Supplier Open Day

Presented by : Nomalungelo Mbewu

: GM Strategy

City Power

Date : 26 October 2016

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Geographical Footprint

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CITY POWER JOHANNESBURG

ISO: Only utility in Africa with four ISO accreditations

(9001, 14001, 18001 & 31000)

ISO 26000 compliant and currently implementing 16000

Capital investment: over R8.5bn invested in

infrastructure in the past 10 years

Infrastructure: over 17 500km of cable, over 18 700

substations, and over 270 000 public lights

Current peak demand is over 2800MW which is 8-10%

of national load

MOE: City of Johannesburg is the single shareholder of

City Power

Number of customers: Over 390,000 - LPU: 1%,

Prepaid: 62%, Conventional Business/Domestic: 37%

Revenue: over R14bn

Employees: Over 1,700

City Power

Eskom

City Power at a Glance… June 2015

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Background

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City Power Journey

2002-2006 2006-2011 2011- 2016

COJ Strategy

Document

Egoli 2002 GDS 2030 GDS 2040

City Power

Focus Areas

Bringing the different

municipalities together

Improving network

performance

Improving condition

monitoring maintenance

Moving from fire

fighting to planned

maintenance

Perfecting time based

maintenance

Making sure we get paid for

our services & improve

revenue management

Developing and

initiating Capex

program to reduce

backlog

Introducing condition

monitoring maintenance

Improve stakeholder

communication,

engagement and

management including

R&CRM

Introduction of

customer

segmentation

Implementation and

improving Capex program

to reduce backlog

Review Company business

model to move to an energy

company

Introduction of prepaid

meters

Consolidation and

centralisation of

customers services

Shift to low carbon

infrastructure and

introduction of SSM & DSM

Improving prepaid &

smart meter technologies

Introduction on TOU and

green tariffs

Piloting of DSM projects

COJ Planning Process

5 year term

review

Revised

City

Strategy

2016/21

IDP

2011/21

IDP rev1

2016/21

IDP rev2

2016/21

IDP rev3

2016/21

IDP rev4

5 year term

review

Revised City

Strategy rev1

2021/26

IDP

The COJ runs a process but it is done in conjunction with

the MOEs. It is a 5 year planning process done annually.

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Background

Local

Elections

3 August

2016

Election

Results

Change in

Government

Total Seats in COJ 270

ANC: 44,55% > 121seats

DA: 38.37%>104 seats

EFF: 11,09% > 30 seats

Others: 5.99%> 15 seats

COJ Political Leadership

Swearing in of

the Councillors

Election of

the New

Leadership

Coalition

Government

DA Lead Coalition

New Mayor:

Cllr Herman Mashaba

Speaker of Council:

Cllr Vasco Da Gama

Chief Whip:

Cllr Kevin Wax

New MMCs:

COJ Political Leadership: MMCs

• Finance: Dr Rabelani Dagada

• Economic Development: Sharon Peetz

• Development Planning: Richard Funzela Ngobeni

• Environment and Infrastructure Services: Anthony William Still

• Housing: Mzobanzi Ntuli

• Transport: Nonhlanhla Helen Makhuba

• Public Safety: Yao-Heng Michael Sun

• Corporate and Shared Services: Dr Valencia Ntombi Khumalo

• Community Development: Nonhlanhla Sifumba

• Health and Social Development: Dr Mpho Phalatse

New Focus

4 Day

inductionTen Point

Plan

Mayoral

Speech

• Professionalism

• Job Creation

• 5% Economic Growth

• Service Delivery

• Fraud and Corruption

New Focus: Ten Point Plan

1. A recognition by all present (political and administrative leadership) of the political

arrangement/coalition imposed by the electorate in Joburg. This is necessary to help us

move forward with speed.

2. Joburg must run a responsive and pro-poor government.

3. Plans and policies must be aligned for the City to work towards achieving a 5% economic

growth rate. While this is an ambitious target, given that the country’s own economic

growth rate is projected at 0.6% by the Reserve Bank, we appreciate the fact that if we do

not achieve this, unemployment will remain high, the youth will be out of school and out of

jobs at the end of this term and we would not have made a difference. We want Joburg to

be the engine of the country’s economic growth. We appreciate that achieving this 5 %

jump requires both government and the business sector to join hands, understanding that it

is absolutely critical for us to achieve 5% GDP growth because failing to kickstart the

Joburg economy has dire implications beyond Joburg’s own borders.

4. Create a professional public service that serves Joburg residents with pride.

5. Ensure that corruption is public enemy number 1 in Joburg.

6. Revive the inner city to bring people and business back into the inner City.

7. Complete the official housing waiting list and get it signed by the Mayor in 90 days.

8. Produce within 60 days a report on the number of completed houses built by the city and the province - but not yet allocated or handed over to beneficiaries.

9. Fast track the hand over of title deeds - to both ordinary residents, churches and

businesses.

10. Use one of our clinics as a pilot project to investigate possibilities of availing our health

facilities to residents for extended hours.

New Focus

Acceptance

SpeechEEMT

Lekgotla

Ad Hoc Meetings

1-on1 with MMC

Cluster Meetings

• EM Presentation

• EEMT Discussion

Meeting of

Chairs and

EM

City Power Alignment

10 Point Plan Priorities CP Response

2. Pro-poor

government.

BBBEE, Indigent policy, J@W, EPWP,

Electrification, FBE, Employment

Equity policy

3. 5% economic

growth rate.

6. Revive the inner

city

Resolve billing system

Encourage urban

regeneration

Promote economic

development and investment

Quality of Service (NRS047), Quality

of Supply (NRS048), Infrastructure

Planning and Maintenance, Public

Lighting Planning and Maintenance,

Energy Mix and Management, ICT

strategy and implementation

4. Professional public

service

Improve service delivery

performance and service

delivery culture

Vetting and training staff, Ambassador

Programme, High Performing Teams,

Filling Vacancies

5. Corruption is public

enemy number 1

Resolve billing system

Improve residents safety

Zero tolerance to fraud & corruption

campaign, Integrated Security Plan,

Awareness programmes

7. Housing list Align to housing programme, Mixed

grid infrastructure,

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The City Power Scorecard and

Priorities for the next 6 month

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Industry Change Drivers

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Changing

energy mix

and DG

Empowered

customers

Digitization

Market and

policy

reforms

Regulatory

frameworks

New

competitors

Talent and

diversity

Infrastructure

investment

Sector in

transformation

Generation mix is shifting to cleaner

sources, including natural gas and

renewables, and is becoming more

decentralized.

Customers are being offered choices

to manage their energy use, through

both distributed generation (DG) and

energy management solutions.

Smart meters, “big data” and

analytics can be used to optimize

energy delivery, improve energy

efficiency and enhance customer

experiences.

Significant investment is required to

update or replace power, gas and

water assets.

Federal and state mandates are

driving restructuring, creating

incentives and imposing new rules.

Regulatory compact is under

pressure to accommodate changing

customer demands and encourage

innovation.

Aging workforce and challenges of

the new digital economy require

effective knowledge transfer and

fresh thinking.

New and powerful entrants have

begun to offer customers innovative

home energy management products

and services.

Vision, Mission and Values

Vision

A world-class energy utility

Mission

The mission of City Power Johannesburg SOC is to meet the expectations of our

customers and stakeholders by:

1. Providing a sustainable, affordable, safe and reliable energy supply

2. Providing prompt and efficient customer services

3. Being the preferred equal opportunity employer by developing and incentivising

our employees

4. Undertaking our business in an environmentally acceptable manner

What Business Are We In?

We are in the business of providing energy.

Business Operating Principles

Customer-centric organisation

Seamless value chain driven organisation

Zero tolerance for poor performance

Doing business in an ethical manner, zero tolerance for

fraud and corruption

Business case driven investment decisions

Maximum technology enablement

Doing it right the first time

Aspired Values

Resourceful

Resilient

Reliable

Respectful

Always with Integrity

Strategy MapGetting the Basics Right

City of Johannesburg

Business of Tomorrow

Governance Structure

Board

Managing Director

Director: Finance

Director: HR

Director: RAC

COO

Director: Eng Service

Director: Eng Ops

Director: Metering Services

GM: Strategy

GM: Relationship Management

Company Secretary

Executive Support

Power and Utilities:

Key Industry Challenges and Risks

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The top 10 Global risks:

► Compliance and regulation

► Commodity price volatility and access

to competitively priced long-term fuel

supplies

► Political intervention in power and

utilities (P&U) markets

► Uncertainty in climate policy and

carbon pricing

► Significant shifts in the cost and

accessibility of capital

► Capital project execution

► Economic shocks and resulting short-

term energy demand shocks

► War for talent

► Aging generation and network

infrastructure

► Managing planning and public

acceptance

Key challenges:

► Load shedding

► Theft (copper) and vandalism

► Economic downturn and increasing electricity

costs

► Municipal finances

► Skills and capacity shortages

► Service delivery protests

► Illegal connections

► State of infrastructure and development

affordability

► Industry direction – embedded generation,

alternative energy, technology (DG), etc.

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Key Projects

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Progress Report on Projects

Back to Basics ProgrammeFocus Areas

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A turnaround service delivery strategy was developed in March 2016 to focus attention on the basics of the

Operations business. The strategy was befittingly named Back to Basics or B2B.

TRAFFIC LIGHTS:• Inspect both streetlights and faulty traffic lights

• Both City Power and Eskom supply areas

2STRETLIGHTS:• Inspection of streetlights on arterial routes (M1, M2) and primary roads twice

a week (Mondays and Thursdays)

• Repair defects identified

3THEFT & VANDALISM:• Supply points to streetlights have been encased in cages

• Theft and vandalism at substations is to be curbed through establishment of

armed security response capability

4PLANT OUT OF SERVICE:• Restoration of all out-of-service plant items back to service

• This effort will restore the network back to its normal state and eliminate

nuisance outages

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Back to Basics ProgrammeOut of Service Plant Items (cont.)

No Category Description Original Size of

Backlog

Backlog Resolved

(30.06.2016)

Backlog Not Resolved

(30.06.2016)

1 Streetlights

M1 & M2 856 856 0

Primary Routes 5690 5690 0

Secondary Routes 7216 7216 0

2

Theft &

Vandalism of

Supplies to

Streetlights

Enclose mini-substations in

steel cages21 21 0

3Out-of-Service

Plant Items

Power Transformers 35 11 24

HV Cables 9 3 6

HV Circuit Breakers 9 4 5

MV Circuit Breakers 134 11 123

MV Underground Cables 117 117 0

4 Traffic LightsCity Power Supply Areas 40 40 0

Eskom Supply Areas 28 28 0

• The maintenance of MV underground cables, street lights, traffic lights is a continuous process.

• The street lights and traffic lights are inspected twice a week on Mondays and Thursdays, and

repairs effected in between.

• MV cables are repaired as a fault occurs. The target restoration time for MV cables is 48 hours.

Plan to Improve Revenue and Reduce Losses

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The above plans are subject to budget availability to fully

realize the anticipated benefit.

Overall Meter Reading

Performance

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Accomplishments 1stApr – 30thJune 2016

Overall meter reading performance improved by 8% in June 2016 (79,91%) when compared to

April 2016 (74,63%)

Domestic AMI Meter reading has increased to 90%

Domestic manual read increased by 13% from 53% to 66%

LPU Manual read increased by 8% from 62% to 70%

Key Customer read increased by 17% from 82% to 99%

TOU Customer read increased by 9% from 91% to 100%

AMR LPU meter reading increased by 2% from 79% to 81%

Overall Meter Reading

Performance

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MonthTotal number of

meters downloadedMeters Read Meters not Read

Overall Performance

April '16205 308 153 220 52 089

74,63%

May '16 204 275 160 664 43 92778,65%

June '16 203 899 162 940 40 93979,91%

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Business of Tomorrow

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Electricity27%

Gas27%

Automotive fuels

45%

Other1%

Electricity35%

Gas9%

Automotive fuels

53%

Other3%

x GJ y GJ

2 City Energy needs (2015 to 2040) [Energy Plan]

City-wide view, based on best available information and predictions

2014 2040

Environmental Scan: Reviewing

• Electricity

• Gas

• Automotive Fuel

• Other Sources

1

COJ

A. Collapse into department

Co.

E G AF

Oth

B. Energy company, with departments

3 Energy business structure options (scenarios)

Co.

C. Energy company, with subsidiaries

Co. Co. Co. Co.

D Individual companies

Co. Co. Co. Co.

E – Electricity; G – Gas; AF – Automotive fuels; Oth - Other

E G AF Oth

Implementation Roadmap

Step 1

Step 2Step 3

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Project Framework

Go/ No Go Decision

4

Supply and Demand options

available to the City

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+

Technology options (with high level consideration of technical,

economic and market potential)

Ownership options(besides national grid)

• Utility owned

• Customer owned (own supply)

• Third party / customer owned (grid supply /

wheeling)

• Partnerships (e.g.. PPP)

Opportunity to be utilised as

an embedded or distributed

solution(whether likely to be pursued as distributed or

embedded/onsite solutions)

+

National grid Kelvin upgrade Ops. efficiency Demand

management

Energy Efficiency

Demand

reponse

Fuel switching

(gas)WTE & landfill gas

Gas turbines

Cogen and biogas

Solar (PV and CSP) Energy storageRE incl Wind

Nuclear

Other technology

innovations including Joburg

Water Hydro conduit Dams…

A combination of these sources leads to

increases diversity in the supply mix and

decrease net emissions. A small model run is

shown later in presentation.

Greener options

Basket of energy options

Longer termImmediate-short term Medium term

Load shedding

mitigation

Embedded GX

policy

Demand

Response

Kelvin

IPP PV

applications

PPA MTN /

ABSA

Solar Water

Heaters

Demand Side

Management

Renewable

Energy tariff

Rural Gas/PV

systems

Diesel

Generation

Battery Storage

City – Waste to

Energy

City – Landfill

Gas

City –

Gravitational feed

GX

Electric Vehicles

charging

Smart meter /

Load Limiting

Gas Turbines

(OCGT)

Own Rooftop

PVRipple Control

Independent Power Producers /

Embrace Renewable Energies

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80

20

0

11

2

60

24

06

20

30

Structural

Changes

Open

Grid/Trading

3

Time of Use Tariffs

Conclusion

• City Power has faced challenges and had great achievement.

• Going forward the organisation will spend a significant amount of effort

to ensure that structures and processes are put in place to address the

concerns raised in the audit report.

• City Power identified and is implementing interventions as part of the

Revenue Recovery Project working with all its stakeholders to reduce

nontechnical losses.

• City Power identified and is implementing interventions to improve

service delivery

• City Power is committed to continually improving its performance and

the company is confident that it will meet and exceed the expectation

of all our stakeholders thus attaining its vision of being a “World Class

Energy Utility.”

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Thank You