COMPLIANCE MONITORING REPORT OF MAFUBE LOCAL MUNICIPALITY
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1 COMPLIANCE MONITORING REPORT OF MAFUBE LOCAL MUNICIPALITY Monitoring Date: 06 May 2014
2 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: National Energy Regulator of South Africa Kulawula House 526 Madiba Street Arcadia Pretoria PO Box Arcadia 0007 Tel: +27 (0) Fax: +27 (0) 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 20
3 TABLE OF CONTENTS EXECUTIVE SUMMARY INTRODUCTION METHODOLOGY NERSA AND MAFUBE LOCAL MUNICIPALITY DELEGATES GENERAL INFORMATION ON MAFUBE LOCAL MUNICIPALITY AUDIT FINDINGS MAFUBE S PERFORMANCE ON NERSA COMMUNICATION PROGRESS ON THE IMPLEMENTATION OF THE CORRECTIVE ACTION PLAN PLANT CONDITION DURING AUDIT VS. MONITORING TIME CONCLUSIONS RECOMMENDATIONS NEXT STEP Page 3 of 20
4 EXECUTIVE SUMMARY The National Energy Regulator (NERSA) conducted a compliance audit on Mafube 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 Mafube Local Municipality with the legal, financial and technical conditions of the electricity distribution licence. During the audit, Mafube Management highlighted that all electricity related business activities of Mafube are completely ring-fenced from the Municipality s other businesses and are held separate and administered by a company called Rural Maintenance (Pty) Ltd. Mafube Local Municipality entered into a service level agreement with Rural Maintenance (Pty) Ltd on 15 December 2011, hence Rural Maintenance (Pty) Ltd is responsible for all Mafube s electricity business activities. In February 2012, Rural Maintenance started its activities in Mafube area of supply as per the agreement with the municipality. 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 make the report final. On 11 January 2013, Mafube Local Municipality through Rural Maintenance (Pty) Ltd sent the management comments to NERSA. These were received well within the prescribed time frame. The report was then considered final by NERSA and Mafube Local Municipality was then requested to send NERSA a signed time-bound corrective action plan (CAP) to address the highlighted instances of non-compliance. On 16 May 2013, Rural Maintenance (Pty) Ltd on behalf of Mafube Local Municipality sent a CAP for NERSA s perusal and this was found to be acceptable as they addressed the issues highlighted by the audit. The National Energy Regulator instituted a monitoring regime to ensure and enforce the implementation of the CAP. On 06 May 2014, the National Energy Regulator conducted a monitoring exercise on the implementation of the CAP at Mafube 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 Mafube 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 noncompliances highlighted during the audit. During the monitoring exercise, NERSA conducted site inspections to verify progress made in the implementation of the CAP. It must be noted that there is significance progress made by Rural Maintenance (Pty) Ltd to improve the network condition and business systems of the Mafube Local Municipality. The level of improvement is depicted in detail in section seven of the report. Page 4 of 20
5 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 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 nonperformance. 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 plans; 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 plans. Page 5 of 20
6 2. METHODOLOGY A corrective action plan template was developed and sent to 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 and addressing the issues highlighted during the audit. 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 MAFUBE LOCAL MUNICIPALITY DELEGATES NERSA was represented by the following officials: Mr B Nhlabathi Mr B van Heerden Ms V Poswa Mr V Malaza Compliance Monitoring Technician Financial Compliance Officer Dispute Resolution Officer Senior Distribution Compliance Engineer Mafube Local Municipality was represented by the following persons through the service level agreement (SLA): Mr C Bosch C Niemand G Goldner G Mokoena W van Oudtshoorn Engineer Rural Maintenance (Pty) Ltd Project Manager Rural Maintenance (Pty) Ltd Area Manager Rural Maintenance (Pty) Ltd Tech Admin Manager Rural Maintenance (Pty) Ltd Control Rural Maintenance (Pty) Ltd 4. GENERAL INFORMATION ON MAFUBE LOCAL MUNICIPALITY Mafube Local Municipality is the licensed electricity distributor (Licence No NER/D/FS205) located in the Free State Province with offices in Frankfort. This is a small municipality with only five intake bulk points and has a total Page 6 of 20
7 installed capacity of 44MVA. At the time of the audit it had 8948 customers, which were categorised as follows: 8123 prepaid domestic; 287 domestic credit meters; 287 commercial and 23 industrial customers with only km² supply area. At the time of the monitoring it was highlighted that the Licensee managed to connect 500 additional new customers to the network. 5. AUDIT FINDINGS At the time of the audit, the following was highlighted to the Licensee as areas that need attention and improvement: a) The Protection Relay setting provided was for the wrong substation (Mwanza South). b) The disconnection notice was in compliance with the municipality s by-laws (Clause 16 paragraph 6 but not in compliance with NRS (Paragraph 4.3.7) as it gave the client only 48 hours to pay the outstanding account. c) The actual areas of supply were not exactly the same as those stated on the licence schedule 1. d) The power quality management system was installed and was in the process of being commissioned. This was not yet fully operational at the time of the audit. e) A substandard network was prevalent in Tweeling Township largely due to the prevalence of high voltage (HV) bundle conductors historically located under the low voltage (LV) network. f) One switch gear at Villiers Substation was not in commission. g) Housekeeping at Tweeling substation s switch room was not acceptable. h) No asset management policy was submitted and the network asset register was not appropriate. i) Substandard LV boards in certain sub stations. j) Certain transformers had old silica gels and minor oil leaks. k) Magnefix switches were still in use, which poses an increased safety hazard and is not ideal. l) Low Voltage (LV) and Medium Voltage (MV) network upgrade project was under way. 6. MAFUBE S PERFORMANCE ON NERSA COMMUNICATION In November 2012, the National Energy Regulator conducted a compliance audit on Mafube Local Municipality to determine its level of compliance with its licence conditions. This audit was followed by a number of s from the National Energy Regulator to Mafube Local Municipality. All this Page 7 of 20
8 communication was sent to Rural Maintenance (Pty) Ltd as the custodian of the Mafube Local Municipality s Electricity Distribution Licence according to the SLA. In all this communication, Rural Maintenance (Pty) Ltd cooperated and responded in a satisfactory manner as indicated below. NERSA REQUEST DATE OF REQUEST LICENSEE RESPONSE DATE OF RESPONS E 11/01/2013 Request of Management comments on draft report 14/12/2012 Management comments sent Request for Corrective Action 18/01/2013 CAP sent 16/05/2013 Plan Progress report 06/02/2014 Progress report sent 14/02/2014 Monitoring notification 15/04/2014 Positive response 15/04/2014 Monitoring exercise 06/05/2014 Positive response 06/05/ PROGRESS ON THE IMPLEMENTATION OF THE CORRECTIVE ACTION PLAN Mafube Local Municipality and Rural Maintenance Pty (Ltd) displayed a high level of commitment during the monitoring exercise as all the instances of non-compliance highlighted during the audit were attended to. At the time of the monitoring exercise it was observed that most of the issues highlighted by the audit were completely addressed with some new additional work that was done to improve the network condition of the Mafube Local Municipality. The table below depicts the progress made at the time of the monitoring of the implementation of the CAP that was submitted to NERSA to address the instances of non-compliance. Unit affected Non-compliance Corrective action Mwanza South Protection Relay setting provided is for a different substation. General Disconnection notice payment period of 48 hours is not in compliance with NRS 047 of 2 weeks. RWW to provide quotation to do relay reprogramming and use correct parameters. Due diligence to be done to determine impact on operations Priority Progress Condition during monitoring day High Complete 100% compliant. Low Resolved 100% compliant. Customer bills give 14 Page 8 of 20
9 General General Tweeling (Mafahlaneng) Villiers Substation Actual Areas of supply different than stated in Schedule 1 of the Licence. Power quality management system not yet fully operational. MV and LV bundle next to each other. One Switchgear unit out of order and needs to be fixed, no spare units available, ASAP. and future possibilities to put this in place. Licence documents to be updated, particularly Schedule 1, and sent to NERSA for approval. 7 more QOS400 units to be installed, monthly data to be collected. Yearly report to be submitted to NERSA when 6 months of data is available. Remove the MV ABC and put on separate poles. This will be done ASAP from 18 February. Spare feeder breaker which is currently not operational will be repaired and upgraded by RWW with order having been placed Medium Low High High Letter for licence amendme nt dated 29 October 2013 was sent to NERSA. QoS meters are installed in the Mafube network to monitor the QoS parameter s. MV and MV network has been reconfigur ed. Spare breaker repaired and the switch room was extended to improve space constraint in the days notice. 50% NERSA to respond. 90% of the network is monitored for QoS via Net-view. 100% Complete. 100% completed. Page 9 of 20
10 Tweeling Switch room General General General Housekeeping Asset management register needs to be implemented on GIS. LV MCBs in FSB2,FSB7, FSB8, FLL2, Cornelia Main Sub, Rethabile Sub (urgent one) and Meule Sub 2 to be rehoused in proper LV cabinets/boards and chipboard housings to be replaced. Tariffs to be placed on Mafube LM's website as well. on 26 November with delivery expected mid April Remove oil drums to store, clean. Software purchased and currently being installed. The following priority: 1) Complete MV infrastructure 2) LV infrastructure 3) Individual Customers All panels have been ordered and delivered, installation to proceed. Contacted Service Provider, Medium Low High Low switch room. Oil drum removed from the switch room, switch room was cleaned and open covers replaced and closed. Asset managem ent system is continuous ly being implement ed. This is coupled with the fault reporting system via Netdesk system. Majority of the LV MCBs has been installed and still in progress. Awaiting Council. 100% completed. 50% Systems now in place. 90% complete. 50% Page 10 of 20
11 Villiers Substation General General Frankfort Main Substation Frankfort Main Substation DSM (Demand Side Management): Powerfactor Correction to be implemented. Maintenance plan to be updated to show Progress indication. Mafube control centre with SCADA to be implemented. Battery levels were low, batteries to be checked now if fully charged, if not then replace batteries. Termite infestation to be handled before it enters the substation. discussions taking place. Project for Powerfactor Correction at Villiers Main Sub in planning. Equipment being bought. Add columns to show progress for each subsection. Low Medium New Power Factor Correction system installed and resulted to reduction in Demand at the substation. Resolved. The maintenan ce plan continuous ly updated to indicate the maintenan ce done and the date it was done. TBC Low Not yet started. Batteries checked and found to be fine (30-32V). Indicator light was blown and will be replaced. Termites have been cleared with Landex inside sub and they will create a barrier High Completed. 100% Completed. 100% compliant. 100% resolved. High Completed 100% resolved. Page 11 of 20
12 around the sub with the same. FSB2 FSB7 FSB6 FLL2 Rethabile Sub Meule Sub 2 Tweeling Sub Villiers Substation Villiers Waterworks MSS Magnifix CB to be replaced. Clean oil spills on the floor. Transformer service due (previous service 2009). Transformer service due, oil leaks evident. Plinth under transformer not sufficient. LV Terminal cover to be replaced/put back Trench covers to be replaced/put back, oil cans to be moved to proper store, decent cleaning due. Space limitation problems Vegetation growing around MSS, MSS4 replace warning Replace with T Switch Gordon Sub: Used BREM638 cleaner, need some adjustment to cater for old transformer oil. Plan maintenance, get quotations. Plan maintenance, get quotations. RFQ, order and plan outage. Completed (New L panel ordered as well). Trench covers being manufactured 3 weeks ETC. Expand Substation design in progress for PFC Plant. Planned completion mid to end Spray Round-up and clean High Completed 100% Medium Completed 100% Low Planned 20% Low Planned 20% Medium Planned 08 May % High Completed 100% resolved. High Replaced and cleaned. 100% Low Completed 100% resolved and switch room has sufficient space High Completed 100% Vegetation removed Page 12 of 20
13 General signage, labelling to be added at LV side. The following transformers were found to be in need of maintenance: 1) TP25/3 Silica 2) TP26 Silica 3) TP10 Earthing and Silica 4) TP4 Silica 5) TM10/18/5 Silica 6) TT17 Silica 7) TT14/11 Silica 8) TT40/6 Silica 9) TH55 Silica 10) Mukaba Silica 11) Rethabile Sub Plinth 12) FSB7 Silica 13) FLL2 Silica area of vegetation. 1) TP25/3 Silica Replaced 2) TP26 Silica Replaced 3) TP10 Earthing fixed and Silica replaced 4) TP4 -Silica Replaced 5) TM10/18/5 Silica Replaced 6) TT17 Silica Replaced 7) TT14/11 Silica Replaced 8) TT40/6 Silica Replaced 9) TH55 Silica Replaced 10) Mukaba Silica Replaced 11) Rethabile Sub Plinth to be recasted and MSS barricaded with palisade fence. High Completed 100% Attended and resolved. The table above indicates that Mafube Local Municipality, with the help of Rural Maintenance (Pty) Ltd, has drastically improved its level of compliance with the distribution licence conditions. A high level of efficiency has also been noticed at Mafube Local Municipality since their tariff is planned to not increase beyond the NERSA tariff guideline increase of 7.39% in the 2014/15 financial year. The turnaround in Mafube Local Page 13 of 20
14 Municipality s Electricity business under the service level agreement with Rural Maintenance (Pty) Ltd has seen its revenue growing from R3.2m to R6.85m, while the Eskom Bulk account decreased from R4.2m to R4.07m. During the office session of the monitoring, the supporting documentation to substantiate the feedback on what was done to address the issues highlighted by the audit was provided to NERSA officials. According to the CAP developed and submitted by Rural Maintenance (Pty) Ltd on behalf of Mafube Local Municipality to the National Energy Regulator, it was indicated that some of the instances of non-compliance were already being addressed, while others were scheduled for future dates. At the time of the monitoring exercise this was evident from the network condition that was observed during site inspection and the systems that were already in place. The bulk account of Mafube Local Municipality was also up-to-date and this is an area that some licensees are battling with. 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. Meule Sub 2 LV terminal cover missing during audit New silica gel and LV terminal cover replaced during monitoring Page 14 of 20
15 Old LV MCBs against a wall replaced with a new LV MCB panel properly closed during monitoring Page 15 of 20
16 Rosenberg Switching Station (FLL2) Transformer with oil leaks and old silica gel in 2012 Repaired oil leaks and new silica gel during the monitoring LV MCB board made of chipboard against the wall during audit New upgraded LV MCBs panel during the monitoring Page 16 of 20
17 Tweeling Substation Open cable trench covers and meter cubicle during the audit Closed trench covers and meter cubicle during monitoring Tweeling Overhead Network Substandard line with MV underneath the LV line in 2012 New line with street light proper clearance between MV and LV line in 2014 Page 17 of 20
18 Villiers Substation Switch room extension due to space problem after audit. Extended building with newly installed PF correction unit in Spare indoor breaker out of commission in Villiers substation during audit Repaired spare breaker during the monitoring Page 18 of 20
19 Villiers Overhead Network Newly refurbished LV and MV lines in Villiers Town and Suburb during the monitoring The photos indicate that the condition of Mafube Local Municipality s network has improved since the audit. A great amount of work has been done to correct the substandard network configuration in Tweeling Township. The magnefix switches has been replaced with the new compact T-switches at various parts of the network for safe and easy switching. A power quality management system and instruments are now in place for the proper monitoring of the quality of supply. The old overhead lines have also been upgraded and refurbished in most of the network highlighted by the previous audit. 9. CONCLUSIONS Mafube Local Municipality, with the assistance of Rural Maintenance (Pty) Ltd, has managed to turn around their level of compliance with their licence conditions. The high level of dedication and commitment to improve the compliance level and network condition of Mafube Local Municipality s network is shown through their dedication to attend to each and every issue raised by the previous audit as seen in their CAP. The progress made to implement the CAP at the time of the monitoring testifies to the dedication to comply with licence conditions. 10. RECOMMENDATIONS It is recommended that Mafube 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 19 of 20
20 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 noncompliance 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 Arcadia 0007 Fax: +27 (0) Page 20 of 20
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