COMPLIANCE MONITORING REPORT OF UMHLATHUZE LOCAL MUNICIPALITY

Transcription

1 COMPLIANCE MONITORING REPORT OF UMHLATHUZE LOCAL MUNICIPALITY Monitoring Date: 08 September 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 and Compliance 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 15

3 TABLE OF CONTENTS EXECUTIVE SUMMARY INTRODUCTION METHODOLOGY NERSA AND UMHLATHUZE LOCAL MUNICIPALITY DELEGATES GENERAL INFORMATION ON UMHLATHUZE LOCAL MUNICIPALITY AUDIT FINDINGS UMHLATHUZE 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 15

4 EXECUTIVE SUMMARY The National Energy Regulator (NERSA) conducted a compliance audit on umhlathuze Local Municipality ( the Licensee ) from 04 to 05 December 2012 to determine its level of compliance with the licence conditions. The objective was to determine the compliance of umhlathuze Local Municipality with the legal, financial and technical conditions of the electricity distribution licence. After the audit, findings were recorded in a draft report and forwarded to the Licensee for management comments with regard to the correctness of the findings in order to make the report final. umhlathuze Local Municipality complied with some of the conditions of the electricity distribution licence, but there were instances of non-compliance that needed management intervention to prevent deterioration of the network. On 14 February 2013, umhlathuze Local Municipality sent the management comments to NERSA. These were received well within the prescribed time frame. The report was then considered final by NERSA and umhlathuze 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 22 August 2013, umhlathuze Local Municipality sent an unsigned CAP for NERSA s perusal and it was found to be acceptable as it addressed the issues highlighted by the audit. NERSA instituted a monitoring regime to ensure and enforce the implementation of the CAP developed by umhlathuze Local Municipality. On 08 September 2014, NERSA conducted a monitoring exercise on the implementation of the CAP at umhlathuze Local Municipality. This exercise was conducted in order to determine the progress made in the implementation of the CAP. NERSA is of the view that addressing issues raised during an audit will help umhlathuze 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 significant progress has been made by umhlathuze Local Municipality to improve the network condition and business systems of the Municipality. The level of improvement is depicted in detail in section seven of the report. 1. INTRODUCTION 1.1 Overview The National Energy Regulator (NERSA) is required to monitor and assess whether the electricity suppliers comply with the conditions of Page 4 of 15

5 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. 2. METHODOLOGY A corrective action plan template was developed and sent to umhlathuze Local Municipality ( the Licensee ) to populate all the non-compliances highlighted during the audit, together with the intended corrective action plans (CAPs) with target dates of implementation. This is to be used by the National Energy Regulator to monitor the progress made and to establish Page 5 of 15

6 whether the timelines of the CAP were realistic in terms of addressing the issues highlighted during the audit. The CAP was sent to NERSA, but it was not signed by the relevant officials of the Licensee. NERSA accepted 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 were 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 to the plant condition during the audit. 3. NERSA AND UMHLATHUZE LOCAL MUNICIPALITY DELEGATES NERSA was represented by the following officials: Mr M Mudau Ms B Gobe Ms V Poswa Mr V Malaza Compliance Monitoring Technician Compliance Monitoring Engineer Dispute Resolution Officer Senior Distribution Compliance Engineer umhlathuze Local Municipality was represented by: Ms A Smit Chief Technician Officer: Customer Manager Mr D Mohapi Planning Mr M Lovemore Planning Mr B Kanyile Acting HOS Mr G Cronje Manager LV and Street Lighting Mr C Mokoena Manager: Electricity Supply Service Mr G Bouohlr Superintendent IT&S Mr K van der Westhuizen Senior Engineer Mr PJ van Heerden Superintendent IT&S 4. GENERAL INFORMATION ON UMHLATHUZE LOCAL MUNICIPALITY umhlathuze Local Municipality is the electricity distribution licence holder for the supply area with licence number NER/D/KZ282 and supplies electricity to Empangeni/Ngwelezane; Richards Bay; Esikhawini; Nseleni; Vulindlela; Carsdale Village and Felixton Village. It has 39,782 customers, which are categorised as follows: 35,058 prepaid domestic; 1,114 domestic credit meters; 3,544 commercial and 66 industrial Page 6 of 15

7 customers. There are eight bulk intake points under the umhlathuze Local Municipality area of supply and it has a summated Notified Maximum Demand of 296 MVA. The total geographical area of umhlathuze Local Municipality is approximately km². 5. AUDIT FINDINGS At the time of the audit, the following was highlighted to the Licensee as areas that need attention and improvement: (i) The vegetation management had been neglected at some substations. (ii) Housekeeping of some of the substation buildings needed attention, e.g. loose paint and cracks in the walls. (iii) Some safety signs were loose, faded or missing completely. (iv) Some cable trenches were open, which is dangerous. (v) The service date of all of the fire equipment in the substations had expired. (vi) The condition of the Polaris substation was unacceptable. There was only one transformer which was in very bad condition with potential grave economic consequences should it fail. (vii) A dangerous condition was found at Vela substation, where a blown-up panel was unlocked, bridged and live without any warning danger signs. (viii) Some mini-substations were in a bad condition with loose panels inside and were accessible to the public. Vegetation management had not been done and no safety signs were visible. 6. UMHLATHUZE S PERFORMANCE ON NERSA COMMUNICATION In December 2012, NERSA conducted a compliance audit on umhlathuze 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 umhlathuze Local Municipality s Electricity Distribution Department. The table below shows communication between NERSA and the Licensee. Table 1 Communication Record NERSA REQUEST DATE OF REQUEST LICENSEE RESPONSE DATE OF RESPONSE Request of Management 17/01/2013 Positive response 14/02/2013 comments on draft report Reminder on CAP 21/06/2013 Positive response 17/09/2013 Page 7 of 15

8 Request for Corrective Action 01/03/2013 CAP sent 22/08/2013 Plan unsigned Monitoring notification 27/08/2014 Positive response 07/09/2014 Monitoring exercise 08/09/2014 Positive response 08/09/ PROGRESS ON THE IMPLEMENTATION OF THE CORRECTIVE ACTION PLAN umhlathuze Local Municipality displayed a fair level of commitment in terms of the implementation of the CAP during the monitoring exercise. The condition of Vela still needs attention since the wall of the substation building is still cracked. The officials of umhlathuze Local Municipality highlighted during the monitoring exercise that they had decided to first attend to Capella due to its condition being worse than that of Vela. It was emphasised that Vela must be attended to urgently to prevent the imminent collapse of the building. The table below depicts the progress made in addressing the instances of noncompliance at the time of the monitoring of the implementation of the CAP submitted to NERSA. Table 2 progress on the CAP implementation Unit affected Non-compliance Corrective action s General The vegetation management Housekeeping of s Tender document is in the evaluation process Identify funds for serious building repairs/repl aced Priority Progress Condition during monitoring day Medium Continuous Evaluation concluded & the contract is in place. Medium Continuous Capella was attended to and Vela still to be done. General Safety signs Replaced High Completed Safety signs in place. General Open cable trenches The trenches were closed High Completed All trench covers were closed. Page 8 of 15

9 General Polaris Service date of fire equipment Condition of Polaris substation In progress High Completed Fire extinguishe rs were serviced. Second transformer has been commission ed and back on load High Completed Completed. Polaris transformer no. 1 refurbished. ABB also checked all the breakers in July 2014 and there is a programme for the breaker refurbishme nt which is still ongoing. Vela Vela General Condition of Vela Condition of Vela Condition of minisubstations LV panel repaired Identify funds for serious building repairs/repl aced Mini-sub maintenanc e is being outsourced and tender document approved. In house repairs implemente d since audit. High Completed Completed. Safety signs in place and the local transformer properly barricaded. Medium Medium Not attended to. M/S 4 minisubstation fixed. Vegetation manageme nt around the M/S 1 minisubstation still the same. Building still needs attention. The loose panel inside M/S4 was removed. Systems now in place. Vegetation manageme nt still not done. General Vacant positions Appointed High Ongoing Some manageme nt positions Page 9 of 15

10 were filled. Ongoing. The table above indicates that umhlathuze Local Municipality implemented some of the activities in the CAP. This will improve their level of compliance with the distribution licence conditions. At the time of the monitoring, about 90% of the CAP had been implemented by the Licensee. During the office session of the monitoring, the supporting documentation to substantiate the above feedback was provided to NERSA officials. The electricity bulk account of umhlathuze Local Municipality was still up to date at the time of the monitoring. 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. Oil leaks on transformer during the audit in 2012 Oil leaks repaired during the monitoring in 2014 Safety signs faded at the control room 2012 Safety signs in 2014 Page 10 of 15

11 Vela building during the audit Fire equipment serviced still needs attention building wall badly cracked during the 2012 audit Still cracked during the monitoring in 2014 Open cable trench during the audit in 2012 Cable trench closed during monitoring in 2014 Page 11 of 15

12 Dangerous blown up live panel with no warning signs in Panel repaired, locked & signs replaced in 2014 The earth on the steel structure was missing in 2012 Missing earth restored in 2014 Vegetation management problem in 2012 Vegetation well managed in 2014 Loose panel inside mini-substation during the audit in 2012 Loose panel removed during monitoring in 2014 Page 12 of 15

13 The wrong sized back panel of M/S 4 in 2012 M/S 4 correct size panel fitted in 2014 Bad vegetation management at mini-substation in 2012 Vegetation management still the same in 2014 No safety signs on this mini-substation in 2012 Still no safety signs in 2014 Cracked and shifted wall in Capella Page 13 of 15

14 Cracked and sinking foundations due to structural problems in Capella Repaired structural problems at Capella Cracks and structural problems repaired at Capella during the monitoring in 2014 Capella substation HV yard First aid box inside the control room The photos indicate that umhlathuze Local Municipality has done impressive work as far as the implantation of the CAP is concerned. 9. CONCLUSIONS umhlathuze Local Municipality has implemented the CAP. The NERSA audit team noted the dedication and commitment of umhlathuze Local Municipality to improve their level of compliance. This commitment is commendable. Page 14 of 15

15 10. RECOMMENDATIONS It is recommended that umhlathuze Local Municipality fully implement the CAP. The Licensee should develop and conduct a self-monitoring regime to ensure that the level of compliance does not deteriorate. 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 and Compliance: Electricity National Energy Regulator of South Africa PO Box Arcadia 0007 Fax: +27 (0) Page 15 of 15