The strategy for improved electricity distribution maintenance

1. The strategy for improved electricity distribution maintenance 9 June 2008

2. “the main economic impact of the power interruptions, both planned and unplanned, is the loss of output in the industrial sector. In a typical year of power shortages, arising from a deficit in generation capacity, these losses can be as high as US$ 0.66 and US$ 1.08 per kWh of energy loss, respectively. It is also observed that most industries have standby generation facilities to satisfy either, in full or partially, their own power requirements. The serious economic and environmental impacts of power interruptions, both planned and unplanned, underlines the importance of timely implementation of the long term least cost generation expansion plan and proper maintenance of transmission and distribution networks to ensure their high reliability”.

3. WHAT IS THE FUSS?

4. PRESENTATION OUTLINE • Energy White Paper Objectives • Evolution of policy and regulatory focus • Strategy for improved maintenance • What is in the pipeline? • CONCLUSION

6. 1987 1995 2004 2006 - Electricity Act Socioeconomic Focus Big jump in new connections Maintenance Summit 2003 NER Act for pipelines, gas and electricity Revenue cap regulation introduced Electricity Regulation Act plus Amendment to Cover municipalities Independent economic regulation Quality of supply becomes critical EVOLUTION OF POLICY AND REGULATORY FOCUS

7. STRATEGY FOR IMPROVED MAINTENANCE Partnership Regulation Improved Quality of Supply Monitoring Investment

8. STRATEGY FOR IMPROVED MAINTENANCE Regulation • Quality of Supply: section 47 of Electricity Regulation Act • Set performance targets relating to interruptions: • duration • frequency • Benchmarks in relation to peers

9. STRATEGY FOR IMPROVED MAINTENANCE Investment • Norms and standards • typical investment level based on regulated returns • how to balance costs, power quality, safety, environment • Asset management • Minimize overall life cycle and risk costs

10. STRATEGY FOR IMPROVED MAINTENANCE Monitoring and reporting • Statutory requirements for certain monitoring • equipment on critical infrastructure • example is SCADA on all key substations • Accessibility of information • component indicators e.g. age, maintenance costs • network indicators e.g. losses, outages per year

11. STRATEGY FOR IMPROVED MAINTENANCE Partnership • Licensees play central role • End user activism must be encouraged

12. WHAT IS IN THE PIPELINE? • New regulation in terms of Electricity Regulation Act to cover: • Key performance indicators like voltage deviations, harmonics, flicker • Framework for reports to the regulator including quality of supply interruptions and incidences, compulsory audits, customer relations regarding power quality specifically • Concomitant rules by the regulator • Municipal Fiscal Powers and Functions Act of 2007 • defines tariff • regulates surcharge relating to electricity service • Even more focus on institutional reform – EDI reform

13. CONCLUSION • Maintenance Summit 2008 has additional challenges: • The challenge for this gathering is to look at the entire ESI value chain in making recommendations; • Supply side is receiving attention with the build program • Quality of supply must receive due scrutiny, because maintenance drives quality of supply • Equally important is the need for the reform of the entire electricity sector to be conceived as a seamless process if we want to ensure its sustainability; • A need to institute early warning systems and response structures across the value chain; • A need to institute responsive monitoring, evaluation and resposive systems.

14. CONCLUSION • Symptomatic interruptions confirm poor maintenance and asset life cycle management • Brand South Africa needs to get act together • – own end users deserve better, let alone 2010 World Cup