strategic study on current and future watersupplies in the Emirate. Issues addressed included developing a strategy for assessing water losses, thedevelopment of new security standards and a review of existing contingency planning methodology.
During 2004, the distribution companies followed the recommendations of the study and prepared the firstreports on water leakage in their networks, these reports identified leakage levels in the 15 to 20 percent range.Further work is planned to refine their analysis and develop suitable strategies to reduce leakage lossesthroughout distribution networks.
The developed Security Standards for the desalination and transmission/distribution systems provide guidance toplanners to ensure that sufficient desalination capacity is available in future years. While the transmission anddistribution standard provides guidance to system operators so as to safeguard continuity of supply followingplanned or unplanned outages. During 2004 Transco, AADC and ADDC commenced assessing planning andoperational processes against the new security standard.
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MAJOR INCIDENTS
A primary duty of the Bureau is to ensure the continuous health and safety of the public, contractors and Licenseeemployees. A number of fatalities during the year required the Bureau to undertake investigations and seek theimplementation of improved prevention methods from the companies involved.
Two contractors working for ADDC in the Liwa area suffered electric shocks while they were guiding asuspended load into place. The crane's cable came too close to an energised overhead power line which resultedin arcing. One of the contractor’s employees was killed.
A contractor working for SCIPCO was crushed by a loader during unloading operations of a barge. The workerwas carrying a water cooler when he was struck by the loader while it was reversing.
The number of contractor incidents which occurred this year prompted the Bureau to meet with Licensees todiscuss ways to enhance contractor safety. In response, the licence holder companies have adopted morestringent safety processes when retaining and appointing companies to undertake work for them, includingaddressing supervision issues.
An AADC operations and maintenance engineer was electrocuted while working on an energised breaker panel.The engineer entered the panel without appropriate earthing being applied and without locking out theequipment as required by company safety rules.
Safety audits play a critical role in accident prevention. The Bureau completed a system safety rule audit this yearby working in conjunction with a Licensee. The methodology developed will become the template for all auditsto follow, as it readily allowed for customisation to the Licensee, did not encumber the workers while they werebeing assessed and resulted in meaningful findings. As they were in this instance, the findings of the audits willbe focused on continuous improvement opportunities which will result in enhanced health and safety of thepublic, contractors and workers.
HSE TECHNICAL WORKING GROUP
This year, the Bureau promoted and facilitated the formation of a working group of health and safetyprofessionals from all company licence holders in the sector. The HSE Technical Working Group serves as acommunicative and issue resolution forum which ensures coordination and timely development of practicalsolutions to health and safety issues faced by the sector.
Through the cooperation of the Licensees, the Bureau is now receiving detailed monthly health and safety data.The data includes incident statistics as well as total hours worked for both employees and for contractors.
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AIR QUALITY MONITORING
Work has continued with the Environmental Research and Wildlife Development Agency (ERWDA) Air QualityMonitoring and Management Study by providing ERWDA with emission testing results for all the sectorproduction companies.
The Bureau’s analysis of emissions indicted that exhaust gases primarily contain oxides of nitrogen, sulphur andcarbon and that the concentrations of each of these gases vary depending on the operating and loading conditionsof the gas turbines within the production companies. Reduced loads cause lower thermal efficiencies within thegas turbines, which result in less efficient combustion processes and consequently higher emission rates.
More detailed studies on emission dispersion characteristics and ambient air quality are necessary to accuratelyassess the relative contributions of air pollution from power and desalination plants.
EFFLUENTS DISCHARGED INTO THE GULF
The Bureau has worked closely with production companies in monitoring the physical, chemical and biologicalquality of effluent discharges into the Gulf water. Effluent discharges consist mainly of used cooling waters,desalination reject water and treated waste water.
Analysis of effluent discharges indicates that there has been a general trend of increased temperatures andincreased concentrations of Total Dissolved Solids (TDS) in the effluents discharged into the seawater. Also thetemperatures and TDS levels were found to be above the Federal Environmental Authority limits. Recent studiescarried out at production plants indicated that elevated temperature and salinity levels covered a larger area alongthe seabed compared to the surface level and the effluent discharges from the plants created a plume thatextended some two to three kilometres from the outfall at subsurface levels. Therefore, environmental monitoringprogrammes with time integrated measurements over extended periods together with detailed studies on thecharacteristics of the outfall plume and marine ecology are necessary to provide a full understanding of anyadverse environmental impacts associated with electricity generation and water desalination plants.
Findings from the environmental surveys carried out at some production plants suggested that detrimentalimpacts on seawater quality and marine ecology may have already occurred. However, due to the general lackof information and detailed studies on the Gulf’s marine ecology, it is difficult for the Bureau to assess anyenvironmental impact caused by the sector’s production companies.
ENVIRONMENTAL PERMITS
During 2003, ERWDA commenced a programme of issuing environmental permits to all production companiesin the Emirate. Good progress was made during 2004 with the issuing of environmental permits to the threeproduction companies located at the Al Taweelah site, as well as renewing the APC permit. It is anticipated thatERWDA will complete the issuing of permits to all production companies during 2005.
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WATER CONSERVATION
A customer education and awareness programme was introduced by the distribution companies during 2004which focused on the themes of conserving water and how water conservation could be part of a modern lifestyle. The programme included schools visits, formal presentations at various public functions and exhibitions,media advertising as well as information leaflets distributed with customer bills.
WELL WATER
The sector has continued efforts to reduce well water extraction during 2004, with the total decreasing by almost50 percent compared with 2003. The continued closing of wells is in line with the Abu Dhabi Government’sdirection of preserving the environment as well as responding to water quality issues (notably heavy metals) thathave started to increase in density as the ground water levels decrease across the Emirate.
During 2003 a Groundwater Assessment Project (GAP) was established to study groundwater consumption andwater use particularly in relation to irrigation techniques. By the end of 2004 an inventory of more than 13,000wells had been complied and surveyed by the project.
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COMMENCEMENT OF PRICE CONTROLS REVIEW
The two distribution companies (AADC, ADDC), ADWEC, RASCO and TRANSCO each have a monopoly over theiractivities in their respective licensed areas and are thus subject to price controls set by the Bureau.
These controls take the form of a medium-term cap on the Maximum Allowed Revenues (MARs) of eachcompany (in general, separately for their water and electricity businesses). This cap is set to reflect an “efficient”level of costs and serves to limit the income that the companies can recover in any year. To date, the price controlshave been of CPI-X type, which is a popular form of utility regulation in a number of countries because of itsstrong efficiency incentives.
The first price controls (known as PC1) lasted from 1999 to 2002. The present price controls (PC2) took effecton 1 January 2003 for a three year period. A third set of price controls (PC3) is thus required to be set for2006 onwards.
During 2004, the Bureau commenced the price controls review with the publication, in August, of the FirstConsultation Document. This highlighted some of the key issues to be addressed in the review, including:
• The form, duration and scope of the controls;• The potential for operating efficiency improvements;• The treatment of past and future capital expenditure;• The cost of capital of the sector companies; and• Further development of the Performance Incentive Scheme (PIS).
At the same time, the Bureau issued an information request to companies specifying data required in order toaccurately set the price controls, and held meetings and presentations to explain its approach.
The price controls will allow companies who operate efficiently to earn a reasonable return. This requiresassessment of the companies’ past performance and future forecasts of costs and demands, and the review ofsimilar data for comparator companies from other countries. In this regard, the Bureau has also been assessingdata from the regional and international capital markets to determine the reasonable return for Abu Dhabicompanies and undertaking a review of the performance of companies subject to CPI-X regulation in othercountries, to establish a reasonable efficiency benchmark. Draft Proposals on PC3 controls are due to be publishedby the Bureau in the summer of 2005 and Final Proposals by the year end.
REVIEW OF 1999 - 2002 CAPITAL EXPENDITURE
One of the most important inputs into the price control calculations, particularly for the ‘network’ companies(AADC, ADDC and TRANSCO), is the level of allowed capital expenditure. This determines the level ofdepreciation and the allowed return on capital that the companies can recover. Consistent with its statutory dutyto ensure the economy and efficiency of the sector, the Bureau has undertaken to finance an efficient level ofcapital expenditure within the price controls.
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For the PC1 period (1999 – 2002), to date only a provisional amount of capital expenditure has been financeddue to a lack of reliable data relating to the period. However, during 2004 the Bureau received audited data backto 1999, which allowed the Bureau to commence an assessment of PC1 capital expenditure against efficiencycriteria established in 1999. These criteria are that the expenditures:
• Were required to meet growth in customer demand or the relevant security standards; and• Were efficiently procured.
The overall approach adopted during the review was to assess the processes undertaken by the companies anda number of selected projects.
Towards the end of 2004, the Bureau began discussing the results of the review with the companies. Theseindicated a total amount of efficient capex for the PC1 period in excess of the provisional capex allowance madeto date, which will require a positive adjustment to future price controls.
COMPLETION OF AUDITED ACCOUNTING STATEMENTS 1999 – 2003
Under the terms of their respective licences, the price controlled companies (AADC, ADDC, ADWEC, RASCOand TRANSCO) are each required to submit two sets of audited data to the Bureau each year.
• Audited Separate Business Accounts (due by 30 June each year); and• Audited Price Control Returns (due by 31 March each year).
The audited Separate Business Accounts refer to accounting statements for the preceding year for (i) each ofthe separate licensed businesses of the licensee and (ii) each of any unlicensed activities for which the licenseehas received the Bureau’s consent.
The audited Price Control Returns shows the licensee’s compliance in the preceding financial year against theprice controls, based on comparing their actual revenues to the Maximum Allowed Revenues (MARs) under theprice control.
Prior to 2004, none of the companies had metthese requirements. However, in 2002, theBureau introduced a Performance IncentiveScheme (PIS), a mechanism wherebycompanies would receive bonuses orpenalties under the price control dependingon whether the audited statements weresubmitted on time.
External auditors were appointed by thelicensees to audit the required statements,and during 2004 all of the concernedlicensees submitted to the Bureau a full set ofcompliant (with only minor exceptions) audited statements, on an annual basis for the period 1999 - 2003. Thisrepresents a noteworthy achievement which will greatly improve the transparency of the sector and the ability ofthe Bureau and others to monitor the performance of these companies.
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The auditing process has enabled the financial performance of the monopoly companies over the PC1 period(1999 – 2002) to be assessed. The chart shown in the previous page exhibits a trend of rising turnover butdeclining profits due to increases in operating costs, despite incentives incorporated into the price controls.
Audited out-turn figures for capital expenditure are reproduced below:
There has been a substantial increase inannual capex undertaken by thecombined network businesses, as shownopposite, which highlights theimportance of ensuring such expenditureis undertaken efficiently.
APPROVAL OF 2005 BULK SUPPLY TARIFF (BST)
Each year, the Bureau must approve the Bulk Supply Tariffs (BSTs) at which ADWEC sells water and electricity tothe distribution companies. The water and electricity BSTs each comprise two components: a “Demand Charge”charged according to the contribution to system peak demand, and hourly “System Marginal Price” (SMP) charges.SMP charges may vary during the day (from AM to PM) and from month to month.
During the year, the Bureau and ADWEC workedclosely to undertake various analyses and finalise the2005 BST. The approved charges for 2005 are shownbelow alongside the corresponding charges for 2004:
Figures for 2004 are shown before exceptional charges totalling AED 71.01 million representing an under-recovery of the approved 2004 BST against Maximum Allowed Revenues (MARs).
In 2005, BST revenues are forecast to be AED 5.122 billion, divided broadly equally between electricity and water.This would represent an increase of 17% over the 2004 out-turn (including exceptional charges) of AED 4.386billion. This increase is largely explained by the availability of new production plant owned by SCIPCO and UWEC,plus the effect on SMP payments of general demand growth.
It is anticipated that over the next price-control period, production unit costs will reduce as surplus capacity diminishes.
Audited Out-turn Capital Expenditure
AED m, nominal prices 1999 2000 2001 2002 2003TRANSCO - Electricity 493.218 824.299 1,103.281 968.596 1,159.419
TRANSCO - Water 124.268 133.328 205.189 650.695 1,967.181
ADDC - Electricity 247.612 424.309 539.044 523.333 575.461
ADDC - Water 106.543 36.789 113.651 262.780 486.311
AADC - Electricity 125.344 298.981 282.270 177.084 402.908
AADC - Water 86.133 212.185 74.557 181.567 175.91
Total 1,183.118 1,929.891 2,317.992 2,764.055 4,767.190
Demand Charges
2005 BST 2004 BST
Electricity (AED/kW) 460.28 410.84
Water (AED/TIG) 3,422.30 2,905.86
Electricity System Marginal Prices
Fils/kWh 2005 2004
AM PM AM PM
Jan - Mar 2.73 2.73 1.73 2.26
Apr - May 2.95 3.03 2.75 2.97
June - Sep 3.15 3.17 3.15 3.15
Oct - Dec 3.22 3.22 2.71 2.71
Water System Marginal Prices
AED/TIG 2005 2004
AM PM AM PM
Jan - Mar 4.67 4.67 5.08 5.39
Apr - May 5.56 5.56 4.53 5.20
June - Sep 5.24 5.24 5.45 5.71
Oct - Dec 4.62 4.66 4.34 4.47
23
Econ
omic
Reg
ulat
ion
APPROVAL OF 2005 TUOS CHARGES STATEMENT
During the year and in accordance with its licence, TRANSCO submitted to the Bureau a draft Transmission Useof System (TUoS) charging statement for 2005. The Bureau approved the charges as follows:
The charges are levied according to the distributioncompanies’ contribution to transmission systempeak demand.
In 2004, TRANSCO over-recovered significantly againstits Maximum Allowed Revenues, for both water and electricity. This was principally due to lower metered unitsthan anticipated due to delays in the metering programme. The extent of over-recovery was such that the penaltyinterest rate provisions were triggered for both businesses (when over-recovery exceeds 2% of MaximumAllowed Revenues). As a result, significant (negative) correction factors were carried forward from 2004 to 2005.
In late 2004, TRANSCO applied for a derogation from the Bureau to advance AED 250 million of allowed revenuefor its water business from 2006 to 2005. The Bureau approved this request due to the additional, unforeseencosts expected to be incurred by TRANSCO as a result of its acquisition of the water transmission systemassociated with the UWEC production plant. This accounts for the increase in the TUoS charge between 2004and 2005. Otherwise, both water and electricity TUoS charges would have been lower in 2005 than in 2004.
UWEC
During 2004, the Union Water and Electricity Company (UWEC) generation and desalination plant located atQidfa, Fujairah raised a number of regulatory issues. The Bureau granted a Bulk Delivery and Storage of Waterlicence to UWEC in November 2003 and will issue a new licence – a production licence – to UWEC when itstransmission assets are transferred to TRANSCO. In view of these developments, the Bureau advised ADWEC andTRANSCO that they would each require the Bureau’s consent to undertake, respectively, procurement andtransmission activities outside the Emirate of Abu Dhabi. Further, these companies would also be required toestablish financial ring-fencing between their licensed activities and their activities outside the Emirate. During theyear, UWEC continued negotiations with ADWEC for the sale of its water and electricity capacity and production.
CONSULTATION ON TRANSCO CONNECTION CHARGE PRINCIPLES
During 2004, the Bureau reviewed the basis on which users should be charged by TRANSCO for connection tothe transmission system. Following consultation and a review of international practice, the Bureau has concludedthat for the time being:
• Only distribution companies should be charged transmission connection charges (ie, no charges should belevied on production companies or embedded customers); and
• such charges should be based on a “shallow” methodology (ie, should include costs associated directly withthe connection but exclude the costs of wider system reinforcement).
TUoS Charges
2005 2004
Electricity (AED/kW) 203.924 212
Water (AED/TIG) 1,570.927 1,250
24
Econ
omic
Reg
ulat
ion
A principal driver of the above conclusions was the important influence the water and electricity transmissionsystem plays in facilitating the development of the national economy.
Any such charges would be in addition to transmission use-of-system (TUoS) charges. In any case, TRANSCO’stotal revenue from the two charges would remain capped by the price controls set by the Bureau, ensuring thatTRANSCO has no incentive to recover excessive revenue from one charge. The Bureau will now assist TRANSCOto develop a connection charges statement consistent with the above principles.
REVIEW OF IWPP’S PWPA PAYMENT STRUCTURE
Due to the trend of rising sector costs, the Bureau undertook a review of the PWPA payment structure. Thisreview concluded as follows:
• The present Build, Own and Operate (BOO) model for IWPPs, the 20-year term and two-part paymentstructure of the PWPAs in Abu Dhabi are all consistent with international best practice.
• The capacity payments for Abu Dhabi IWPPs are comparable to, and in some cases somewhat lower than,those experienced in other countries.
• The increase in unit production costs over recent years is primarily attributable to surplus capacity in thesector, rather than a fault of the PWPA payment structure per se.
• Surplus capacity in 2004 is estimated at 1,100 MW for electricity and 55 MGD for water (taking intoaccount the required security reserves), at an extra cost to the sector (in 2004) of AED 328 million and AED173 million, respectively.
APPROVAL OF 2004 ADWEC SEVEN YEAR PLANNING STATEMENT
ADWEC is required by Condition 18 of its licence to produce an annual statement setting out electricity and waterdemand forecasts and production capacity requirements for the following seven years. As in earlier years, theBureau worked closely with ADWEC in refining the statement to ensure it accurately reflected all of the latestinformation available to the sector. However, it was not possible for the Bureau to approve the statement untilDecember 2004 and ADWEC will produce the statement earlier in the future.
APPROVAL OF 2004 TRANSCO FIVE YEAR PLANNING STATEMENT
Similarly, TRANSCO is required under Condition 15 of its licence to produce an annual statement of transmissionsystem demand forecasts and investment requirements, in this case for the next five years. The Bureau was againimpressed with the comprehensiveness of TRANSCO’s statement although has suggested ways in which itsaccessibility to the third party reader could be improved. TRANSCO should also show more transparently the linkbetween their investment plan in the Five Year Statement and capital expenditure projections submitted for pricecontrol purposes.
25
Cus
tom
er S
tand
ards
CUSTOMER TRENDS
CUSTOMER CONNECTIONS
Growth in customer numbers (connections) has been highest in Al Ain Distribution Company at an average of4.8 percent for electricity customers and 2.3 percent per annum for water since the formation of the Company.Customer connections growth in Abu Dhabi Distribution Company is 3.6 percent for electricity and 1.7 percentfor water over the same six year period.
Overall, the average annual growth in electricity customer numbers has mirrored more closely the growth inannual electricity unit consumption for the Emirate as a whole. Conversely as the graph below illustrates, the gapbetween water and electricity with regard to the total number of customers is widening.
The main driver for the apparent divergenceis related to agricultural connections whichgrew at around 6 percent per annum forelectricity for both companies with virtuallyno increase in water connections in thiscategory due to the use of on-site wells. Theextraction and use of well water under thesecircumstances is not regulated or controlledby the Bureau. Neither is this consumptioncounted towards the total well-watersupplied to the sector, which is diminishing.
Control of wells and well-drilling for irrigationpurposes is provided by the Department of Municipalities and Agriculture of the Emirate of Abu Dhabi.
CONSUMPTION CATEGORIES
Electricity categories only are listed. The difference between the two distribution companies is significant mainlydue to demographics with respect to UAE Nationals and Expatriates and the more agricultural nature of theAl Ain region.
Customer Standards
26
Bur
eau
Spe
cific
Mat
ters
ALLOCATION OF COSTS
During the year the Bureau maintained a register which recorded the daily allocation of staff-time against one offour activities; namely Production, Transmission, Distribution/Supply and Procurement.
The results are given in the table below, with each number representing a percentage of the time each divisionallocated to the activity.
These figures form the basis of the allocationof Bureau costs against each activity andeventually through to the calculation oflicence fees. Publication ER/E01/003 – CurrentScale of Charges and Services, providesgreater detail on the allocation of Bureau costs to licence holders, which was revised and re-issued during 2004.
NEW HIRES
The following staff joined the Bureau during the year; Andy McQuattie: Health and Safety Advisor, Antony Hobbs:Senior Metering Engineer, Nadia Ali Al Bloushi: Water Quality Engineer, Amna Al Khalaqi: MIS Officer.
WORK PLAN ACHIEVEMENTS
The Bureau’s 2004 Annual Work Plan is published in two formats. Initially an internal document is produced listingall work-streams, including Bureau-specific tasks as well as those which may have a direct impact on licenceholders. The external publication (Document number ER/P01/005) is a shortened version of the initial Work Plan.
The chart shows progress against the 54 work-streams as apercentage of each task completed.
Bureau Specific Matters
Activity Production TransmissionDistribution/
SupplyProcurement
Compliance 27 3 66 4
Economic Regulation 25 26 30 19
Technical Affairs 38 20 35 7
Board of DirectorsThe Bureau Board of Directors held sevenmeetings throughout the year. The membership isas follows:
Zaal Mohammed Zaal Al HameeriChairman
Nick CarterDirector General
Ibrahim Mubaydeen Member
Line DirectorsThese staff are responsible for the day-to-dayrunning of their respective directorates (They are notmembers of the Bureau Board)
Sameh NemerCompliance and Operations Director
Mark CliftonDirector of Economic Regulation
Lindsay Hill Director of Technical Affairs
Percentage of Completion 60% 80% 100%
Compliance / Finance 5 2 12
Economic Regulation 0 1 11
Technical Affairs 9 3 11
27
Fina
ncia
l Rep
ort
Part 2 - Financial Report
PART 2Financial Report
Auditor’s Report
Balance Sheet
Statement of Cash Flows
Notes to the Financial Statements
28
29
31
32
28
Aud
itor’s
Rep
ort
Auditor’s Report
29
Bal
ance
She
et
Balance Sheet31 December 2004
ASSETS EMPLOYED
VEHICLES AND EQUIPMENT
ADVANCE TO EMPLOYEES
CURRENT ASSETSPrepayments and other receivablesBank balances and cash
CURRENT LIABILITIESAccounts payable and accruals
NET CURRENT ASSETS
FUNDS EMPLOYED
Accumulated surplus
NON-CURRENT LIABILITYEmployees’ end of service benefits
Zaal Mohammed Zaal Al Hameeri Nick CarterCHAIRMAN DIRECTOR GENERAL
Notes
3
4
5
6
7
2004
AED
204,540
52,500
1,655,3997,520,964
9,176,363
8,518,737
657,626
914,666
31,451
883,215
914,666
2003
AED
301,272
157,500
615,9061,819,616
2,435,522
2,177,175
258,347
717,119
157,487
559,632
717,119
30
Bal
ance
She
et
STATEMENTS OF FUNDING AND EXPENDITURE AND ACCUMULATEDSURPLUS, Year ended 31 December 2004
STATEMENT OF FUNDING AND EXPENDITURE
FUNDINGLicence feesOther income
EXPENDITURESalar ies and staff related costsDepreciat ionOthers
NET (DEFICIT) SURPLUS FOR THE YEAR
STATEMENT OF ACCUMULATED SURPLUS
Balance at 1 JanuaryNet (defic it) surplus for the year
Balance at 31 December
Notes
9
3
2004
AED
9,055,03536,587
9,091,622
7,609,662135,168
1,472,828
9,217,658
(126,036)
157,487(126,036)
31,451
2003
AED
7,289,39364,306
7,353,699
6,378,057127,621
1,296,034
7,801,712
(448,013)
605,500(448,013)
157,487
31
Sta
tem
ent
of C
ash
Flow
s
Statement of Cash FlowsYear ended 31 December 2004
OPERATING ACTIVITIESNet (deficit) surplus for the yearAdjustments for:
Provision for employees’ end of service benefitsDepreciation
Operating (deficit) surplus before working capital changesPrepayments and other receivablesAccounts payable and accruals
Cash from operationsEmployee’s end of service benefits paid
Net cash from operating activities
INVESTING ACTIVITIESPurchase of plant and equipment
Net cash used in investing activities
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the year
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
Note
5
2004
AED
(126,036)
348,378135,168
357,510(934,493)6,341,562
5,764,579(24,795)
5,739,784
(38,436)
(38,436)
5,701,348
1,819,616
7,520,964
2003
AED
(448,013)
243,399127,621
(76,993)34,709
1,067,799
1,025,515(27,367)
998,148
(44,749)
(44,749)
953,399
866,217
1,819,616
32
Not
es t
o th
e Fi
nanc
ial S
tate
men
ts
1. ACTIVITIES
The Regulation and Supervision Bureau (the Bureau) for the Water and Electricity Sector in the Emirate ofAbu Dhabi was established under Law no. (2) of 1998 to regulate the water and electricity sector in the Emirateof Abu Dhabi.
The Bureau is funded by the payment of licence fees by those entities awarded licences and is a not–for–profitorganisation.
The total number of employees at 31 December 2004 was 21 (2003: 18). The Bureau’s registered office is atPO Box 32800, Abu Dhabi, United Arab Emirates.
The financial statements of the Regulation and Supervision Bureau (the Bureau) for the year ended 31 December2004 were authorised for issue by the management on 20 June 2005.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparationThe financial statements have been prepared in accordance with Standards issued, or adopted, by theInternational Accounting Standards Board (IASB) and interpretations issued by the International FinancialReporting Interpretations Committee of IASB.
The significant accounting policies adopted are as follows:
Accounting conventionThe financial statements are prepared under the historical cost convention. The accounting policies are consistentwith those used in the previous year.
The financial statements have been presented in UAE Dirhams (AED).
Vehicles and equipmentVehicles and equipment are stated at cost less accumulated depreciation and any impairment in value.
Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows:
Motor vehicles over 3 yearsSoftware over 3 yearsOffice equipment and furniture over 5 years
Notes to the Financial Statements 31 December 2004
33
Not
es t
o th
e Fi
nanc
ial S
tate
men
ts
The carrying values of vehicles and equipment are reviewed for impairment when events or changes incircumstances indicate the carrying value may not be recoverable. If any such indication exists and wherethe carrying value exceeds the estimated recoverable amount, the assets are written down to theirrecoverable amount.
FundingLicence fees funding from the licensees in respect of the current year is accounted for in the Statement of Fundingand Expenditure based on the amount of the cash expenditure incurred during the year. Any funding receivedin excess of the cash expenditure is deferred and included in accounts payable and accruals. Short funding isincluded in prepayments and other receivables as licence fees recoverable.
Accounts payable and accrualsLiabilities are recognised for amounts to be paid in the future for goods or services received, whether billed bythe supplier or not.
ProvisionsProvisions are recognised when the Bureau has an obligation (legal or constructive) arising from a past event, andthe cost to settle the obligation is both probable and able to be reliably measured.
Employees’ end of service benefitsThe Bureau provides end of service benefits to its expatriate employees. The entitlement to these benefits isusually based upon the employees’ length of service and completion of a minimum service period. The expectedcosts of these benefits are accrued over the period of employment.
With respect to its national employees, the Bureau makes contributions to Abu Dhabi Retirement Pension andBenefit Fund calculated as a percentage of the employees’ salaries. The Bureau’s obligations are limited to thesecontributions, which are expensed when due.
Foreign currenciesTransactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assetsand liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balancesheet date. All differences are taken to the statement of funding and expenditure.
Financial instrumentsFinancial instruments comprise other receivables, bank balances and cash, accounts payable and accruals. Thefair values of financial instruments are based on estimated fair values using such methods as the net present valueof future cash flows.
34
Not
es t
o th
e Fi
nanc
ial S
tate
men
ts
3. VEHICLES AND EQUIPMENT
Cost:At 1 January 2004Additions
At 31 December 2004
Depreciation:At 1 January 2004Charge for the year
At 31 December 2004
Net carrying amount:At 31 December 2004
At 31 December 2003
4. PREPAYMENTS AND OTHER RECEIVABLES
Licence fees recoverablePrepaid expensesOther receivables
5. BANK BALANCES AND CASHCash and cash equivalents comprise:
Bank balances and cashBank deposits
Bank deposits are denominated in UAE Dirhams and bear interest at market rates. A portion of bank deposits is maintained by the Bureau to cover the Bureau’s liability for employee’s end ofservice benefits.
Total
AED
558,31138,436
596,747
257,039135,168
392,207
204,540
301,272
Office
equipment
and
furniture
AED
323,06131,433
354,494
105,70166,625
172,326
182,168
217,360
Software
AED
85,2507,003
92,253
57,58818,543
76,131
16,122
27,662
Motor
vehicles
AED
150,000-
150,000
93,75050,000
143,750
6,250
56,250
2004
AED
788,777818,053
48,5691,655,399
2003
AED
30,995571,66113,250
615,906
2004
AED
2,507,3735,013,5917,520,964
2003
AED
1,819,616--
1,819,616
35
Not
es t
o th
e Fi
nanc
ial S
tate
men
ts
6. ACCOUNTS PAYABLE AND ACCRUALS
Accounts payableAccrued expensesLicence fees received in advance
Accounts payable are normally settled within 30 days of the date of purchase.
7. EMPLOYEES’ END OF SERVICE BENEFITS
The movements recognised in the balance sheet are as follows:
Balance at 1 JanuaryProvided during the yearPaid during the year
Balance at 31 December
8. RELATED PARTY TRANSACTIONS
These represent transactions with related parties, ie. Abu Dhabi Water and Electricity Authority (ADWEA) and seniormanagement of the Bureau and companies in which they are principal owners. Pricing policies and terms of thesetransactions are approved by the Bureau’s management.
Transactions with related parties included in the statement of funding and expenditure are as follows:
Licence fees (note 9)Water and electricity chargesOthers
ADWEA has also provided to the Bureau, at no cost, certain general and administrative services.
2004
AED
23,076185,920
8,309,741
8,518,737
2004
AED
559,632348,378(24,795)
883,215
2004
AED
9,055,03536,76712,000
2003
AED
60,336266,228
1,850,611
2,177,175
2003
AED
343,600243,399(27,367)
559,632
2003
AED
7,289,39388,93723,653
36
Not
es t
o th
e Fi
nanc
ial S
tate
men
ts
9. LICENCE FEES
Licence fees received during the yearLicence fees received in advance, net of receivable fees:
Beginning balanceEnding balance
10. FAIR VALUES
The fair values of the Bureau’s financial assets and liabilities, other than advances to employees, are not materiallydifferent from their carrying values at the balance sheet date.
11. RISK MANAGEMENT
Interest rate riskThe Bureau is not currently exposed to interest rate risk, as the majority of its monetary assets and liabilities are notsubject to interest rate exposure. Deposits with banks are repriced frequently.
Credit riskThe Bureau collects licence fees from related parties. Licence fees are collected based on an annually forecast budget.
Liquidity riskThe Bureau limits its liquidity risk by monitoring its current financial position in conjunction with its cash flow forecastsand close communication with ADWEA on a regular basis to ensure funds are available to meet its commitments forliabilities as they fall due.
Accounts payable are normally settled within 30 days of the date of purchase.
Currency riskCurrency risk is limited since a significant proportion of Bureau’s monetary assets, liabilities and transactions are inUAE Dirhams.
2003
AED
8,242,792
866,2171,819,616
7,289,393
2004
AED
14,756,383
1,819,6167,520,964
9,055,035
37
Lice
nsin
g Is
sues
Part 3 - Licensing Issues
PART 3Licensing Issues
Licence Holders
Licensing Documents
Consultation Papers
Publications
38
40
43
45
38
Lice
nce
Hol
ders
AL MIRFA POWER COMPANY (AMPC)Operates two power stations at Al Mirfa and Madinat Zayed with a total licensedcapacity of 380 MW. Water production is at the Al Mirfa station only, with a licensedcapacity of 38.7 MGD.
AL TAWEELAH POWER COMPANY (ATPC) Operates two power stations at Al Taweelah complex with a total licensed capacityof 1,220 MW and 103 MGD for both B and B2 extension plants.
ABU DHABI WATER & ELECTRICITY COMPANY (ADWEC) ADWEC is the single buyer of water and electricity output and capacity fromproducers under various power and water purchase agreements (PWPA) andcharges the distribution companies for water and electricity, under a Bulk SupplyTariff (BST).
AL AIN DISTRIBUTION COMPANY (AADC) Distributes and sells water and electricity to around 90,000 customers in the oldMunicipality area of Al Ain
ABU DHABI DISTRIBUTION COMPANY (ADDC)Distributes and sells water and electricity to around 190,000 customers in the oldMunicipality area of Abu Dhabi.
ABU DHABI COMPANY FOR SERVICING REMOTE AREAS(RASCO)Licensed to generate, desalinate, transmit, distribute and sell electricity and water inremote areas, not connected to either of the distribution networks.
ARABIAN POWER COMPANY (APC)Fourth IWPP in the Emirate, following the purchase of the Umm Al Nar PowerCompany’s assets located at Sas Al Nakhel. Licensed capacities of 2,200 MW and160 MGD reducing to 1,550 MW and 95 MGD after 2008.
BAINOUNAH POWER COMPANY (BPC) Operates two power stations at Mina (Abu Dhabi) and Al Ain. Total licensedcapacity 1,001 MW and water production of 16 MGD.
Licence Holders
39
Lice
nce
Hol
ders
EMIRATES CMS POWER COMPANY (ECPC)Located at the old Taweelah A2 site, with licensed water capacities of 50 MGD andelectricity of 763 MW.
GULF TOTAL TRACTEBEL POWER COMPANY (GTTPC)Licensed capacities of 84.8 MGD of desalinated water and 1,431 MW of electricity.
SHUWEIHAT CMS INTERNATIONAL POWER COMPANY(SCIPCO)SCIPCO is licensed to produce up to 1,500 MW of electricity and 100 MGD ofdesalinated water from the Shuweihat S1 Plant, located 260 kms west of Abu Dhabi,near Jebel Dhanna.
TRANSMISSION AND DESPATCH COMPANY (TRANSCO) The company is responsible for all transmission voltages at 400, 220 and 132kVincluding despatch of generation units, water balancing and the bulk movement ofwater throughout the Emirate.
UMM AL NAR POWER COMPANY (UANPC)Ownership of Baniyas power station with a licensed capacity of 120 MW, currentlynot in production.
UNION WATER AND ELECTRICITY COMPANY (UWEC) The Union Water and Electricity Company (UWEC) owns production facilities in theEmirate of Fujairah, located on the East Coast of the UAE. The company produceswater and electricity for the Federal Electricity and Water Authority and water for theEmirate of Abu Dhabi. It is licensed by the Bureau for the bulk delivery and storageof potable water up to 100 MGD for the Emirate of Abu Dhabi.
(MW= Mega Watts, MGD = Million Imperial Gallons per Day)
40
Lice
nsin
g D
ocum
ents
CONSENTS
Consents are normally sought by a licence holder pursuant to the undertaking of different activities or the transferof assets.
ED/L03/009 1 January 2004 Arabian Power Company Supply and sale of demineralised water
An updated revision, to supply and sell up to a maximum of 101,000 Imperial gallons per month of demineralisedwater to specified customers.
ED/L03/010 1 January 2004 Abu Dhabi Distribution Company Transfer of assets to Transco
The transfer of pipelines connecting units II and IV with Umm Al Nar East and West pump houses.
ED/L03/011 13 June 2004 Abu Dhabi Transmission and Despatch Company Transfer of assets to ADDC.
Transfer of water pipeline assets in the Eastern Region from Transco to ADDC.
ED/L03/012 15 June 2004 Abu Dhabi Transmission and Despatch CompanyManpower Services
Consent for the undertaking and provision of manpower services, other than licenced activities, by Transco toother licensees.
ED/L03/013 1 June 2004 Abu Dhabi Distribution Company Management of RASCO’s Production Activities in ADDC’s Authorised Area
Consent to manage RASCO’s production activities in ADDC’s authorised area.
Licensing Documents
41
Lice
nsin
g D
ocum
ents
ED/L03/014 1 June 2004 Al Ain Distribution Company Management of RASCO’s Production Activities in AADC’s Authorised Area
Consent to manage RASCO’s production activities in AADC’s authorised area.
ED/L03/015 1 June 2004 Abu Dhabi Distribution Company Central Laboratory Services
Permission granted for ADDC’s Central Laboratories to provide testing services to third parties.
ED/L03/016 1 June 2004 Abu Dhabi Distribution Company Purchase of Electricity from ADNOC
Refers to the purchase of electricity from ADNOC (Ruwais Housing Complex Area) located in the Westernregion of the Emirate.
ED/L03/017 19 October 2004 Abu Dhabi Transmission and Despatch CompanyTransfer of Assets from Transco to ADDC
The transfer of all water assets in the Meziyrah to Liwa area of the Western region of the Emirate to Abu DhabiDistribution Company.
MODIFICATIONS
Modifications to licences are made by the Bureau subject to agreement by the appropriate licence holder.
ED/L01/001 1 June 2004 Al Mirfa Power Company Water Desalination and Electricity Generation Licence
Incorporated licence modification ED/L02/008 relating to an increase in water production capacity, issued on 22September 2001, plus minor changes to licence conditions, numbers 10 and 15.
42
Lice
nsin
g D
ocum
ents
ED/L01/002 1 June 2004 Bainounah Power Company Water Desalination and Electricity Generation Licence
Incorporated licence modification ED/L02/001 relating to an increase in water production capacity, issued on 25December 2000, plus minor changes to licence conditions, numbers 10 and 15.
ED/L01/010 1 June 2004 Emirates CMS Power CompanyWater Desalination and Electricity Generation Licence
Included changes to Condition 10 (fees) and the addition of Condition 15 (Transfer of Licence), plus minorchanges to definitions and layout.
ED/L01/011 1 June 2004 Gulf Total Tractebel Power CompanyWater Desalination and Electricity Generation Licence
Modification to Condition 10 (fees), minor changes to definitions, and changes in presentation.
REGULATIONS
ED/R01/001 1 Jan 2004 Water Quality Regulations (Revision 2)
The new revision of the Water Quality Regulations was approved and issued in 2004 taking account of currentinternational best-practice and the sector’s water quality performance to-date.
REPORTS
ER/E01/002 8 Mar 2004 ADWEC Electricity Demand Forecast Process
The Bureau carried out an audit of the process, assumptions and data used by ADWEC to produce theelectricity Demand Forecast for the sector. Some areas for improving the process, key assumptions and thepresentation of results were identified and implemented for the next forecast period.
43
Con
sulta
tion
Pap
ers
Consultation papers are designed to seek views from a range of stakeholders and other interested parties onmatters which may have a significant impact on licensees or customers.
ECONOMIC
Title Document No.
Licensing of UWEC's Production Activities (CR/L01/006)
Highlighted the potential regulatory and licensing issues arising from the possible transfer of water pipeline assetsowned by the Union Water and Electricity Company (UWEC) in Qidfa in the Emirate of Fujairah, to the Abu Dhabitransmission operator (TRANSCO).
2005 Price Controls Review First Consultation Paper August 2004 (CR/E02/020)
The commencement of the review of the price controls which apply to AADC, ADDC, ADWEC, RASCO andTRANSCO, due to take effect for the third price controls period (PC3) commencing January 2006.
ELECTRICITY
Transco Electricity Transmission Security Standards (CD/C01/005)
In accordance with condition19 of its Licence, TRANSCO is required to publish a security standard which can beused for the effective planning, operation and development of the transmission network. In 2004 the Bureaucarried out a consultation with licence holders to agree a new Transmission System Security Standard . This wasthe first time that such a standard has been formally defined against which the Bureau can monitor theinvestment proposals and performance of the transmission company.
Electricity Transmission Code Amendment (CD/C01/006)
During 2004 the Electricity Transmission Code panel reviewed all parts of the electricity transmission code andrecommended a number of amendments. The Bureau consulted with all Licensees on the proposedamendments which covered issues including data provision, scheduling, dispatch and panel membership. TheBureau approved the amendments in December 2004.
Consultation Papers
44
Con
sulta
tion
Pap
ers
Limits for Voltage Unbalance in the Electricity Supply System (CD/C01/008)
This was one of a number of new Engineering Standards which the Bureau developed with the distributioncompanies in order to specify and monitor technical performance parameters for the distribution networks. Thestandard also sets a base for procedures to address customer complaints when the electricity supply is outsidethe prescribed limits.
The Electricity Supply Regulations (CD/C01/009)
Under Law No. (2) of 1998, the Bureau is required to publish Electricity Supply Regulations to govern the technicalparameters, operational aspects and safety standards for electricity supplies to customers. These Regulations alsoput responsibilities on customers and building owners on safety and regular testing of their electrical wiring. Thisconsultation document was issued in the latter part of 2004
Voltage Fluctuations and Disturbances Affecting Customer’s Equipment (CR/T02/001)
Issued as an information source and guidance to customers who have problems with voltage fluctuations orother disturbances on their electricity supply system.
WATER
Water Distribution Key Performance Indicators (KPIs) – AADC / ADDC (CD/C01/007)
Defined performance expectations of licensees and reviewed the number and type of KPIs monitored within thewater sector.
Water Desalination, Transmission and Distribution Security Standards (CR/T03/001)
Established a co-ordinated set of appropriate Security Standards for the desalination, transmission and distributionwater sector to be applied in the planning and development of water networks.
Pub
licat
ions
Publications
TITLE PUBLICATION NO.
Water and Electricity Tariffs ER/P01/006 (Including special supply terms for bulk connections)
2003 Annual Report
Arabic Version ER/P02/007
English Version ER/P02/008
Annual Work Plan (2004) ER/P01/005
Current Scale of Charges and Services ER/E01/003
Copies are available upon request–charges may apply.
NOTE:All publications, consultation documents and current licences are available in PDF format from the Bureau’s website.www.rsb.gov.ae
Common terms used in this publication
IWPP Independent Water and Power ProducerMG Million Gallons *MGD Million Gallons per Day *MW Mega WattsMWh Mega Watt hours (Note: 1 unit of electricity equals 1 kilo Watt hour (kWh))PC2 Price Control Two (PC3 - Price Control Three)TIG Thousand Imperial Gallons (The unit of purchase and sale of water in the sector)
* Unless stated all Gallons are Imperial.
