Emergency Response and Business Continuity Plan

1. Emergency Response and Business Continuity Plan Special Task Team – Mandate & Constitution June 2010 Supported by EON Consulting

2. Agenda • Welcome and Introductions • Background • Begin with the End in Mind • Mandate, Structure, Integration • Roadmap & Deliverables • Method & Approach • Energy Response Wedges • Fact Sheets • Assign Responsibilities • Flight Plan for the next 4 weeks • Questions & Closure

3. Background • South Africa cannot afford economic recovery to be halted and the country plunged back into recession due to electricity shortages • The Electricity Supply Industry must be able to support economic growth • Significant risks of energy shortfalls in the period 2011 to 2015 • Short-term demand side and supply side solutions required to mitigate risks • Maintain line of sight with IRP2010 and integrate seamlessly into longer term supply plan • Various initiatives from different stakeholder perspectives have been launched, in a non integrated manner • Definition of Energy in context of this project to be interpreted as Electrical Energy

4. Confusion & Mixed Signals Policy, Regulation & Legislation Standard Offer vs Tax Incentives IRP 2 Demand Side Initiatives Supply SideInitiatives

5. Begin with the End in Mind

6. Begin with the End in Mind

7. Begin with the End in Mind

8. Structure & Mandate ( ) Key Stakeholders (IAP’s) Government Cabinet CoM BUSA BLSA SALGA Nedlac Cosatu NUM Ministers Inter-Ministerial Committee (IMC) Government Policy making entities (PME’s) DG/DDG’s Inter-Departmental Task Team (IDTT) Work Tracks NERSA Presidency Alignment facts and technical recommendations DoE Ministries SOE DTI DPE SOE Nt Eskom Technical WG 1 EIUG AMEU CoM NBI Responsible ministry Informing policy making Technical work (TTT) Technical WG 2 Specialist Work Technical WG 3 Emergency Response & Business Continuity Team Technical WG 4 Technical WG 5 Technical WG 6

9. The Planning Process(Way We Work) Debate A & B until all agree A The “uncertainties” in getting from A to B are sorted with a Systematic ABCD B CURRENT REALITY OBJECTIVES C D STRATEGY IMPLEMENTATION When A & B agreed Develop C When ABC agreed Develop D

10. Phase 1: Risk Assessment and Mitigation Measures • Identify the CURRENT Reality • Update post MYPD2 Supply curve • Update “Business as Usual” demand curve • Add additional contingencies to improve robustness of plan • Establish the Energy Shortfall Gap

11. Phase 1: Risk Assessment and Mitigation Measures • Solutions to close the Gap • Funded DSM  • Electricity efficiency awareness • Eskom Internal Efficiency improvement • Energy Efficiency Improvement • Public buildings program • Virtual Power Station (DMP and ULM) • Own generation and co-generation • Renewable generation • Willing Buyer Willing Seller • Municipal generation • IPP generation • Electricity Conservation

12. Phase 2: Engagement and Development (Strategy) • Parameter Sheets for each solution • Detailed definition of each solution • Impact on Supply or Demand curve • Assumptions included in establishing the parameter values • Parameter Values (Each solution’s contribution to closing the gap identified) • Range of parameter value • Preconditions for this parameter to be successful • Parameter Owner

13. Phase 2: Engagement and Development (Strategy) • Identify Constraints for each solution to be successful • Possible Remedies to break the constraints • Recommended implementation plans for each remedy 1 2 Describe Current Situation Agree the Objectives 3 Identify the “Uncertainties” Opportunities & Constraints 4 5 For each constraint Identify its REMEDIES Describe each Opportunity & its Constraints R1 For each remedy Identify its IMPLEMENTATION PLANS 6 R2 Rn IP1 IP2 IPn

14. Phase 3: Track and Monitor (Implementation) Opportunities • A • B • C • D Constraints • A • B • C • D Remedies • A • B • C • D Implementation of Remedies to remove Constraints standing in the way of the success of Opportunities in order to reach objectives (Filling the Gap)

15. Programme Roadmap • Objectives: • Prepare a 6 year Business Continuity Plan • Solicit participation & align stakeholders • A: Confirm the Current Reality • B: Define where we want to be • Identify & launch quick-hits • Outcome Expected: • A: Agree the current Demand and Supply picture or Gap • B: Define agree opportunity wedges to close Gap • Gather required data from all • Identify Constraints • Establish & communicate big picture perspective • Plan & launch engagement & develop phase • Outcome Expected: • Manage Implementation and create stability. • Track and Report on MW Savings and additional non Eskom Generation • Identify appropriate SOE to own and manage Programme • Outcome Expected: • C: Define how we can get thereD: What must be done to get there • Constraint resolution: Regulatory & Policy Barriers removed • Launch initiatives : Demand Management Opportunities • Launch initiatives : Supply Management Opportunities • Secure required funding • Capacity and Skills requiredto drive and manage PHASE 1“Assessment & Planning”A & B(Next 4 weeks) PHASE 4“Track and Monitor” (Post 18 Months) PHASE 2“Engagement & Develop”(Next 4 months) PHASE 3“Implement & Stabilise”(Over the next 18 months)

16. Wedges & Owners Ompi Aphane Tom Skinner Pieter Brand Nico Smith Nico Smith Charles Mahoney Du Toit Grobler / Wolfgang Fechter Tom Skinner Paul Vermeulen Val Geen / Paul Botha Mokgadi Matheekgana Doug Kuni Ian Morison Regulatory, Legislative, Policy and Funding

17. Parameter Quantification Rules • Parameter value quantification to consider two scenarios: • High probability targets under current regime (“as is” regime) • High Probability definition = high level of confidence (can substantiate) that the proposed project will be implemented and produce energy savings within the required time frames • Stretch targets, with binding constraints resolved (“to be” regime) • Ramp-up period: 2011 to 2016 • Double counting to be avoided: • Example 1: Co-Gen to meet Energy Efficiency Accord targets, counted only in Co-Gen wedge not Energy Efficiency or Conservation Wedge • Example 2: DSM initiatives, funded from National Government or NERSA (MYPD) to be counted once in Funded Initiative wedge • Primary departure point: • High probability Demand and Supply Initiatives identified • GAP after high probability initiatives, to be closed by Energy Conservation Management initiatives • Stretch targets, if achieved, will reduce gap and increase margin for error • All constraints towards realisation of targets to be identified

18. Proforma Example • Define the Wedge scope, in a standard agreed definition, to ensure category of either supply enhancement of demand reduction Parameter Description • Specific impact on either enhancing supply, or reduction demand, through adding actual MWs or reducing the electricity consumption, or shifting the load, outside the peak demand period Impact on Supply and Demand Gap • Document any assumptions required to affect the demand side reduction or supply enhancements. Assumptions included in establishing parameter value • Quantification of the actual parameters, through 2010 to 2016, by indicating the MW and TW/h impact. Wedges are made up from defined parameters (smaller building blocks). Supporting documentation, feasibility case or detailed calculations should be attached to this. Bankable in this case imply high probability projects / initiatives that will most likely yield an impact on either supply or demand. Parameter Value Quantification (Bankable or High Probability Savings) • Stretch targets refer to additional impact on Supply and Demand that can be achieved, by removing binding constraints, that can reasonably affected by changing energy regulation, policy, legislation or tariffs structures. Stretch Targets (Constraints removed) • Constraints refer to policy, legislative, regulatory or economic and funding issues, that can be defined, and debated through a transparent consultation process (via normal Government procedures). Constraints: (Legal, regulatory, policy, funding, tariffs, e.g. ) • Identify all potential stakeholders involved in this wedge, identify potential duplication in effort, or areas where integration or consolidation will yield a positive outcome. Stakeholder Landscape / Ownership

19. Flight Plan (4 weeks)

20. Emergency Response and Business Continuity PlanAppendix AWedge - Draft Definitions

21. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Wedge Definition Definition Parameters Demand Side Management Funded DSM Programmes Lighting (CFL’s) HVAC SWH

22. Policy / Regulatory / Stakeholder Considerations Definition Parameters continued… Demand Side Management Heat Pumps Shower Heads Compressed Air

23. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Wedge Definition Definition Parameters Demand Side Management Industrial Process Improvement Water losses management Energy Efficiency Improvement Supply Side Management

24. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Wedge Definition Definition Parameters Demand Side Management Generation input Energy Efficiency Internal awareness campaign Eskom Internal Efficiency

25. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Definition Definition Wedges Parameters Supply Side Management Wind Energy Concentrated Solar Bio Mass Renewable generation

26. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Definition Definition Wedges Parameters Supply Side Management ??? IPP generation

27. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Definition Definition Wedges Parameters Supply Side Management Own generation Distributed Generation (DG) / Distributed Energy Resources (DER) / Embedded Generation (EG)

28. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Definition Definition Wedges Parameters Supply Side Management ?? Co Generation

29. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Definition Definition Wedges Parameters Supply Side Management ?? Municipal Generation

30. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Definition Definition Wedges Parameters Supply Side Management ?? Willing Buyer & Willing Seller

31. Policy / Regulatory / Stakeholder Considerations Emergency Response Relevance Definition Definition Wedge Parameters Energy Conservation Demand Market Participation Rationing / Penalty System Energy Conservation Management Self Managed Conservation Cap and Trade System Utility Load Management (ULM) Virtual Power Station