Protecting Water Consumers & Ensuring Sustainability

1. CHIEF DIRECTORATE: ECONOMIC AND SOCIAL REGULATION ESR PROPOSED STRATEGY “Protecting the interest’s of water consumers throughout the water value chain and ensure the sustainability of water sector institutions” REGULATION IMBIZO Name Surname: Designation Directorate: Economic and Social Regulation Date: 13-14 May 2015 PRESENTATION TITLE Presented by: Name Surname Directorate Date

2. PRESENTATION OUTLINE • ESR Domains • Why ESR • Interrelated Drivers • Regulation reality • Regulation Dilemma • Draft strategy • Five year roadmap • ESR long term wish

3. ESR DOMAINS

4. WHY ESR Financial requirements Taxes Tariffs Transfers Uncertainty of actual costs; under-recovery; major grant funding; Inadequate investment in O&M refurbishment, development; poor service management; unaffordable services; poor billing and revenue collection; value for money Service delivery Asset development and maintenance Service quality Poor service quality; high costs to government Quantity Quality Reliability Impacts on human rights, well being, economic development; achievement of national development objectives; Water users (raw water and potable water)

5. INTERRELATED DRIVERS

6. REGULATION REALITY

7. REGULATION DILEMMA Safe water is the first step in breaking the poverty cycle.Consider the following scenario: • The walk for water that used to take three hours, now takes 15 minutes – this means: • water is now safe to drink.  • the extra time and new water source can be used to start a vegetable garden to feed the family. • they can sell extra food at the market.  • children spend more time in school instead of walking to fetch water. • once educated, children can become pilots, medical doctors and business executives. • The reverse of water access could mean amongst others, a different story altogether? • Ballooning poverty gap • No schooling • Health hazard and death fatalities

8. DRAFT STRATEGY VISION To be an independent, credible and transparent regulator who ensures that water-related goods and services, throughout the water value chain, are provided equitably, efficiently and sustainably, within the context of national socio economic policies.

9. DRAFT STRATEGY MISSION To regulate institutions, including competition regulation, as well as to regulate water pricing and tariffs, financial sustainability, service quality, social obligations and consumer protection by : • setting rules and putting service standards into place, • implementing regulations and enforcing compliance to ensure transparency and predictability in the water sector.

10. DRAFT STRATEGY MOTTO “Protecting the interest’s of water consumers throughout the water value chain and ensure the sustainability of water sector institutions”

11. DRAFT STRATEGY Mandate: • Ensure sustainable, affordable and safe water in the country • Make sure the rights of the consumers are protected • Prevent monopoly, wherever possible • Ensure a functional environment in terms of legislation and policies • Empower the SA Citizens (Improving the lives of the ordinary citizens

12. STRATEGIC OBJECTIVES/ PILLARS

13. STRATEGIC OBJECTIVES ORIENTATED TASKS • Analyse and monitor WB bulk water tariff determination process • Analyse and monitor the intermediaries' bulk water tariff determination process • Review of WSA/WB bulk water supply contracts • Analyse and monitor the retail water tariff determination process • Analyse and monitor waste water tariff determination process at retail level • Monitor compliance of WSAs to the regulatory requirements in water services. • Business process for raw water tariff approval • Regulatory model for review of all tariffs and policies (incl. impact studies on Bio-energy, Fracking, Water & Quality and IPP) • Finalize dispute resolution framework and manage consumer disputes by conducting technical investigations into disputes • Monitor service quality standards by ensuring quality services are provided to and experienced by consumers • Developing consumer voice and national surveys • Evaluate pro-poor tariff implementation as set by WSA’s

14. STRATEGIC OBJECTIVES Financial Strategic Theme 1: Set regulations for water tariffs and charges, perform financial assessments of WSIs, and enforce equitable and sustainable water tariffs and charges to ensure financial sustainability of WSIs

15. STRATEGIC OBJECTIVES Strategic Theme 1….

16. STRATEGIC OBJECTIVES Strategic Theme 1…

17. STRATEGIC OBJECTIVES Customer Strategic Theme 2: Define, monitor and publish service quality standards, and enforce these standards to ensure that water supply and sanitation services are reliable and that water and wastewater quality is acceptable

18. STRATEGIC OBJECTIVES Customer Strategic Theme 3 We will ensure service providers are accessible to consumers and that consumers are adequately protected by enforcing consumer protection decisions, dispute resolutions and interventions

19. STRATEGIC OBJECTIVES Customer Strategic Theme 4: We will set rules for water sector competition regulation, implement and enforce equitable water use licensing, review contractual arrangements and facilitate contract dispute resolution

20. STRATEGIC OBJECTIVES Internal business process Strategic Theme 6: We will develop and revise regulations and guidelines, as well as develop Economic Regulation systems and interfaces to establish the regulatory institution

21. 5 YEAR ROAD MAP • Long term (5 years and beyond) • Regulating water board tariffs • Review and approve water board corporate plans • Undertake socio-economic studies to understand the impact of tariffs • Regulate raw water pricing • Regulate retail water tariffs • Regulate sanitation tariffs • Develop the framework for incentive based regulation • Medium term (2-5 years) • Amend Legislation • Draft ESR act • Regulating water board tariffs • Developing the economic regulatory systems and processes • Develop framework for benchmarking water boards • Undertake socio-economic studies to understand the impact of tariffs • Regulate raw water pricing • Consumer surveys • Assessment of consumer charters • Contract regulation • Short term (1-2 years) • Developing pricing policies, regulation and guidelines • Developing database and baseline information for WSAs • Developing the economic regulatory systems and processes • Review raw water tariffs • Develop the frameworks for dealing with water disputes

22. ESR LONG TERM GOAL Reflect a sophisticated understanding of customer needs Convey a deep understanding of Sector economic changes Indicate detailed knowledge of competitors Result in increased profitability, sustainability and growth with the sector Are described in terms of clear and measurable operational outcomes Build on past successful strategies and exploit your competitive advantages Are executable by the organisation • What they value, how to build loyalty, and how to build switching costs • Differences across customer types and how they should be segmented based on needs • Impact of our offer on their value chain • Drivers of operational efficiency / value add • Economic drivers of value creation • Relative position in the market and in the customers’ eyes • The core of their business models and economics • Strengths, weaknesses relative to you • Actual and predicted behaviour and how they could respond to a changing environment • Create value for customers • Improvement in value creation for shareholders • Practical implementation paths • Explicit performance measurement • Skill mix, resources and information • Processes, systems and culture • Understand why success was achieved in the past • Knowing what attributes are better than the competitors

23. “Protecting the interest’s of water consumers throughout the water value chain and ensure the sustainability of water sector institutions”