NERSA NEWS Volume VI edition1 2011

Volume VI, Edition I, 2011Official Newsletter of the National Energy Regulator of South Africa

Contents

NEWS

02 Editor’s note Energy efficiency under the spotlight - and NERSA welcomes its new CEO

03 From the desk of the CEO NERSA CEO and full-time regulator members

appointed

InsIdE OUT, reflecting our outward-bound activities ...

04 Energy efficiency Are you energy efficient?

05 Regulatory services AFUR Conference

07 Events Regional forum places African economy under the

spotlight

08 Public hearings and licence approvals Public hearings and applications - fair and informed outcomes

09 Pipeline tariffs New tariffs for Transnet’s petroleum pipeline

10 International relations NERSA shares energy supply experience with

Japan

12 Regional relations Zambian Energy Regulation Board visits NERSA

13 Farewell message from outgoing CEO Time to say goodbye

14 Out and about Utilising exhibition platforms to convey NERSA’s

messages

15 Community outreach NERSA’s outreach benefits disadvantaged

scholars

OUTsIdE In, a glimpse at our internal activities …

16 Energy consumption Let’s be energy efficient

17 IT Wise Correct use of IT equipment for a healthy work

environment

18 Capacity building Bibliographic databases invaluable resource tools

19 nERsA Calendar of Events: June - August 2011

2 Volume VI,I

Editor’s Note

Mr Charles Hlebela

In this issue of NERSA News, the spotlight falls on energy efficiency and

tips to conserve this valuable resource, as well as Transnet’s pipeline tariffs for the current financial year. We report on a number of regional events held in South Africa, including the fifth Africa Economic Forum, Africa Utility Week Conference and Exhibition, and the eighth annual conference of the African Forum for Utility Regulators (AFUR).

Our regular section on public hearings include feedback on the licensing of petroleum facilities and the granting of construction and operation licences. We were also pleased to host visitors from Japan and Zambia, and we profile our new CEO, who joined NERSA at the beginning of May this year.

In Outside in, where we focus on employee wellness, there are regulator appointments and a farewell from our outgoing CEO.

As always, we want to ensure that you enjoy reading every issue of NERSA News. Your feedback is highly appreciated and helps us to improve the newsletter to meet your communication requirements.

Energy efficiency under the spotlight

Contact Poppie Mahlangu at [email protected] with your comments about any aspect of the newsletter or to contribute to the next issue, which is due out in August 2011.

Enjoy.Charles Hlebela

Contributors:

Our thanks goes to:

Mpho Nemukongwe; Peter Buys; Henri Ndlovu; Jacquelene Coetzer; Tebogo Majatladi; Takalani Hadzhi; Buyiswa Bingwa; Wanda Langenhoven; Erna Alberts; Fiona Mbewe and Martin Untied

for their contributions to this issue of NERSA News.

Ps:

Visit our website at www.nersa.org.za for updates on our activities, public hearings and events calendar.

- and nERsA welcomes its new CEO

The Official Newsletter of the National Energy Regulator of South Africa 3

From the desk of the CEO

nERsA CEO and full-time regulator members appointed

The appointment of NERSA’s new CEO, Phindile Nzimande, was confirmed

by Cabinet on 6 April 2011 to replace former CEO, Smunda Mokoena, whose contract had come to an end. Cabinet also approved the appointments of Thembani Bukula as a full-time regulator responsible for electricity regulation, Ethel Teljeur as full-time regulator member responsible for piped-gas industry regulation and Dr Rod Crompton as full-time regulator member responsible for petroleum pipelines regulation.

These appointments are for a period of five years, effective from 1 April 2011.

nERsA's new CEO - a profile

An admitted attorney and conveyancer, Phindile Nzimande joins NERSA after a 15-year career that has taken her from candidate attorney in 1994 to Chief Executive Officer of EDI Holdings (Electricity Distribution Industry) in 2003.

Phindile Nzimande is an acknowledged strategist with remarkable business acumen gleaned from more than 10 years’ experience at executive and senior management levels in the public and private business sectors in South Africa.

For the past seven years she has led EDI – a state-owned company tasked with restructuring the electricity distribution industry in South Africa – in its initiatives

to establish six financially viable Regional Electricity Distributors (REDs) in the country. The design, execution and management of this national project involved approximately 30 000 employees and assets worth R270 billion.

After graduating with a BProc and LLB from Wits University and serving articles, Phindile became a Professional Assistant at Wright Rose Innes in Germiston before joining a law firm in Pretoria for a year. She left the legal practice in 1994 to take up a role in government as Strategic Management Team Legal Advisor to the then Gauteng MEC for Housing and Local Government. A year later, in 1995, President Nelson Mandela appointed her to the Board of the National Urban Reconstruction and Housing Agency (NURCHA), one of his Presidential Lead Projects for the Reconstruction and Development Programme to unblock funding for low income housing.

Prior to joining EDI in 2003, Phindile spent seven years with the City of Johannesburg Metropolitan Council, where she held a number of key positions and gained invaluable experience in strategic planning, managing complex projects and spearheading transformation initiatives. Initially appointed as an Executive Officer responsible for cooperative and local government support, she also acted as the legal advisor to the Office of the City Manager and Transformation

Ms Phindile Nzimande

Lekgotla. She also became the Executive Sponsor and key negotiator for the Kelvin Independent Power Project, South Africa’s first IPP transaction and a notable achievement at the time.

Phindile ended her tenure at the Council as the Executive Director of the Contract Management Unit, which was established under her leadership to manage and regulate the relationship between the Council and Municipal Owned Entities. During this time, she compiled a communication protocol for seamless service delivery across the entire City Council and created the legal and governance frameworks for the MOEs that are still used today.

In addition to the NURCHA Board, she also served on the Sanparks and Momentum Boards. Currently, she is a member of the MERSETA and Common Purpose Boards, as well as the Wits University Council.

Phindile also holds a Certificate in Urban Planning and Management from the University of the Witwatersrand (1998) and successfully completed the Programme on Public Utility Regulation Strategy at the Public Utility Research Centre of the University of Florida in the US in 2000, as well as the Senior Executive Programme at the Wits Business School/Harvard Business School in the same year.

4 Volume VI,I

INSIDE, REFLECTING OUTWARDS ...In the front section of our quarterly newsletter we provide readers with an ‘inside, reflecting outwards’ perspective of NERSA’s challenges and achievements, as well as our work-in-hand and the status of our regulatory activities as they affect our stakeholders and the public at large.

Globally, many decades of experience in energy generation

has shown that wherever energy is used, it is possible to increase efficiency. Economic analyses of the cost of energy efficiency clearly indicate that it is cheaper than most kinds of energy generation.

Technology exists today to implement efficiency in many different areas. Innovations in technology have also decreased the costs of renewable energy, while funding for ‘clean power’ has become more readily available due to concerns about the effect of green house gas emissions on climate change.

There is no doubt that in South Africa too, there is significant potential to save energy. According to the Department of Energy, up to 30% of current energy usage could be saved. It would also be the easiest and most cost-effective option to reduce the country’s electricity shortage.

In his State of the Nation address delivered to Parliament in February this year, President Jacob Zuma identified 2011 as the start of procuring power from renewable energy power producers. “We must all save energy so that we do not have to resort to load shedding again as a saving measure,” he said.

Both Government and the private sector have committed themselves to limiting wastage through a number of energy efficient measures. These

include reducing environmentally damaging emissions to stabilise green house gas concentrations, using renewable energy sources and energy efficient production methods to save electricity, and mobilising South Africans to participate actively in saving and conserving energy.

NERSA has also allowed Eskom to recover the cost of energy efficiency through tariff increases over a three-year period. The utility’s medium-term report illustrated below shows the usage forecast against available capacity.

Figure 1: Eskom’s medium-term report, showing available capacity and forecasted usage.

Source: Eskom medium-term adequacy reportKey: MW: Mega Watt; OR: Operating reserves from generation; UN: Unplanned Outage Allowance

The unplanned failure of a generation plant often happens at random. Several units may fail at the same time, or none at all. Due to the random occurrence of forced outages, it is important to monitor the reserves capacity to address current trends in electricity generation, use of demand-side resources and increased energy efficiency, and plans for meeting future electricity needs that will result in reliable supplies of electricity.

Energy efficiencyAre you energy efficient?

Forecast (MW)

Available capacity in MW (Less OR and UA)

Available capacity (MW)

Capacity Reserve margin (%)

6%

4%

2%

0%

-2%

-4%

450 000

400 000

350 000

300 000

250 000

200 000

150 000

100 000

50 000

014 15 16 17 18 19 20 21 22 23 24 25 26 27


Table 1: Eskom’s current operational usage forecastWeekly system status

MW MW

Week start WeekOperating surplus/deficit

Risk

4 April 2011 14 1 803 Adequate

11 April 2011 15 -963 High

18 April 2011 16 -585 High

25 April 2011 17 -607 High

2 May 2011 18 -1 104 High

9 May 2011 19 -866 High

16 May 2011 20 -1 075 High

23 May 2011 21 -1 145 High

30 May 2011 22 -1 171 High

6 June 2011 23 -1 111 High

13 June 2011 24 -591 High

20 June 2011 25 -628 High

27 June 2011 26 -545 High

4 July 2011 27 -704 High

What is energy efficiency?Using energy efficiently reduces the amount of energy required to deliver

products and services and is mostly achieved by using more efficient technologies or production processes. Energy efficiency is the cheapest and most effective way for South Africa to satisfy its rapidly increasing power demands. The energy savings might seem to be small, but they will cut your electricity bills and help reduce blackouts and power failures. Becoming energy efficient doesn’t have to be a costly exercise – in fact, it can save you money!

Are you energy efficient?Energy efficiency helps to prevent load shedding, saves money and reduces carbon emissions. Every energy consumer can contribute to the country’s drive to save energy by following a few simple guidelines.

Switch off the lights when you leave a room. Replace your old light bulbs with compact fluorescent lamps (CFLs). Available at most supermarkets, they save up to 80 percent and last six to eight times longer than ordinary light bulbs.

In the kitchen, do not open the oven door when cooking, as heat escapes and

energy is needed to make up for it. Do not fill your kettle completely, boil only the quantity of water you really need. Let hot food cool properly before refrigerating or freezing, as extra power is needed to chill something that is warm. Empty your fridge and switch it off when you go on holiday and only use your dishwasher when it is full.

Heaters, air-conditioners and geysers generally use the most energy in a household, Usage ranges from 16 to 39 percent. Cut costs by turning your geyser down to 60ºC, shower instead of having a bath and use cold water to wash your hands, fruits and vegetables. Try not to let water run from the taps unnecessarily and fix leaking hot water taps, as they can easily waste up to 18 litres of water per day.

Dress warmly in winter before using a heater and switch off the electric blanket when you get into bed. Only use heaters in occupied rooms and If you use air-conditioning in summer, keep the temperature in the ‘golden zone’, which is between 18˚C and 22˚C.

Globally, regional infrastructure networks are contributing to the

integration of gas and electricity, as well as harmonising costs and regulations, and invigorating investments to attract foreign capital. The effective functioning of these regional networks is based on energy information systems that support informed analyses and planning to sustain development.

Africa is the only region without such a regional network.

This issue is, however, being addressed through the initiatives of the African Forum for Utility Regulators (AFUR). Regarded by the African Union as a key building block in the regulation of the region’s energy, telecommunications, transport and its water and sanitation industries, AFUR aims to establish and foster cooperation among utility regulators in Africa to support the continent’s growth and socio-economic development.

AFUR recently hosted its Eighth Annual Conference at the Eskom Convention

Centre in Midrand, Johannesburg on 19 and 20 April 2011 under the theme: Balancing the interest of stakeholders in regulatory services. The objectives of the conference were to support effective utility regulation in Africa and find best practices and shared solutions in balancing the interest of stakeholders in regulatory services.

Approximately 120 delegates from multi-sectoral industries across Africa attended the event.

Regulatory servicesAFUR Conference

6 Volume VI,I

In the opening address, delivered on behalf of South Africa’s Minister of Energy, Dipuo Peters, by the Minister’s Special Advisor, Jonathan Davies, AFUR was identified as a critical forum for shaping new ideas and initiatives for infrastructure services in Africa and balancing the interests of all stakeholders in regulation.

“The role of AFUR is to help impel Africa to leap forward by contributing cutting-edge approaches toward the improvement of the regulation of utilities in such key areas as communication, energy, water and sanitation, and transport. Utility regulation is critical and all parties need to be considered.”

The Minister suggested ways to address this, such as public-private partnerships in infrastructure regulation, Centres of Excellence in regulation through training and evidence-based research, pooling resources and sharing experiences, empowering stakeholders as gatekeepers of standards for utility regulation, and strengthening AFUR to contribute more effectively to regulating utilities in Africa.

Mr Thembani Bukula, Full-time Regulator Member responsible for electricity, presented the South African reality of balancing the interests of all regulatory services stakeholders: the interests of government versus those of operators. Historically, the vertically integrated electricity industry was Government-owned and operated. Since unbundling occurred in 2002, various operators and independent producers have become involved in energy generation, transmission, distribution and reticulation activities.

According to Mr Bukula, “Government’s interests are focused on six deliverables, which – with effective national application – will benefit energy consumers across the country.” These include security of supply with sufficient generation, transmission and distribution capacity and the integration of resources for national utilisation.

Jobs will be created through localised manufacturing plants, while the use of

climate-friendly technologies will result in low carbon emissions, the use of renewable energies, creating affordable and accessible services with low cost sources and efficient and sustainable operations.

Conversely, operator interests include guaranteed revenue streams and attractive returns. These include credit-worthy off-takers, Government guarantees (backstopping) and regulatory certainty, as well as United State Dollar (USD)-based returns (above 14 per cent) and insulation from foreign exchange fluctuations.

In addition, operators are interested in long-term binding agreements, such as 20-year agreements with year payback periods of 8 to 15 years, take-or-pay contracts, guaranteed grid access and low (or no) risks or transferred risks, which include favourably allocated risks.

“Balancing these, at times, disparate interests,” said Mr Bukula, “comes down to two drivers: Multi-Year Price Determination (MYPD) and Renewable Energy Feed-In Tariffs (REFITs).” The MYPD affects the entire electricity supply industry, provision of ‘guaranteed’ revenue streams and grid upgrades to guarantee access, while REFITs offer initial attractive returns that are adjusted annually, selection criteria to enforce/enable Government

requirements, affordable and accessible electricity for consumers, and regulatory certainty.

The conference showed, yet again, that regulators in Africa need to further build and foster more effective partnerships and networks through regional bodies such as AFUR so that they can pool resources and share knowledge and experience on effective and efficient methods for improvement and development. The need for harmonisation or complementing regulatory policies and service standards will not be met without more effective forums for information exchange that take the views and opinions of all stakeholders into account.

The key stakeholders of the regulatory process, i.e. the government, operators and consumers, often have conflicting interests, as Mr Bukula explained. The regulator’s task is to ensure that the interests of consumers on the one hand, and operators on the other, are balanced in a manner that will further the ideas enshrined in government policy, as well as making the delivery of services sustainable and representing value for money for consumers. In this regard, it is imperative for the regulator to remain unbiased and ensure that it is not influenced by either of the two principle stakeholders – consumer and government.


The shape and shifts of the African economy and the continent’s emerging

role and strategic position within a highly-competitive and rapidly globalising world were placed under the spotlight at the fifth Africa Economic Forum held at the BMW Pavilion Theatre at the V&A Waterfront in Cape Town during March this year.

The programme consisted of more than 50 plenary presentations, as well as break-away sessions conducted parallel to the main sessions. NERSA’s well-presented exhibition stand drew much attention, as did its branded carry bags and reading material, which included the 2010 NERSA Annual Report.

Africa’s economy, the realignment of investments and the domestic needs of the continent are some of the issues that were addressed by many of the presenters. According to Peter Buys, one of NERSA’s representatives at the event, “it was clear that African governments have broadened their inter-state, cross-border, political, diplomatic, security and financial links in such a way that investors and companies needed repositioning for long-term competition.”

The realignment meant that reforms in South Africa’s key liquid fuels, energy and power markets should create openings for private Independent Power Producers in national grids and the development of regional power markets.

“All energy forms need to be economically balanced, so that more renewable energy could become part of this equation in the future. The current state of affairs does not attract such entry

and therefore requires state investment strategies to be more reliant on subsidies and excessive regulation,” says Buys.

It was evident from much of the discussion at the event that many constraints still hinder growth and development in Africa. Some of these are inherited, while others are self-inflicted, with a number of restrictions that could be removed or mitigated through better strategies.

As elsewhere in the world, fast-expanding consumer markets require a supply side that grows at the same pace, if not faster, than its market. Should this not happen, Africa will remain at the bottom rung of the development ladder, with skills that are limited to ‘hand-to-mouth’ survival. This is the same old hindrance that has, over centuries, reduced a continent richly endowed with natural resources to a third world aggregation.

South Africa, and NERSA’s, role in this regard is to ensure that this country remains a key destination for investment and that its domestic companies continue to seek a wider African footprint. Regulatory principles that are transparent, firm and ethical are, on their own, a good attraction for investment by foreign companies, including overseas interest. It also offers the opportunity for them to learn from us, as well as for us to learn from them. By implementing this, NERSA is one step closer to what it strives to achieve: being a world-class leader in energy regulation.

EventsRegional forum places African economy under the spotlight

The conference focused on issues such as the prospects and challenges of the regulation of infrastructure services in South Africa and the African region, as well as the implications for stakeholders.

Stakeholder perspectives on regulatory performance with input from the Africa Electricity Regulator Peer Review and Learning Network, as well as on government versus operator interests and national versus regional community interests were also discussed.

In addition, papers were presented on:• Financing transmission

expansion in Africa• The limits to regulation

– when policy and administrative oversight is more appropriate

• Incumbent public utilities versus new entrants

• Regulation of IPP contracts versus public utility generation

• Natural monopoly versus competitive activities

Delegates during the AFUR conference - Left: Mr R Mochebelele (MC), Mr S Scheepers (Eskom), Mr Huruna Masebu (Deputy Chairperson AFUR), Mrs C Khuzwayo (NERSA Chairperson), Mr J Devries (Department of Energy), Ms D Roets (Executive Secretary AFUR)

8 Volume VI,I

NERSA’s Petroleum Pipelines Division held public hearings during the fourth quarter of the 2010/11 financial year to consider matters relating to the licensing of petroleum facilities as follows:

date Application Applicant description

3 Feb 2011

Licences to operate three storage facilities in the Mpumalanga province

Mpumalanga Petroleum CC trading as BP Mpumalanga

Existing storage facilities located in Ermelo, Bethal and Belfast

10 Mar 2011

Petroleum pipeline tariff application for 2011/12

Transnet Limited Petroleum industry I&APs* presented views on NERSA’s draft tariff determination published for comment on 28 January 2011 in the Business Day, Star, Cape Times and Pretoria News.

*I&APs: Interested and Affected Parties

During the fourth quarter of the 2010/11 financial year, NERSA considered and granted the following construction and operation licences:

Applicant and application description, outcome and way forward

BP southern Africa (Pty) Ltd and shell south Africa Refining (Pty) LtdConstruct six petroleum pipelines to transfer product from BP and Shell storage facilities to Transnet’s NMPP coastal terminal in Island View, Durban

Construction is due to start early in 2011.

Mpumalanga Petroleum CC trading as BP MpumalangaOperate three storage facilities in the Mpumalanga Province

The licence was granted on 7 March 2011. These facilities are existing and are already operational.

sasol Oil Ltd Operation of a pipeline connecting the Sasol Oil coal-to-liquids Refinery in Secunda and the National Oil Refinery (Natref) in Sasolburg

The pipeline construction is nearing completion and will be ready for commissioning in June/July 2011.

sunrise Energy (Pty) LtdConstruct Liquefied Petroleum Gas (LPG) loading and storage facilities in Saldanha Bay in the Western Cape

The development project is still in its early stages and the Environmental Impact Assessment process as well as the approval by Transnet National Ports Authority is still outstanding.

Transnet Limited2011/12 Petroleum pipeline tariff increase application

I&APs from Transnet Ltd, BP SA. Sasol Oil (Pty) Ltd and Petroline (Pty) Ltd presented their views on NERSA’s draft tariff determination at the public hearing.

NERSA considered all views presented. Its final decision, made on 31 March 2011 and published at www.nersa.org.za, allowed Transnet a 59.9% increase in allowable revenue compared with the 2010/11 tariff period.

Public hearings and licence approvalsPublic hearings and applications - fair and informed outcomes


NERSA approved a 59.9% increase on 31 March 2011 in response to Transnet’s application for a 69.1% increase in allowable revenue for the operation of its petroleum pipeline system, the New Multi-Product Pipeline (NMPP), for the 2011/12 financial year. The increase will allow the state freight logistics group to increase allowable revenue by R0.7 billion during the year.

The tariff increase has led to a concomitant petrol price increase in Johannesburg of 18 cents per litre. This resulted directly from the decision by the Minister of Energy to use the pipeline tariff as a proxy for the cost of transporting fuel from Durban to Johannesburg.

According to Dr Rod Crompton, NERSA’s regulator member responsible for petroleum pipelines, the size of Transnet’s revenue increase was largely attributable to the fact that a significant part of the NMPP has been included

in the regulatory asset base that will start operating in the current financial year. “It includes the 24-inch diameter trunk line from Durban to Jameson Park scheduled to start operating in January 2012, with further additions to the asset base anticipated in 2012/13,” said Crompton.

Crompton stated that the approved increase could have been more than a third higher had it not been affected by clawback adjustments from previous years. These mostly relate to the value difference in the group’s starting regulatory asset base for the 2008/09 and 2009/10 financial years and the six month delay, since June 2010, in bringing new pipelines into operation.

“These are three 16-inch pipelines of the NMPP running from Jameson Park to Alrode, Alrode to Langlaagte and Kendal to Waltloo,” according to Crompton. The Energy Regulator is concerned about

Pipeline tariffsnew tariffs for Transnet’s petroleum pipeline

the unpredictability of Transnet’s tariffs due to the delays in the commissioning of new pipelines and the regular increases in project costs. NERSA undertook to investigate the meaningful benchmarking of petroleum pipeline tariffs.

“Once the NMPP project has been completed,” said Crompton, “we will investigate whether the costs were prudently incurred or not.” The initial projection in 2007 of R11 billion for the 550km pipeline from Durban to Johannesburg increased dramatically to R23.4 billion in 2010.

This dramatic increase, as well as the delays, are currently being investigated by a task team appointed by the Minister of Public Enterprises, while BP Southern Africa also supports NERSA’s concern about rising tariff costs.

Until recently, the rationale for Transnet’s tariffs was an unknown factor. Extensive consultations with stakeholders, however, has enabled the Energy Regulator to apply a rational and systematic basis for setting tariffs for the first time this year. While the approach adopted was chosen as the one with the least adverse economic impact, it does not affect all customers equally.

In addition, NERSA considered the following applications to amend licence conditions:

Applicant and application description, outcome and way forward

FFs Refiners (Pty) LtdThe revocation, alternatively amendment, of its licence conditions to operate three petroleum storage facilities

The request was NOT granted. The Licensee will have to comply with its conditions of licence in accordance with the original licence conditions issued to FFS.

Engen Petroleum Ltd The amendment of its operation licence for its Polokwane Depot storage facility

The request was granted to remove the storage tanks, since Chevron is the legal owner. Chevron has already removed the tanks for use at one of it’s commercial sites.

Public hearing on Transnet tariff application

10 Volume VI,I

At the end of January this year, NERSA hosted a seven-team delegation

from JEPIC, Japan’s non-profit Electric Power Information Centre. The purpose of the visit was to share information with JEPIC’s power supply experts about NERSA’s role in South Africa’s energy supply and electricity power industry.

Globally, countries are increasingly experiencing challenges in sustainable energy generation. Pressure to change the way in which energy is utilised to achieve social, economic and environmental goals has prompted governments in a number of developing countries, such as the Southern Africa Development Community (SADC) member states, to develop better policies to regulate their energy sectors.

As a result, SADC’s combination of economic growth, regulatory regimes and increasing demand for electricity is of particular interest to Japan, which as a country is only 16% energy self-sufficient due to a lack of domestic energy resources, but is recognised internationally as a leader in energy efficiency.

South Africa is a particularly attractive destination for JEPIC’s technical cooperation programmes and investigations into foreign commercial investment opportunities in energy supply businesses.

During a previous visit to South Africa in 2008, a Japanese delegation found that energy efficiency in South Africa is exceptionally low – a situation that needs to be addressed urgently, especially in view of the country’s dire need for more electricity to aid economic growth.

Japan is already working closely with South Africa in human resource development through the Japan International Cooperation Agency (JICA). In similar vein, JEPIC’s International Cooperation Centre (ICC), the organisation’s technical cooperation implementation arm for the electric power sector, has assisted groups and individuals from developing countries to participate in sector-related training courses in Japan and has sent many JICA experts to developing countries to share knowledge and expertise in this field.

The JEPIC team consisted of engineers specialising in nuclear power, hydro and wind power, civil engineering, energy distribution and power systems, as well as an economist and a translator. The visitors met with NERSA’s executive and management representatives at its offices in Pretoria to exchange information about various issues pertaining to the energy sectors in South Africa and Japan.

Topics included South Africa’s current and projected power supply and demand, the promotion of private investment in the domestic power sector and the establishment of Regional Electricity Distributors (REDs). The discussions about power facilities ranged from renewable energy, nuclear and clean coal technology power plants and their respective development and operations challenges, such as carbon dioxide (CO2) emissions and environmental issues, to energy efficiency policies and measures, such as subsidy programmes.

The teams also discussed energy tariffs, including renewable energy feed-in tariffs, as well as rural electrification,

International relationsnERsA shares energy supply experience with Japan

From left: Ms Bianka Belinska, Mr Smunda Mokeona and four delegates from Japan International Cooperation Agency


Japan’s energy profile

• Largest importer of liquefied natural gas (LNG) and coal

• Largest producer of nuclear power• Second largest net importer of crude

oil• Relies on LNG imports for virtually

all its natural gas needs• Few domestic energy resources• Only 16% energy self-sufficient• Major exporter of energy-sector

capital equipment• Strong energy research and

development programme supported by Government

• Pursues energy efficiency measures domestically to increase energy security and reduce carbon dioxide emissions

• Provides engineering, construction, financial and project management services for energy projects around the world

Japan Electric Power Information Centre (JEPIC) profile

A non-profit organisation established to meet Japan’s increasing need for a systematic and sustained exchange of information with electric utilities globally. One of its main activities is the creation of technical cooperation programmes in electric power in developing countries.

Japan Total Energy Consumption, 2007

Oil 45%

Coal 22%

Natural Gas 17%

Nuclear 11%

Hydro 3% Other* 1%

Source: EIA

international power exchange and financial targets.

According to Ms Nomalanga Sithole, NERSA’s Executive Manager: Corporate Service, “the discussions provided us with the opportunity to explore mutually beneficial technical cooperation between Japan and South Africa and promote the possibility of Foreign Direct Investment in the country. We identified a number of areas of synergy and look forward to continued interaction between our two countries in the interest of optimising power supply, especially in the area of renewable energy.”

The JEPIC team’s visit to South Africa also included discussions with the

management teams at, among others, Eskom, the South African Nuclear Energy Corporation (NECSA), the Department of Energy, City Power Johannesburg, the Morupule Coal Power Station and Phakalane Substation. The results of the visit will be compiled in a report intended for distribution to stakeholders locally and in Japan. The aim is to further promote technical cooperation with and commercial investment in South Africa, as well as participation in its energy sector.

At this time of crisis in Japan following the earthquakes, tsunamis and nuclear fall-out at Fukushima, our hearts go out to the Japanese people.

NERSA’s staff and Japan International Cooperation Agency delegates

12 Volume VI,I

Nine representatives from the Zambian Energy Regulation Board

(ERB), including the Vice-Chairperson, Ms Ida Nkhoma and a number of ERB Board members, recently spent two days in South Africa for discussions with the NERSA management team. The Energy Regulator received the visitors at its offices in Pretoria on 10 and 11 March this year.

In response to the ERB’s expressed interest in NERSA’s public hearing processes, members of the delegation attended a public hearing on Transnet’s draft tariff determination for their 2011/12 petroleum pipeline tariffs during the first day of their visit. Pre- and post-hearing briefings with the visitors preceded and followed the public hearing to ensure that the group was fully informed before the session and could discuss the proceedings after the hearing procedures were concluded.

During the second day of the visit, the programme consisted of an overview of NERSA’s activities, presented by Ms Nomalanga Sithole, Executive Manager: Corporate Services. Mr Sandile Ntanzi, NERSA’s Senior Manager: Regulator Support followed with detailed presentations on governance, the

regulatory decision-making process and public hearings.

The second part of the day’s programme dealt with performance measurement, where NERSA’s organisational performance measurement was discussed by Ms Esther Viljoen, Senior Manager: Strategic Planning and Monitoring. Mr Sandile Ntanzi also shared information on the Board’s performance appraisal system, specifically the process used to determine Board performance.

According to NERSA’s Ms Nomalanga Sithole and Ms Esther Viljoen, the visit was a resounding success, with both parties gaining valuable knowledge about energy regulation in the two countries, South Africa and Zambia.

“We always appreciate the time taken and interest shown by visitors in the activities of NERSA,” said Ms Sithole. “Our aim is to establish a network of relationships across the African continent, to share learning and experience and feed this into our continuous improvement process. We also hope that we added value to Zambia’s ERB, specifically as regards governance and performance measurement issues.”

Regional relationsZambian Energy Regulation Board visits nERsA

On 31 March this year, outgoing NERSA CEO, Smunda Mokoena,

thanked employees for their cooperation and support in building a world-class organisation to lead energy regulation in South Africa.

In his final message to staff before his departure, Mr Mokoena acknowledged the privilege and honour of having experienced the transformation of the energy and mining industries in South Africa over the past 23 years, in both the private and public sectors. During that time, he served under the visionary leadership and oversight of five Ministers, three Directors-General and one Presidential Advisor and during the past six years, reported to no less than three Regulator Boards, first at the National Electricity Regulator (NER) and more recently at NERSA.

He thanked those involved in managing and consolidating a seamless transition from NER to NERSA, the research team involved in the process - whose members may have left NERSA, but who are still making a meaningful contribution to the industries that they have always been part of - and the advisory team, Arthur Dykes (may his soul rest in peace), Thami Nompula, Welile Mqhum and Willie Boeije.

Mr Mokoena’s departure from NERSA coincides with the retirement of Willie Boeije, to whom he referred as one of the most experienced, intelligent and hard-working advisors and an icon of economic regulation in the energy industry in South Africa, especially the regulation of the electricity industry. “Willie, I salute you. You will be sorely missed and we pray that your health improves.”

During his tenure, the achievements and pioneering work of NER and NERSA in the regulatory environment included the return on revenue (ROR) methodology, multi-year price determination (MYPD), tariff methodologies, licensing procedures and the Regulatory Reporting Manuals (RRMs). NERSA’s position within NERSA staff and Zambian delegates


Mr Smunda S Mokoena

Farewell message from outgoing CEOTime to say goodbye

South Africa’s economic architecture was confirmed by the Energy Summit in 2008 and its contributions are recognised locally and internationally. This is evidenced by its association with regulatory bodies such as the Regional Electricity Regulators Association (RERA), African Forum for Utility Regulation (AFUR) and World Forum on Energy Regulation (WFER), as well as its relationships with individual regulators across the continent.

Recent developments in the global financial sector caused the international community to rethink the approach of regulating important sectors such as energy, communications, transport, finance, and water and sanitation. It was not surprising that when the global community, through UNCTAD

and the G8, was searching for new perspectives on the economic regulation of these sectors, NERSA was included among the experts invited to advise.

“Since 1 May 2004, your hard work, dedication and commitment have seen NER and NERSA achieve clean external audits. I know that as you start the new financial year on 1 April 2011, you will work hard to keep the slate clean by cooperating with the Auditor-General during the external audit of the 2010/11 financial year.

“I am most appreciative of having been given the opportunity to perform my mandate until the very last day, hour, minute and second. It was gratifying to

attend the Forum of Energy Executives on 30 March and address some of you. Today, 31 March, I partly attended the Energy Regulator meeting and finalised the handover report which I respectfully submitted a few minutes earlier.

“Colleagues, friends and distinguished Regulator Members, GOODBYE. I wish you all the luck and success in taking the good work and the image of NERSA forward. I also wish my successor every success at NERSA.

“Good luck and God bless you all.”

Warm regardssmunda MokoenaOutgoing CEO

Mr Mbulelo Ncetezo presenting a gift to outgoing CEO Mr Smunda Mokeona

14 Volume VI,I

The 12th Southern Africa Oil, Gas & Energy Conference 2011 (BMW Pavilion, Cape Town 8 to 9 March), a part of the 5th Africa Economic Forum 2011 (AEF-2011), which has been acknowledged as a landmark event in Africa. Top-level speakers addressed issues such as the strategic shifts that impact governments, companies, investors, financiers and service industries within Africa’s most energy-critical region, while breakaway sessions focused on oil, gas and energy across Southern Africa. The event provided significant networking opportunities with senior executives, African government officials and representatives from countries outside Africa. The AEF-2011 itself included ten high-level plenary sessions about critical business issues that are shaping Africa’s economic future.

Out and aboutUtilising exhibition platforms to convey nERsA’s messages

The African Utility Week (Cape Town International Convention Centre 15 to 16 March), a well-known annual event, again brought together various key players in the African power sector. Delegates and dignitaries included government ministers and high-level representatives, as well as representatives from utilities and municipalities, power pools and regulators, consultants, vendors, service providers and energy-intensive power users. The event successfully created a platform for sharing knowledge and expertise and determining the ‘way forward’ in the future development of Africa’s power industry.

NERSA’s participation in a range of conferences, workshops and summits presented locally, in the region or overseas, has given the Energy Regulator numerous opportunities to create awareness and stimulate interest in its functions, activities and mandate among audiences across the broad spectrum of the energy industry.

Among those that took place during March 2011 were the following:

The Tomorrow’s Leaders Convention (Sandton Convention Centre, Johannesburg 31 March), convened by Leadership magazine, saw a gathering of South Africa’s next generation of corporate leaders. Speakers included the Minister of Public Enterprise, Mr Malusi Gigaba, and renowned futurist and scenario planner, Clem Sunter, as well as Adv Vusi Pikoli, former National Prosecuting Authority Director, Mr Saki Macozoma, Chairman of STANLIB and Mr Jimmy Manyi, GCIS CEO and spokesperson of the South African Cabinet. Participation in the event enabled NERSA to interact with captains of industry and business leaders.


NERSA’s staff with children from Itumeleng, Lerato and Tswelelang homes

NERSA’s Human Resources (HR) Department hosted a World Aids Day Campaign event at its offices in Pretoria on 1 December 2010. As part of the event, and to support the Energy Regulator’s community outreach initiatives, three homes for under-privileged children were invited to visit NERSA and learn more about its activities.

Representatives from NERSA’s HR department received a group of boys and girls from the Itumeleng Home for Boys in Sunnyside and the Lerato House and Tswelelang Home for Girls in Pretoria Central for a World Aids Day visit to the Energy Regulator.

Community outreachnERsA’s outreach benefits disadvantaged scholars

NERSA employees were also requested to donate clothes as part of the outreach activities for a period of two months after the event, with the intention of distributing these to the children in the homes mentioned above.

On 11 March this year, the joy and gratitude was evident at the three homes when representatives from the HR department delivered the clothing.

The HR department would like to thank all the NERSA employees who contributed and/or collected clothes for these under-privileged children.

nangamso…..!!! Realeboha !!!

16 Volume VI,I

The second section of our quarterly newsletter provides readers with an ‘outside in’ perspective of NERSA’s people and their activities during the previous quarter and how NERSA’s values and goals drive its vision of being a world-class energy regulator.

OUTSIDE, LOOKING IN …

Tips in the office

• Electricity-efficientequipmentreducesyourelectricityconsumption.• Switchoffequipmentnotinuse,suchasacomputer.Leavingitonwasteselectricityandgeneratesheatthathastobe

overcome by the HVAC (Heating Ventilation and Air Conditioning) system. • Enablethepowersavemodeoncomputers,asthiscanreduceelectricityconsumptionwithabout40%.• Flatcomputerscreensuselessenergythantheoldermonitors.• Appliancesinkitchens(suchasurns)shouldbeturnedoffwhentheyarenotrequired.• Don’tleaveofficelightsonatnightinunoccupiedareas.• Usenaturallightduringthedayinsteadofswitchingonlights.• Switchoffphotocopiersafterhours.• Air-conditioningshouldonlyruninroomsthatareoccupied.• Switchoffprojectorsafteruse.

These measures will help to reduce electricity consumption and/or wastage and result in cost savings for organisations.

Energy consumptionLet’s be energy efficient


ITWise has decided to share the information below with all NERSA staff as it contributes to a proper use of IT equipment and Health and Safety good practice. This guide is designed to help you be more comfortable and productive while using your computer. It may also help you reduce your risk of experiencing painful and disabling injuries or disorders described in the following Health Warning.

It only takes a moment to read, but the benefits can be lasting, especially for Employee Wellness as the use of a keyboard or mouse may be linked to serious injuries or disorders. When using a computer, as with many activities, you may experience occasional discomfort in your hands, arms, shoulders, neck, or other parts of your body.

Recurring discomfort, pain, throbbing, aching, tingling, numbness, burning sensation or stiffness that persists, ARE WARNING SIGNS THAT SHOULD NOT BE IGNORED. PROMPTLY SEE A QUALIFIED HEALTH PROFESSIONAL, even if symptoms occur when you are not working at your computer. Symptoms like these can be associated with painful and sometimes permanently disabling injuries or disorders of the nerves, muscles, tendons, or other parts of the body. These musculoskeletal disorders (MSDs) include carpal tunnel syndrome, tendonitis, tenosynovitis and other conditions.

IT WiseCorrect use of IT equipment for a healthy work environment

To support your back, try the following:

• Useachairthatsupportsyourlower back (see detail 1).

• Adjustyourworksurfaceand chair height to assume a comfortable and natural body posture (see detail 2).

To promote comfortable leg postures, try the following:

• Clearawayitemsfrombeneathyour desk to allow comfortable leg positioning and movement.

• Useafootrestifyourfeetdonotrest comfortably on the floor.

To minimize reaching forward and promote comfortable shoulder and arm postures, try the following:

• Placeyourkeyboardandmouseor trackball at the same height; these should be at about elbow level.

• Yourupperarmsshouldfallrelaxed at your sides (see detail 3).

• Whentyping,centreyourkeyboard with your mouse or trackball located close to it (see detail 4).

• Placefrequentlyuseditemscomfortably within arm’s reach (see detail 5).

More useful information on creating a healthy work environment will be provided in the next issue of NERSA News.

There are still many questions about MSDs and a number of factors may be linked to their occurrence, including overall health, stress and how one copes with it, medical and physical conditions and how a person positions and uses his or her body during work and other activities (including use of a keyboard or mouse). The amount of time a person performs an activity may also be a factor.

The following excerpts from the Healthy Computing Guide could help to minimise your risk of experiencing MSDs. Keep in mind that this guide is not a substitute for the advice of a qualified health professional or an employer health policy or programme.

Position yourselfWhether you are working or playing, it is important to avoid awkward postures and position your body comfortably. Not only can this improve your overall productivity, it may help you avoid MSDs. Keep in mind that changing your posture during extended tasks may also help you avoid discomfort and fatigue.

When working or playing at the computer, adapt your surroundings and arrange your computing equipment to promote a comfortable and relaxed body posture. Setting up your workstation to avoid discomfort depends on your unique body size and work environment. However, the following suggestions may help to provide you with a more comfortable environment.

18 Volume VI,I

Bibliographic databases available through the Knowledge Centre

The Knowledge Centre subscribes to a whole range of databases specifically to provide staff with reliable sources of information for research projects.

Available databases include:

• Econometrics• JSE• SEIFSA• InstituteforFuturesResearch• BureauforEconomicResearch• ParliamentaryMonitoring• StatisticsSouthAfrica• WorldGasIntelligence

All you have to do is ask!

In a conversation with the librarians in NERSA’s Knowledge Centre recently, it again became abundantly clear that a wealth of information and resources are available to employees — all that is needed is a request for assistance for you to be directed to the most appropriate and reliable tool available to satisfy all your information needs.

That tool is not always a search engine on the Internet. “One of our concerns as librarians is that staff rush in to use ‘the Internet’ for research projects and often use a search engine where it may be difficult to gauge the reliability of sources”, says a Knowledge Centre librarian.

Bibliographic databases are alternative, authenticated resources and the librarians know exactly where to find them. These specialised databases — to which the Knowledge Centre subscribes to gain access to the information — on published journals, research reports newspapers, magazines, image banks and many other sources.

Capacity buildingBibliographic databases invaluable resource tools

“It is important to understand that while we use the Internet to access the databases, a database is not a search engine,” says Mpho Nemukongwe. Much of the information they contain are peer reviewed, well-researched and scientifically verified — in other words, exactly the type of data you want to use in your next work project.

“Google is great for finding a restaurant or information on the latest movie, but for an authentic journal article or research paper on a specialised subject, bibliographic databases are the right tool to use.”

The Knowledge Centre staff are offering NERSA employees ‘hands-on’ training to sharpen their information retrieval skills. These workshops are intended to steer you to the wealth of information available through the Internet from trustworthy sources to ensure that you get the results you want.

“You will learn the language and tools of the Internet and how to make them

work for you. If you want to improve your proficiency in finding data through the Internet, but not sure where to start, the best, fail-safe place is right here — in the Knowledge Centre!”

Knowledge Centre librarian Mpho Nemukongwe (standing) assists Nompumelelo Tembisa (seated) to use a specialised database as an authenticated resource to satisfy her information needs.


NERSA Calendar of Events: June - August 2011

Meeting dates and times are subject to change. Visit our website at www.nersa.org.za for the latest updates and to verify the information below.

Meeting date and time Meeting purpose

June 2011

Regulator Executive Committee Mon, 6 June 201109:00-11:00

• Reports• Governance/Delegatedmatters

Piped-Gas Subcommittee Wed, 8 June 201109:00-12:00

• Reports• Delegatedmatters



Electricity Subcommittee Wed, 15 June 2011 09:00-12:00


Petroleum Pipelines Subcommittee Thu, 23 June 201109:00-12:00


Reserved for induction Mon 27 to Wed 29 June 2011

• InductionofEnergyRegulatormembers



Piped-Gas Subcommittee Wed, 8 June 201109:00-12:00




Electricity Subcommittee Wed, 15 June 2011 09:00-12:00


Petroleum Pipelines Subcommittee Thu, 23 June 201109:00-12:00


July 2011

Regulator Executive Committee Mon, 4 July 201109:00-12:00


Piped-Gas Subcommittee Wed, 6 July 201109:00-12:00


Petroleum Pipelines Subcommittee Tue, 12 July 2011 09:00-11:00


Electricity Subcommittee Wed, 13 July 201109:00-12:00


Regulator Executive Committee Mon, 18 July 201109:00-12:00

• 1st Quarter performance report• DocumentsforEnergyRegulatorstrategicplanningsession• Reports• Governance/Delegatedmatters

20 Volume VI,I

Phone: 012 401 4600Fax : 012 401 4700Physical Address: Kulawula House 526 Vermeulen Street Arcadia PretoriaPostal Address: P O Box 40343 Arcadia 0007 South Africa

Publisher: Corporate ServicesEditor: Charles HlebelaSub-Editor/Writer: Poppie MahlanguDesign, Layout and Printing: Blackmoon Advertising

This Publication is produced by NERSA Corporate Services and may not be reproduced

without the written consent of the NERSA.

Meeting date and time Meeting purpose

July 2011

Finance Subcommittee Thu, 21 July 201109:00-12:00

• 1st Quarter managementaccounts • AuditedAnnualFinancialStatements• Budgetassumptionsandparameters• Otherreports

Audit and Risk Subcommittee Thu, 21 July 201112:30-14:30

• 1st Quarter management accounts• 1st Quarter performance report• AuditedAnnualFinancialStatements• Otherreports

Energy Regulator Wed 27 to Thu 28 July 201109:00-16:30

• Strategicplanningsession

Energy Regulator Fri, 29 July 201109:00-13:00

• 1st Quarter management accounts• 1st Quarter performance report• Budgetassumptionsandparameters• Firstpartstrategicandbusinessplans• Subcommitteereports

August 2011

Regulator Executive CommitteeMeeting No.

Mon, 01 Aug 201109:00 – 11:00

• Reports/Governance/Delegatedmatters

Piped-Gas SubcommitteeMeeting No.

Wed, 10 Aug 201109:00 – 12:00

• Reports/Delegatedmatters

Public Hearing Thu, 04 Aug 201109:00 – 16:30

Human Resource Subcommittee Meeting No.

Thu, 11 Aug 201109:00 – 12:00

• Reports

Regulator Executive CommitteeMeeting No.

Mon, 15 Aug 201108:00 – 10:00

• Reports/Governance/Delegatedmatters

Petroleum Pipelines Subcommittee Meeting No.

Tue, 16 Aug 201113:00 – 15:00


Electricity Subcommittee Meeting No.

Wed, 17 Aug 201109:00 – 12:00


Finance Subcommittee Meeting No.

Wed, 24 Aug 201109:00 – 11:00

• NERSABudgetfor2012/13

ISSN 2221-898XKey title: NERSA newsAbbreviated key title: NERSA news