Embed Size (px)
Citation preview
COMPLIANCE MONITORING REPORT OF EMFULENI LOCAL
MUNICIPALITY
Monitoring Date: 03 SEPTEMBER 2014
All enquiries and correspondence to be directed to the Head of Department unless indicated otherwise by means of a formal letter signed by the head of department: Electricity Licensing Compliance and Dispute Resolution. Tel: 012 401 4794 National Energy Regulator of South Africa Kulawula House 526 Madiba Street Arcadia Pretoria PO Box 40434 Arcadia 0007 Tel: +27 (0)12 401 4600 Fax: +27 (0) 12 401 4700 www.nersa.org.za DISCLAIMER This is a final report considered a true reflection of the implementation of the CAP based on information and evidence obtained from both the licensee and site verification of plant condition conducted during the monitoring process.
Page 2 of 25
TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................... 4
1. INTRODUCTION ...................................................................... 4
1.1 OVERVIEW ........................................................................................................................................ 4 1.2 MONITORING AND ENFORCEMENT OBJECTIVES ................................................................................ 5
2. METHODOLOGY ..................................................................... 5
3. NERSA AND EMFULENI LOCAL MUNICIPALITY DELEGATES 6
4. GENERAL INFORMATION ON EMFULENI LOCAL MUNICIPALITY 6
5. AUDIT FINDINGS ..................................................................... 7
6. RECOMMENDATIONS .................................................................. 8
7. PROGRESS ON THE IMPLEMENTATION OF THE CORRECTIVE ACTION PLAN ............................................................................................... 10
8. PLANT CONDITION DURING AUDIT VS. MONITORING TIME17
9. CONCLUSIONS ..................................................................... 24
10. RECOMMENDATIONS .......................................................... 24
11. NEXT STEP ............................................................................... 25
Page 3 of 25
EXECUTIVE SUMMARY The National Energy Regulator (NERSA) conducted a compliance audit on Emfuleni Local Municipality (‘the Licensee’) from 27 to 28 November 2012 to determine their level of compliance with the licence conditions. The objective was to determine the compliance of Emfuleni Local Municipality with the legal, financial and technical conditions of the electricity distribution licence. After the audit, findings were recorded in a draft report and forwarded to the Licensee for management comments with regard to the correctness of the findings in order to finalise the report. Emfuleni Local Municipality was then requested to submit a corrective action plan to address the instances of non-compliance highlighted in the report. On 07 June 2013, NERSA received a corrective action plan (CAP) from Emfuleni Local Municipality, indicating which rectifying action they intended to perform to correct the instances of non-compliance. On 18 August 2014, a notice was issued to Emfuleni Local Municipality to inform them that NERSA was planning to conduct a monitoring audit on 03 September 2014. The National Energy Regulator instituted a monitoring regime to ensure and enforce the implementation of the CAP. On 03 September 2014, the National Energy Regulator conducted a monitoring exercise on the implementation of the CAP at Emfuleni Local Municipality. The monitoring exercise was conducted in order to determine progress made in the implementation of the CAP. The National Energy Regulator is of the view that addressing issues raised during an audit will help Emfuleni Local Municipality to be a more efficient and effective licensee. This report depicts all the findings as per the audit and presents the status quo in terms of progress made at the time of the monitoring to address the non-compliances highlighted during the audit. During the monitoring exercise, NERSA conducted site inspections to verify progress made on the implementation of the CAP. It must be noted that some progress was made to improve the network condition and business systems of Emfuleni Local Municipality. The areas of improvement are depicted in detail in section seven of the report.
1. INTRODUCTION
1.1 Overview
The National Energy Regulator (NERSA) is required to monitor and assess whether the electricity suppliers comply with the conditions of their licences. The Energy Regulator approved a compliance monitoring framework for electricity distributors in 2011, which acts as a guide on how compliance audits
Page 4 of 25
and monitoring must be conducted. The framework is also supported by the Electricity Regulation Act, 2006 (Act No. 4 of 2006), Chapter 4 (a) (vii), which states that ‘the Regulator must enforce performance and compliance; and take appropriate steps in the case of non-performance’. The National Energy Regulator conducts the compliance audits on licensed electricity distributors annually. The National Energy Regulator regulates the energy industry in accordance with Government laws and policies, standards and international best practices in support of sustainable development. The organisation issues licences to electricity distributors and therefore requires audits to be conducted against key licence obligations. It is the National Energy Regulator’s mandate to monitor and enforce compliance with the licence conditions as per the Act. This monitoring process enforces and ensures improvement and sustainability of the licensees for the betterment of the Electricity Supply Industry (ESI), which will lead to improved quality of supply and service to customers.
1.2 Monitoring and Enforcement Objectives
The key objectives of the compliance monitoring and enforcement of the corrective action plans are to:
a) enforce implementation of the corrective action plan; b) help the licensee not to lose sight of critical matters that need to be
corrected; c) help the licensee to start doing self-monitoring in terms of their
performance against licence conditions; d) help the licensee to ensure that the quality of service and supply
does not decline; and e) inform the Energy Regulator of the progress made by the licensee in
the implementation of the corrective action plan. 2. METHODOLOGY
A corrective action plan template was developed and sent to Emfuleni Local Municipality (‘the Licensee’) to populate all the non-compliances highlighted during the audit, together with the intended corrective action plan (CAP) with target dates of implementation. This is to be used by the National Energy Regulator to monitor the progress made and to establish whether the timelines on the CAP were realistic in terms of addressing the issues highlighted during the audit.
Page 5 of 25
The CAP was sent to the National Energy Regulator after being signed by the relevant officials of the Licensee. The National Energy Regulator agreed on the CAP and instigated a monitoring process which robustly monitors progress. Progress is checked against target dates and remedial actions are implemented on an ongoing basis. Proof and supporting documents are requested and presented to the National Energy Regulator’s officials during the monitoring process. Site verification was also done to compare the current plant condition against the plant condition during the audit.
3. NERSA AND EMFULENI LOCAL MUNICIPALITY DELEGATES
NERSA was represented by the following officials: Mr B van Heerden Financial Compliance Officer Ms B Gobe Compliance Monitoring Engineer Mr G Hopkins Compliance Monitoring Technician Mr T Manaka Compliance Monitoring Technician Mr M Mudau Compliance Monitoring Technician Emfuleni Municipality was represented by: Mr M Tshabalala Acting Manager Electricity Mr J Lehoko Assistant Electricity Manager: Customer Service Mr CJ van Vuuren Assistant Manager: Electricity
4. GENERAL INFORMATION ON EMFULENI LOCAL MUNICIPALITY
Emfuleni Local Municipality (ELM) is a licensed electricity distributor (Licence No. NER/D/GT421) that supplies electricity to Vereeniging and Vanderbijlpark, including to:
a) Bophelong Ext b) Boipatong Ext c) Roshnee d) Rustervaal e) Eatonside f) Ironsyde g) Tshepong h) Sebokeng Hostel i) Vaaloever
Page 6 of 25
j) Tshepiso It has 65,422 customers, which are categorised as follows: 44,391 prepaid domestic; 15,742 domestic credit meters; 4,116 commercial and 1,173 industrial customers. There are nine bulk intake points under the Emfuleni Local Municipality area of supply and it has a total installed capacity of 1,875MVA. The maximum demand is 487 MVA. The total geographical area of Emfuleni Local Municipality is not known.
5. AUDIT FINDINGS
At the time of the audit in November 2012, the following was highlighted to the Licensee as areas that need attention and improvement:
a) Emfuleni Local Municipality does not supply electricity within the area of supply as prescribed by schedule 1 of the electricity licence (Legal Condition 5.1.1). Some geographical areas on the Municipality’s licence are not supplied by the Municipality.
b) The Emfuleni Local Municipality Electricity Department was not ring-fenced with respect to the balance sheet as certain percentages from the total Council expenditure was apportioned.
c) There were unfilled vacancies which should be addressed as a matter of urgency.
d) The Municipality does not have an apprentice programme in place. e) The planned expenditure for maintenance was only 1.6% of the total
planned expenditure for Emfuleni Local Municipality, whereas it should be at least 6%. This under-expenditure on maintenance by Emfuleni Local Municipality has the potential to lead to the deterioration of plant equipment.
f) The Municipality does not always have adequate stock available in the stores.
g) Although a maintenance plan was presented, the implementation of the plan was not satisfactory due to shortage of human resources. The Municipality does corrective maintenance and only minimum preventative maintenance.
h) There is no formal power quality management system in place at Emfuleni Local Municipality.
i) The general condition of the electricity network was mostly acceptable, except the Duncanville, Vereeniging and Vesco substations. The equipment at these substations was very old and long past its lifetime expectations. It has become obsolete as no parts are available for maintenance. Funds should be obtained and utilised to replace the equipment and upgrade the substations.
Page 7 of 25
j) At all the substations, either no safety signs were visible, or the safety signs were faded.
6. RECOMMENDATIONS
The following recommendations were made to the Licensee: Emfuleni Local Municipality should amend their distribution licence with NERSA according to their supply area.
The vacant positions should be filled and funds made available to appoint employees according to the departmental structure.
Urgent management intervention is needed at the Duncanville, Vereeniging and Vesco substations. The equipment is very old and is long past its lifetime expectations. It has become obsolete as no parts are available for maintenance.
The Licensee must maintain separate electricity distribution business affairs from the Licensee’s other affairs.
Emfuleni Local Municipality must budget at least 6% of total expenditure for maintenance of the electricity network.
Urgent management intervention should be considered to make sure that the funds budgeted for repairs and maintenance should be spent on maintenance in the same financial year that it was budgeted for.
Emfuleni Local Municipality was advised to update the stores system in order to keep sufficient critical stock in order to speed up repairs and limit the time of any outage.
The necessarily resources should be put in place to implement the maintenance plan to prevent the network from deteriorating.
Special attention should be given to the following findings with regard to the network condition:
a. There must be a replacement plan in place for the very old switchgears that are still in operation.
b. The faded safety signs should be replaced and all electricity equipment and surroundings should be indicated as dangerous as required by law.
c. The buildings should be maintained to prevent damage to equipment. d. The maintenance of substation yards in terms of vegetation management,
silica gel replacement and battery backup must be addressed to rectify the maintenance problem.
Page 8 of 25
e. The oil leaks at the substations should be attended to. f. The asbestos trench covers should be replaced with approved covers.
Page 9 of 25
7. PROGRESS ON THE IMPLEMENTATION OF THE CORRECTIVE ACTION PLAN
CORRECTIVE ACTION PLAN
Finding Possible remedy
Action taken/or to be taken Target date Condition during
monitoring day General
No training of apprentices
Implement an apprenticeship training programme with the assistance of external service providers.
The Cluster: Basic Services in cooperation with the Training section of Human Resources is in the process of implementing an apprenticeship training programme for the Municipality.
June 2014
The implementing of apprenticeship training programme was reported as complete, however training of apprentices had not started at the time of the monitoring visit.
No proper ring-fencing
Start the ring-fencing process
A bid document has been drafted and approved for advertisement for the execution of a Section 78 assessment of the Electricity Function, which should lead to the actual ring-fencing of the Electricity Function.
2015 and further
No proper ring-fencing. Target date is 2015.
Insufficient budget for maintenance (only 1.6% of total expenditure vs required 6%)
Increase maintenance provision annually to attain acceptable levels
The maintenance budget has been increased by approximately 39% in the draft budget for 2013/14.
Annually 01 July
The maintenance budget was shown and discussed with the monitoring team. The planned budget for 2014/15 was approximately 5% of the total expenditure.
Insufficient levels of requisite stock in the stores
Improved communication between the
Regular meetings to address the
Continuous action
The Municipality reported
Page 10 of 25
SCM and the user department
problems are held.
that there is an improvement in stock levels
Non-execution of maintenance plan. Mostly only corrective maintenance is done due to shortage of funding
Increase maintenance provision annually to attain acceptable levels
The maintenance budget has been increased by approximately 39% in the draft budget for 2013/14. Maintenance of equipment will be intensified follow higher budget allocation.
Continuous action
The maintenance budget was shown and discussed with the monitoring team. The planned budget for 2014/15 was approximately 5% of the total expenditure. Some preventative maintenance had been done.
No active monitoring of power quality
Additional power quality instruments to be purchased.
Additional power quality instruments have been purchased for the Main Intake stations from Eskom. More instruments to be purchased in 2013/14. Arrangements are being made to read and record the results of other existing instruments.
July 2014
Two instruments installed and operating at Munic S/S
Verdun Substation
Some corrosion on batteries
Clean, replace cells
Cells have been maintained during December 2012.
Dec 2012
It was clear that there was maintenance on the batteries, however continuous maintenance is required as there were signs of acid build up on some of the cells.
Duncanville
Page 11 of 25
Substation Stolen earthing at Duncanville Substation
Replace earthing
Stolen earthing has been replaced.
There was still no earthing on some structures
Leaking roof at Duncanville Substation
Repair leaks
The repairs for this substation, and others, are part of the maintenance plan for 2013/14.
June 2014
Repaired.
No Single Line Diagrams
Provide line diagrams (laminated)
We agree with the proposal of placing a single line diagram in the major substations and have put a process in place to have this done.
October 2013
Single line diagrams were visible at all the substations visited by the monitoring team.
Vereeniging DS Substation
One faulty transformer
Repair/replace transformer
Tenders are being invited
December 2013
Transformer was reported to be at LH Martinesen for repair.
Circuit breakers are very old
Repair/replace switchgear
Tenders are being invited
December 2013
Complete 03/09/2014
No safety signs on gates/doors
Replace signage
Orders have been placed for the purchase of new safety signs and this will continue throughout the next financial year. The replacement will also form part of the regular substation and other equipment maintenance and service inspections.
August 2013 and continuous action thereafter.
There were still no safety signs on the day of monitoring.
TR 41 Substation Silica gel needs replacement
Replace silica gel
Silica gel has been replaced
June 2013 and
Page 12 of 25
and is normally done as part of the regular inspection and maintenance activities. These activities will also be increased during 2013/14 due to extra maintenance funding being made available.
continuous action thereafter.
Silica gel was replaced
Vesco Substation
Substation old and some leaking oil
Upgrading of substation and repair of oil leaks
Tenders are being invited for upgrading of this substation. Tender for repairing of oil leaks is being evaluated currently.
June 2014
Transformers still leaking oil 03/09/2014
HV Switches burnt (11kV)
Repair/replace switchgear
Quotations have been received, order issued for the repair of the switchgear.
August 2013
Switchgear was replaced
Stones in yard to be replaced Replace stones
This will be done as part of the substation upgrading referred to above
June 2014
Contractor on site upgrading substation 03/09/2014
Steel structures rusted
Clean and paint structures
This will be done as part of the substation upgrading referred to above
June 2014
Contractor on site upgrading substation 03/09/2014
Batteries are corroded
Clean, replace cells
Batteries have been maintained and are inspected on a two-weekly basis
Continuous action
It was clear that there was maintenance on the batteries, however continuous maintenance is required as there were signs of acid build up on
Page 13 of 25
some of the cells. Munic Substation
Oil leak on oil tank of transformer 1 Repair oil leak
Tenders are being evaluated for the repair of oil leaks and filtration of transformer oil where necessary
June 2014
No change since the audit, transformer still leaking oil 03/09/2014
Rubble and vegetation
Clean substation
Grass has been cut but the rubble will be removed from the area during the winter period together with other large substation areas.
August 2013
It was clear that rubble and vegetation had been removed, however continuous maintenance is required as there was new rubble and vegetation starting to encroach within the substation.
No Single Line Diagram available
Provide line diagrams (laminated)
We agree with the proposal of placing a single line diagram in the major substations and have put a process in place to have this done.
October 2013
Single Line Diagram was present 03/09/2014
Frikkie Meyer Substation
Oil leaks on transformer 1 Repair oil leak
Tenders are being evaluated for the repair of oil leaks and filtration of transformer oil where necessary
No progress since 2012
Batteries show signs of corrosion
Clean, replace cells
Batteries have been maintained and are inspected on a two-weekly basis
Continuous action
It was clear that maintenance had been done on the batteries, however continuous maintenance is required as there were signs of acid build-up on some of the
Page 14 of 25
cells.
Batteries not on proper rack
Obtain and install proper battery stands
The situation has been noted and quotations will be invited to supply and install a proper rack during the first quarter of 2013/14
October 2013
Completed 03/09/2014
No Single Line Diagrams
Provide line diagrams (laminated)
We agree with the proposal of placing a single line diagram in the major substations and have put a process in place to have this done.
October 2013
Single Line Diagram was available 03/09/2014
Chopin Substation
No safety/danger signs
Replace signage
Orders have been placed for the purchase of new safety signs and this will continue throughout the next financial year. The replacement will also form part of the regular substation and other equipment maintenance and service inspections.
August 2013 and continuous action thereafter.
No progress since 2012
Open cable trench Close trench Fill up with sand and concrete topping
May 2013 Done 03/09/2014
Ventilation inadequate
Investigate solutions and implement
Quotations will be invited to install the proposed ventilation in the first quarter of
October 2013
No improvement since 2012
Page 15 of 25
2013/14
Battery connections are corroded
Clean, replace cells
The battery charger and the batteries are in the process of being replaced
June 2013
It was clear that maintenance had been done on the batteries, however continuous maintenance is required as there were signs of acid build up on some of the cells.
Mini Substations (TR 91, Black Forest, DPH 142, DHP 29)
Vegetation and rubble around some mini-subs
Remove vegetation regularly
This is a function of the Parks Department and they have been requested to clean around all substation and mini-substations on a more regular basis.
Continuous action
Rubble was removed, but more building rubble was dumped close to the mini-sub.
Overhead lines
Barbed wire barricade has been cut on Vesco towers
Repair safety barricading
This work is planned to form part of the replacement of earth wires on other sections of the same overhead line
Dec 2013
The Municipality reported this as completed.
Vegetation encroaching on 11kV lines in Mantevrede
Trim away vegetation and inspect regularly
The appointed contractor is busy with the trimming away/removing of vegetation
May 2013 and continuously
The Municipality reported this as completed.
Pole mounted trans-formers
Vegetation growth to be attended to in some places
Trim away vegetation and inspect regularly
The appointed contractor has attended to this identified problem
May 2013 and continuously
ELM Reported this was done and is ongoing.
Page 16 of 25
Distribution licence to be amended
Redefine actual borders
Report is in the process of being drafted for submission to the Senior Management and Council
December 2013
Not submitted to NERSA.
8. PLANT CONDITION DURING AUDIT VS. MONITORING TIME
The photos below depict the condition of the network equipment during the audit compared to the condition during the monitoring process.
Page 17 of 25
Verdun Substation
In 2012, battery connectors were corroded. In 2014, cells replaced and cleaned. Duncanville Substation
In 2012, transformers 6, 7 and 8 had serious oil leaks. In 2014, the leaks on the transformers repaired.
In 2012, the earthing on the steel structure was stolen. In 2014, there is still no earthing on the steel structure due to theft.
Page 18 of 25
In 2012, the building’s roof was leaking. In 2014, the leaking roof of the building repaired. Vereeniging DS Substation
In 2012, the asbestos cable trenches were broken. In 2014, the asbestos cable trenches still not repaired.
In 2012, vegetation was a very serious problem. In 2014, vegetation removed and yard stones laid around the yard.
Page 19 of 25
TR 41 Substation
In 2012, silica gel needed to be replaced. In 2014, silica gel replaced. Vesco Substation (Vanderbijlpark)
In 2012, a breaker had blown in control room. In 2014, a new breaker was installed.
In 2012, yard stones and vegetation need attention. In 2014, vegetation removed and yard stones laid.
Page 20 of 25
In 2012, corroded battery evidence of In 2014, battery still not maintained, corrosion visible. insufficient maintenance. Munic Substation (88kV Main intake)
In 2012, rubble and vegetation at transformer 1. In 2014, rubble and vegetation visible
In 2012, oil leak at the oil tank of transformer. In 2014, repairs still not done at oil tank of transformer 1.
Page 21 of 25
In 2012, safety signs had faded. In 2014, faded safety signs still not replaced. Frikkie Meyer Substation
Evidence of oil leaks at transformer 1 in 2012 Oil leak still visible in 2014.
In 2012, backup battery of 88KV corroded. In 2014, battery requires continuous maintenance
Page 22 of 25
Chopin Switching Station
In 2012, open cable trenches. In 2014, cable trenches covered.
In 2012, corroded batteries. In 2014, batteries still corroded. Mini-Substations
In 2012, rubble in surrounding of mini substation TR91. In 2014, cement mixture in surrounding of mini substation TR91.
Page 23 of 25
9. CONCLUSIONS
Emfuleni Local Municipality displayed a high level of commitment during the monitoring exercise to address all the instances of non-compliance highlighted during the audit. This was evident from the fact that there were contractors on different sites, attending to the non-compliances. At the time of the monitoring exercise, it was observed that most of the issues highlighted by the audit were being attended to. The table above depicts the progress made by the Licensee to address the instances of non-compliance highlighted during the audit.
Emfuleni Local Municipality is committed to addressing the non-compliances highlighted, as is evident from the preparedness of the representative at the meeting. The representatives from Emfuleni Local Municipality were willing to discuss the budget expenditure with NERSA during the meeting. There is still more work that Emfuleni Local Municipality needs to attend to in order to improve its level of compliance with the distribution licence conditions. The necessary funds should be made available to attend to the outstanding upgrades to and maintenance of the network.
10. RECOMMENDATIONS
It is recommended that Emfuleni Local Municipality should maintain the high level of dedication and commitment to improve the level of compliance with licence conditions and impose a self-monitoring regime to ensure that it does not deteriorate back to non-compliance.
Page 24 of 25
11. NEXT STEP There are still instances of non-compliance that need to be addressed by the licensee. As a result, the Energy Regulator expects the licensee to implement the corrective action plan until all the instances of non-compliance have been fully addressed in order to improve the licensee’s level of compliance. The National Energy Regulator will continue to monitor the licensee’s implementation of the corrective action plan on an ongoing basis to ensure that all the findings are addressed. Once the remaining projects in the CAP have been concluded, the Licensee must send a closeout report to the National Energy Regulator. It is expected that the licensee will now implement a self-monitoring regime to ensure that the improved areas do not deteriorate back to a situation of non-compliance. Further monitoring exercises to be conducted by the Energy Regulator on the licensee will be communicated to the Licensee in due course.
All communication should be forwarded to the Head of Department unless indicated otherwise by means of a formal letter signed by the Head of Department: The Head of Department Licensing, Compliance and Dispute Resolution: Electricity National Energy Regulator of South Africa PO Box 40343 Arcadia 0007 Fax: +27 (0)12 401 4700
Page 25 of 25
