Robert Opini Henry Ndlovu National Energy Regulator of South Africa

Robert Opini Henry Ndlovu National Energy Regulator of South Africa

Regulatory Reporting A new innovative approach for the energy industries About the National Energy Regulator of South Africa Regulatory Reporting a short introduction The Regulatory Reporting Manuals (RRM) The Regulatory Reporting System (RRS) Motivation Deployment Phases and Project Plan Project Organisation Solution Scope 2

About NERSA The National Energy Regulator (NERSA) is the regulatory authority established in terms of The National Energy Regulator Act, 2004 (Act No. 40 of 2004) with the mandate to undertake the functions of the Gas Regulator as set out in the Gas Act of 2001, the Petroleum Pipelines Regulatory Authority as set out in the Petroleum Pipelines Act of 2003, and the National Electricity Regulator as set out in the Electricity Act of 1987 as amended. 3

About NERSA MISSION To regulate the energy industry in accordance with government laws, policies, standards and international best practices in support of sustainable development. VISION To be a world-class leader in energy regulation 4

About NERSA STRATEGIC OBJECTIVES: To implement relevant energy policy, law and regulations efficiently and effectively To identify, develop and implement relevant energy rules efficiently and effectively To establish the credibility, legitimacy and sustainability of NERSA as an independent and transparent energy regulator To create an effective organisation that delivers on its mandate and purpose To evaluate the Energy Regulator's effectiveness 5

About NERSA KEY TASKS (with differing extend / approach regarding industries) Licensing (for new entities or amendments for existing ones) Set license conditions and regulatory framework Evaluate and approve license applications Compliance monitoring Monitoring of financial and technical performance and compliance with individual license conditions Pricing & Tariffs Evaluate tariff applications; set or approve tariffs / prices Develop guidelines, structures and methodologies for tariffs and pricing (e.g. tariff codes, pricing frameworks) 6

About NERSA KEY TASKS (with differing extend / approach regarding industries), cont. Infrastructure Planning (mainly electricity) Planning future energy demand / needs Promoting alternative generation technologies, e.g. renewable energies Promoting demand side management and energy efficiency initiatives Encourage orderly investment in the industries Dispute resolution among licensees Attend to customer complaints International coordination and partnerships (e.g. regulatory associations AFUR, RERA, SAURA) Benchmarking and international best practices 7

Regulatory Reporting NERSA requires timely and accurate information to be able to make decisions that are aligned to its mandate in the industries it regulates. To manage regulation NERSA is implementing comprehensive Regulatory Reporting especially in terms of financial information (the RRM Regulatory Reporting Manuals) but later on, also on related non financial information (e.g. consumption, customers, assets, quality of service, performance, complaints) among its licensees. The information is also required for Projections and trend analysis as well as benchmarking Determine the status of the various activities (e.g. Investments) Reviewing compliance to Energy Regulator decisions 8

Regulatory Reporting Manuals To gather the required information NERSA issued the Regulatory Reporting Manual (RRM) for implementation by licensees for purposes of recording and submitting to the Energy Regulator its financial information regularly in a systematic and consistent way. The goal is to have focused financial information relevant to economic regulation, which may at times differ from what is contained in statutory financial statements, to enhance efficiency and transparency of the regulatory process. The gazetted manuals became effective from the 1st September 2008 and implementation started in a staggered format depending on the different levels of readiness of the respective regulated entities. 9

Regulatory Reporting Manual RRM not only provides a uniform system of regulatory financial reporting by regulated entities, but also requires accounting separation (also known as ringfencing) when the regulated entity has other businesses that the Energy Regulator does not regulate or as the Energy Regulator may require separating different activities within a regulated entity (-> cost allocation). RRM is in two sections. Section 1 (Volume 1) contains general administrative issues and instructions that apply to all entities in the regulated energy industry. Section 2 (Volumes 2, 3 and 4) contains industry specific charts of accounts, activity analysis and reporting templates. 10

Justification Regulatory Reporting System To handle all the processes (including communication) and the huge volume of information related to the RRM About 200 licensees At least 2 reports per year (half year actuals/prognosis; full year report) Covering approx. 400 accounts each; partially with detailed break down (e.g., debts, leases, work in progress) and later on, also to the non-financial information, NERSA decided to set up a specific information system as a core application to support the reporting activities as well as the appropriate validation, documentation and storage of the received information, and as a backbone for the evaluation, presentation and dissemination of the information: named; The Regulatory Reporting System (RRS) 11

Regulatory Reporting System Expected benefits from the RRM and RRS Consistency of information from year to year. Ensure that information requested for regulatory purposes is submitted correctly. Comparability of information over time both within and between regulated entities. Standardization of reporting to allow the development and calculation of metrics and performance measures. Facilitation of more complete and comprehensive tariff applications will better inform tariff reviews and tariff setting/approving processes. Facilitate compliance monitoring of license conditions/requirements. Allow the Energy Regulator to ascertain whether or not the full intentions of its decisions have been complied with. Allow for the detection of instances where there is crosssubsidization and/or discrimination between regulated activities as well as between regulated and non-regulated activities of a licensee. 12

Regulatory Reporting System General objectives of the RRS: Scalability to start small and evolve as needs arise Integration with existing legacy systems where applicable Easy to maintain for local support or in-house support Assist in achieving regulatory efficiencies and as an enabler to reduce the regulatory burden on the licensees Achieve the overall objectives of information transparency needed from licensees and from internal information management required to enable the Energy Regulator to perform its functions Cost-effective and demonstrates value for money to the Energy Regulator 13

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Regulatory Reporting System Communication Architecture: A single communication interface between NERSA and Licensees Three mechanisms for Licensee to provide data: FTPS Automatic file submission For those licensees who have mature source systems which are able to automatically produce the NERSA defined reporting templates. These source systems will need to produce the required templates, log on to the NERSA FTP site and copy the files. Upon receipt of the files the NERSA RRS system will process and provide feedback in the form of xml response files containing the relevant messaging that the Licensee system will in turn be able to process. FTPS Manual upload file submission For those licensees who would like to manually capture data in the MS Excel RRM templates provided by NERSA. The relevant document needs to be manually copied to the NERSA FTP server. Upon receipt of the files the NERSA RRS system will process and provide feedback in form of email response to contact person. HTTPS Manual online data capture submission Licensee can logon onto web application via internet 17

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Functional Scope: Regulatory Reporting System Data Consolidation and Template framework define master templates. inherit & customize templates based on master templates. allow for Licensee Administrators to create, customize, save and publish templates on a field and a record level. template change control process both business and system to lock the changes of templates until defined dates are reached within a year, and then notify all parties of changes. business rule engine that is used by the Licensee Administrator to define on a template level, thresholds and comparisons to validate and alert submitted/received data. templates needs to be designed to cater for financial or non-financial data basically any type of data NERSA requires from the licensees. allowing licensee to download and upload the required template in different formats e.g. EXCEL, CSV, (XML) Secured and encrypted transfer of data via manual capture or template file uploads 19

Regulatory Reporting System System Communication and ETL (Extract, Transform & Load) Layer. Automatic upload of generated template file from defined FTP site hosted at NERSA into the data consolidation database (Staging). Automatic upload of supporting documents in format of pdf, word, PowerPoint, etc... to the NERSA IDMS system (SharePoint). Validation of submitted files and notifications (emails and reports) of success or failure to both NERSA Licensee Administrator and Licensee contact person. Triggering of specific reports to be sent once data is uploaded. Loading of the staging data into the data warehouse. Secured and encrypted transfer of file uploads. Data warehouse The storing of the collected data(staging data) in dimensional model for reporting and further validation (e.g. benchmarking) and advanced analytics SAP Business Intelligence Content Reports, Dashboards, Advanced analytic capabilities 20

Regulatory Reporting System Templates and Flat Files 21

Regulatory Reporting System LICENSEE AUTOMATION RECOMMENDATIONS Licensee running SAP ERP and/or SAP BW Non-SAP Licensee SAP Business Objects Recommended BO XI 3.1 SP2 Reporting Tools Non-SAP BI Platforms UNIVERSE SAP Business Warehouse Recommended BI 7.01 SP05 + Enterprise Data warehouse Cubes SAP ERP Supported Non-SAP ERP Platforms 22

Regulatory Reporting System Outlook to Phase II of RRS in 2011 Extension to Non-Financial data Assessment on required data and their usage Definition of specific templates (per sub-industry, licensee divisions) Links to financial data, KPI s, possible benchmarks, cross industry mapping Support for Tariff application and setting / approval support Further roll out (Phase I implementers, municipalities) Versioning and change management for (master) templates Asset level extension (further breakdown) Asset value indexing and depreciation 23

Thank You 24