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NERSA Strategic Plan 2012

2. CONTENT. IntroductionFramework for Strategic Plans and Annual Performance PlansPlanning ConceptsVision, Mission, Values and Regulatory PrinciplesMandateAchievements (2011/12)Strategic Plan (2012/13 ? 2016/17)Annual Performance Plan (2012/13 ? 2014/15)Budget and Funding (2012/13)Challenge

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NERSA Strategic Plan 2012

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    1. 1

    2. 2 CONTENT Introduction Framework for Strategic Plans and Annual Performance Plans Planning Concepts Vision, Mission, Values and Regulatory Principles Mandate Achievements (2011/12) Strategic Plan (2012/13 2016/17) Annual Performance Plan (2012/13 2014/15) Budget and Funding (2012/13) Challenges facing NERSA Plans for the future Conclusion

    3. 3 INTRODUCTION The National Energy Regulator (NERSA) was established on 1 October 2005 in terms of the National Energy Regulator Act, 2004 (Act No. 40 of 2004) to regulate: Electricity industry (Electricity Regulation Act, 2006 (Act No. 4 of 2006)) Piped-Gas industry (Gas Act, 2001 (Act No.48of 2001)) Petroleum Pipelines industry (Petroleum Pipelines Act, 2003 (Act No. 60 of 2003)) NERSA is expected to implement its mandate and to proactively take necessary regulatory actions in anticipation of and in response to the changing circumstances in the energy industry Furthermore, in executing its mandate NERSA needs to ensure that the interest of both licensed entities and end users/consumers are balanced In terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999), NERSA is a Schedule 3A Public Entity

    4. 4 FRAMEWORK FOR STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS Published by National Treasury in August 2010 Applicable to all national and provincial departments, constitutional institutions and public entities in the development of their strategic plans Applicable from 2012/13 for Schedule 3A Public Entities NERSA is required to: Produce and table a Strategic Plan with a five-year planning horizon; Produce and table an Annual Performance Plan including forward projections for a further two years, with annual and performance targets, where appropriate; and Identify a core set of indicators needed to monitor institutional performance.

    5. PLANNING CONCEPTS 5

    6. 6 VISION In this context, being world-class means that NERSA - Regulates the energy industry within the/our mandate without losing sight of our shared vision and values. Is passionate and sensitive to the needs of our stakeholders, especially employees, consumers, energy suppliers and government, to ensure equity. Creates an environment that has low regulatory risk as viewed by all stakeholders, locally and internationally. Encourages competition and continue to provide sound, objective and professional regulation of monopolies given the existing socio-economic conditions. Assists all key stakeholders in optimizing the use of energy resources to ensure affordability for all consumers. Constantly evaluates our performance and benchmark ourselves against the best-in-class energy organizations in the world. Subscribes to the best regulatory practices and standards, including corporate governance principles. Encourages new ideas, innovation, processes and systems that engender economic efficiency, effectiveness and continuous improvement, as a learning organisation. Maintains synergy between input, work processes and results through our capable, diverse, highly motivated and dedicated teams In this context, being world-class means that NERSA - Regulates the energy industry within the/our mandate without losing sight of our shared vision and values. Is passionate and sensitive to the needs of our stakeholders, especially employees, consumers, energy suppliers and government, to ensure equity. Creates an environment that has low regulatory risk as viewed by all stakeholders, locally and internationally. Encourages competition and continue to provide sound, objective and professional regulation of monopolies given the existing socio-economic conditions. Assists all key stakeholders in optimizing the use of energy resources to ensure affordability for all consumers. Constantly evaluates our performance and benchmark ourselves against the best-in-class energy organizations in the world. Subscribes to the best regulatory practices and standards, including corporate governance principles. Encourages new ideas, innovation, processes and systems that engender economic efficiency, effectiveness and continuous improvement, as a learning organisation. Maintains synergy between input, work processes and results through our capable, diverse, highly motivated and dedicated teams

    7. 7 VALUES Passion Spirit of Partnership Excellence Innovation Integrity Responsibility Professionalism Values are the expression of what NERSA stands for and how it will conduct itself. In this context and in addition to its commitment to comply with the requirements of Sections 9 11 of the National Energy Regulator Act and its Code of Conduct, NERSA has adopted the following values, which underpin the conduct of the Regulator Members and its employees: Passion: We conduct our business with a sense of urgency and commitment and are proud to be part of NERSA Spirit of Partnership: In working with all our stakeholders we deliver on our promises for the purpose of sustainable development Excellence: In striving for the best results, NERSA promotes growth / development of its staff, and benchmarks itself against the best-in-class energy regulators across the globe Innovation: As a learning organization, we strive to set trends and promote creativity by challenging the norm in order to continuously improve Integrity: Being honest, fair and sincere with all stakeholders and amongst ourselves Accountability: We practice responsibility and take ownership of our actions and decisions Professionalism: We encourage maintenance of high standards of professional competence, interdependence between our teams using effective communication channels to treat everybody as stakeholdersValues are the expression of what NERSA stands for and how it will conduct itself. In this context and in addition to its commitment to comply with the requirements of Sections 9 11 of the National Energy Regulator Act and its Code of Conduct, NERSA has adopted the following values, which underpin the conduct of the Regulator Members and its employees: Passion: We conduct our business with a sense of urgency and commitment and are proud to be part of NERSA Spirit of Partnership: In working with all our stakeholders we deliver on our promises for the purpose of sustainable development Excellence: In striving for the best results, NERSA promotes growth / development of its staff, and benchmarks itself against the best-in-class energy regulators across the globe Innovation: As a learning organization, we strive to set trends and promote creativity by challenging the norm in order to continuously improve Integrity: Being honest, fair and sincere with all stakeholders and amongst ourselves Accountability: We practice responsibility and take ownership of our actions and decisions Professionalism: We encourage maintenance of high standards of professional competence, interdependence between our teams using effective communication channels to treat everybody as stakeholders

    8. 8 REGULATORY PRINCIPLES Underpinned by NERSAs legal mandate Transparency Neutrality Consistency and Predictability Independence Accountability Integrity Efficiency In regulating the three industries, NERSA must adhere to sound principles and approaches to be able to deliver on its mandate. NERSA has given consideration both to international best practise as stipulated in South American Gas daring to tap the bounty, International Energy Agency with regard to effective economic regulation, as well as to the key principles stated in the AFUR framework for utility regulation in Africa. Subsequently, NERSA has adopted the following internationally accepted regulatory principles, to characterise its regulatory approach: Rule of Law: This is the foundation of a regulatory system and means that (a) its rights and obligations should be spelt out; (b) the law should apply to everyone; and (c) decisions should be subject to review or appeal to the judiciary system Transparency: The Energy Regulator is required to explain its decisions and processes to regulated entities and other interested parties, implying that the data or information that the decision is based on is readily available and the reasoning behind it is readily explained. This covers public consultation and accessibility Neutrality: Regulations should be neutral to all market players without favouring one or another group (non-discrimination) Predictability and Consistency: Rulings and judgments will be consistent and should have a reasonable degree of predictability based on previous rulings in similar cases Independence: The independence of the Energy Regulator from the regulated companies is a prerequisite for any sound regulatory system. Independence from political influence is also desirable to ensure long-term stability of regulatory practices. Avoidance of regulatory capture by some customer groups is also necessary for successful regulation. Accountability: The Energy Regulator is accountable for its actions and decisions. Independence must not be confused with the lack of accountability In regulating the three industries, NERSA must adhere to sound principles and approaches to be able to deliver on its mandate. NERSA has given consideration both to international best practise as stipulated in South American Gas daring to tap the bounty, International Energy Agency with regard to effective economic regulation, as well as to the key principles stated in the AFUR framework for utility regulation in Africa. Subsequently, NERSA has adopted the following internationally accepted regulatory principles, to characterise its regulatory approach: Rule of Law: This is the foundation of a regulatory system and means that (a) its rights and obligations should be spelt out; (b) the law should apply to everyone; and (c) decisions should be subject to review or appeal to the judiciary system Transparency: The Energy Regulator is required to explain its decisions and processes to regulated entities and other interested parties, implying that the data or information that the decision is based on is readily available and the reasoning behind it is readily explained. This covers public consultation and accessibility Neutrality: Regulations should be neutral to all market players without favouring one or another group (non-discrimination) Predictability and Consistency: Rulings and judgments will be consistent and should have a reasonable degree of predictability based on previous rulings in similar cases Independence: The independence of the Energy Regulator from the regulated companies is a prerequisite for any sound regulatory system. Independence from political influence is also desirable to ensure long-term stability of regulatory practices. Avoidance of regulatory capture by some customer groups is also necessary for successful regulation. Accountability: The Energy Regulator is accountable for its actions and decisions. Independence must not be confused with the lack of accountability

    9. 9 MANDATE NERSAs Mandate is anchored in 4 Primary Acts: National Energy Regulator Act, 2004 (Act No. 40 of 2004) Electricity Regulation Act, 2006 (Act No. 4 of 2006) Gas Act, 2001 (Act No.48of 2001) Petroleum Pipelines Act, 2003 (Act No. 60 of 2003) 3 Levies Acts: Gas Regulator Levies Act, 2002 (Act No. 75 of 2002) Petroleum Pipelines Levies Act, 2004 (Act No. 28 of 2004) Section 5B of the Electricity Act, 1987 (Act No. 41 of 1987)

    10. 10 MANDATE (2) 3 Facilitating Acts: Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) Promotion of Access to Information Act, 2000 (Act No. 2 of 2000) (PAIA) Promotion of Administrative Justice Act, 2000 (Act No. 3 of 2000) (PAJA) Sections 32 and 33 of the Constitution 32. Access to information Everyone has the right of access to any information held by the state; and any information that is held by another person and that is required for the exercise or protection of any rights. National legislation must be enacted to give effect to this right, and may provide for reasonable measures to alleviate the administrative and financial burden on the state. *3 33. Just administrative action Everyone has the right to administrative action that is lawful, reasonable and procedurally fair. Everyone whose rights have been adversely affected by administrative action has the right to be given written reasons. National legislation must be enacted to give effect to these rights, and must provide for the review of administrative action by a court or, where appropriate, an independent and impartial tribunal; impose a duty on the state to give effect to the rights in subsections (1) and (2); and promote an efficient administration. Sections 32 and 33 of the Constitution 32. Access to information Everyone has the right of access to any information held by the state; and any information that is held by another person and that is required for the exercise or protection of any rights. National legislation must be enacted to give effect to this right, and may provide for reasonable measures to alleviate the administrative and financial burden on the state. *3 33. Just administrative action Everyone has the right to administrative action that is lawful, reasonable and procedurally fair. Everyone whose rights have been adversely affected by administrative action has the right to be given written reasons. National legislation must be enacted to give effect to these rights, and must provide for the review of administrative action by a court or, where appropriate, an independent and impartial tribunal; impose a duty on the state to give effect to the rights in subsections (1) and (2); and promote an efficient administration.

    11. 11

    12. 12 ELECTRICITY INDUSTRY REGULATION Tariffs Approved 177 municipal tariffs and reviewed 9 tariff applications for 2011/12; Approved a revised tariff increase for Eskom for the period 1 April 2012 to 31 March 2013 of 16% instead of the originally approved tariff of 25.9% on 9 March 2012; and Concurrence of the Energy Regulator with the determination made by the Minister of Energy in line with section 34 of the Electricity Regulation Act, 2006 (Act No. 4 of 2006) on the procurement process for renewable energy Generation Conducted national hearings on the licence applications by the 28 DoE Renewable Energy IPP programme preferred bidders; and Granting of 5 generation licences. Distribution The mediation between the Chiawelo community and Eskom was successfully completed after the adoption of the report Testing of Disputed Electricity Prepaid Meters in Chiawelo, Soweto; and Granting of 1 distribution licence, amendment of 3 distribution licences and revocation of 1 distribution licence.

    13. 13 ELECTRICITY INDUSTRY REGULATION (2) Distribution The mediation between the Chiawelo community and Eskom was successfully completed after the adoption of the report Testing of Disputed Electricity Prepaid Meters in Chiawelo, Soweto; and Granting of 1 distribution licence and revocation of 1 distribution licence.

    14. 14 PIPED-GAS INDUSTRY REGULATION Pricing and Tariffs Approved Methodology to Approve Maximum Prices for Piped-Gas; and Three stakeholder workshops to inform stakeholders on the Methodology to Approve Maximum Prices for Piped-Gas. Licensing Granting of 5 licences for the construction of gas transmission facilities and 2 licences for the construction of gas distribution facilities; and Granting of 2 operation licences and 1 trading licence. Other Gas dialogue on hurdles facing investment in gas infrastructure; and Determination that there is inadequate competition in the piped-gas industry. This determination paves the way for the implementation of the Maximum Pricing Methodology

    15. 15 PETROLEUM PIPELINES INDUSTRY REGULATION Tariffs: Approved an increase of 31.58% in allowable revenue for Transnet for the period 2012/13; and Approved storage facility tariffs for 9 licencees. Licensing Approved 3 construction licences and 1 operation licence; and Revoked 8 licences.

    16. 16

    17. 17 STRATEGIC OUTCOME ORIENTED GOALS The strategic outcome oriented goals of NERSA are cascaded from the mandate and reflect the 12 National outcomes as well as those of the Department of Energy. These goals attest to NERSAs role in facilitating the achievement of the national socio-economic and socio-political development agenda. The strategic outcome oriented goals are: To facilitate Security of Supply in order to support sustainable economic development in South Africa; To facilitate investment in infrastructure in the energy industry to support sustainable economic development in South Africa; At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    18. 18 STRATEGIC OUTCOME ORIENTED GOALS (2) To promote competitive and efficient functioning of the energy industry in order to sustain economic development in South Africa; To facilitate affordability and accessibility in the energy industry to balance economic interests of all stakeholders in support of economic development of South Africa and a better life for all; To position and establish NERSA as a credible and reliable regulator in order to create regulatory certainty. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    19. 19 LINK TO TWELVE NATIONAL OUTCOMES The strategic outcome oriented goals of NERSA are linked to the following 12 National outcomes: A long and healthy life for all South Africans; Decent employment through inclusive economic growth; An efficient, competitive and responsive economic infrastructure network; Environmental assets and natural resources that are well protected and continually enhanced; and An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    20. 20 STRATEGIC OBJECTIVES The strategic objectives of NERSA, expressed as the desired end state of the energy industry are stated as: A Regulatory environment that facilitates investment in energy infrastructure; Ensuring energy supply that is certain and secure for current and future user needs; Ensure that fair competition exists within the energy industry; Ensure that regulatory certainty exists within the energy industry; Ensure that energy is accessible and affordable for all citizens; and Ensure that NERSA is established and positioned as a credible and reliable regulator. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    21. 21 PROGRAMMES In order to achieve its outcome oriented goals NERSA will deliver on its strategic objectives through the following structured programmes: Setting and/or approving tariffs and prices; Licensing and registration; Compliance monitoring and enforcement; Dispute resolution including mediation, arbitration and the handling of complaints; Setting of rules, guidelines and codes for the regulation of the three industries; and Establishing NERSA as an efficient and effective regulator. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    22. 22 PROGRAMME STRATEGIC OBJECTIVES (ELECTRICITY)

    23. 23 PROGRAMME STRATEGIC OBJECTIVES (PIPED-GAS)

    24. 24 PROGRAMME STRATEGIC OBJECTIVES (PIPED-GAS) (2)

    25. 25 PROGRAMME STRATEGIC OBJECTIVES (PETROLEUM PIPELINES)

    26. 26 PROGRAMME STRATEGIC OBJECTIVES (PETROLEUM PIPELINES) (2)

    27. 27 PROGRAMME STRATEGIC OBJECTIVES (CROSS-CUTTING)

    28. 28 PROGRAMME STRATEGIC OBJECTIVES (ORGANISATIONAL)

    29. 29

    30. 30 ELECTRICITY INDUSTRY REGULATION

    31. 31 NUMBER OF KPIS PER PROGRAMME

    32. 32 Programme 1: Setting and/or approval of tariffs and prices Eskom Multi-Year Price Determination; Municipal tariff approvals; Implementation of inclining block tariffs; Implementation of Regulatory Reporting Manuals; and Free Basic Electricity.

    33. 33 Programme 1: Setting and/or approval of tariffs and prices

    34. 34 Programme 1: Setting and/or approval of tariffs and prices (2)

    35. 35 Programme 2: Licensing and Registration Timely processing of licence applications At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    36. 36 Programme 2: Licensing and Registration

    37. 37 Programme 3: Compliance Monitoring and Enforcement Conducting of compliance audits; Implementation of action plans; and Compliance with prescribed conditions. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    38. 38 Programme 3: Compliance monitoring and enforcement

    39. 39 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Timely processing of complaints At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    40. 40 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints

    41. 41 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry Grid Code administration; Development of Rules; and Analysis of Transmission development plans. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    42. 42 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry

    43. 43 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry (2)

    44. 44 Programme 6: Setting of rules, guidelines and codes for the regulation of the electricity industry Establishment of end-user forums At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    45. 45 Programme 6: Establishing NERSA as an efficient and effective regulator

    46. 46 PIPED-GAS INDUSTRY REGULATION

    47. 47 NUMBER OF KPIS PER PROGRAMME

    48. 48 Programme 1: Setting and/or approval of tariffs and prices Approval of maximum prices; Approval of transmission and storage tariffs; Timely calculation of aggregate prices; and Timely calculation of Sasol Gas prices for compliance report on pricing provisions. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    49. 49 Programme 1: Setting and/or approval of tariffs and prices

    50. 50 Programme 2: Licensing and Registration Timely processing of licence and registration applications and implementation of decisions; Investigation of industry investigated to identify unregistered import and production activities; Development of non-financial RRM; Approved implementation strategy for the gas to power component of IRP2010; Approved implementation strategy for LNG; and Research on alternate gas sources. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    51. 51 Programme 2: Licensing and Registration

    52. 52 Programme 2: Licensing and Registration (2)

    53. 53 Programme 3: Compliance Monitoring and Enforcement Assessment of volume balance reports; Conducting of audits on ROMPCO pipeline; Conducting investigations; RRM compliance; and Reports on uncommitted capacity. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    54. 54 Programme 3: Compliance monitoring and enforcement

    55. 55 Programme 3: Compliance monitoring and enforcement (2)

    56. 56 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Timely processing of received complaints; and Timely processing of investigations. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    57. 57 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints

    58. 58 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry Stakeholder workshops; and Developed, approved and implemented HDI scorecard. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    59. 59 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry

    60. 60 Programme 6: Setting of rules, guidelines and codes for the regulation of the electricity industry Proposed amendments to legislation; Approved comments on draft legislation; and Stakeholder workshops. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    61. 61 Programme 6: Establishing NERSA as an efficient and effective regulator

    62. 62 PETROLEUM PIPELINES INDUSTRY REGULATION

    63. 63 NUMBER OF KPIS PER PROGRAMME

    64. 64 Programme 1: Setting and/or approval of tariffs and prices Setting of pipeline tariffs; Approval of storage and loading facility tariffs; and Implementation of RRMs. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    65. 65 Programme 1: Setting and/or approval of tariffs and prices

    66. 66 Programme 2: Licensing and Registration Timely processing of licence applications; and Investigation of suspected unlicensed activities. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    67. 67 Programme 2: Licensing and Registration

    68. 68 Programme 3: Compliance Monitoring and Enforcement Timely completion of assessment reports; HDSA reporting; 3rd party access reporting; and Common carrier investigations. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    69. 69 Programme 3: Compliance monitoring and enforcement

    70. 70 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Timely processing of complaints At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    71. 71 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints

    72. 72 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry Publish licensing guidelines; Publish tariff guidelines for storage facilities; Publish Petroleum pipelines tariff methodology; and Guidelines to approved Starting Regulatory Asset Base. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    73. 73 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry

    74. 74 Programme 6: Setting of rules, guidelines and codes for the regulation of the electricity industry Infrastructure investigated and reported on in Durban; Report on the inland supply forecast; Report on the review of legislation; Published storage tariffs; Benchmark study on storage tariffs; and Publication of financial and tariff information. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    75. 75 Programme 6: Establishing NERSA as an efficient and effective regulator

    76. 76 CROSS-CUTTING REGULATORY

    77. 77 NUMBER OF KPIS PER PROGRAMME

    78. 78 Programme 6: Setting of rules, guidelines and codes for the regulation of the electricity industry Benchmark report on regulatory decisions by category; Impact of regulatory decisions; Research on new sources of energy; Harmonised regulatory processes; Quarterly newsletters; Stakeholder engagement an d education; and Approved proposals / comments on policy changes. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    79. 79 Programme 6: Establishing NERSA as an efficient and effective regulator

    80. 80 Programme 6: Establishing NERSA as an efficient and effective regulator (2)

    81. 81 ORGANISATIONAL

    82. 82 NUMBER OF KPIS PER PROGRAMME

    83. 83 Programme 6: Setting of rules, guidelines and codes for the regulation of the electricity industry Implementation of Business Plan; Targets of KPIs met; Staff retention; Organisational structure filled; Training and Development; Customer satisfaction; Unqualified audit; and Timely payment of creditors. At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.At the Energy Regulator Strategic Planning Workshop on 27 July, the Energy Regulator identified and ranked ten priorities for the 2007/08 2009/10 MTEF period. These priorities were confirmed as strategic objectives for 2007/08 at the Energy Regulator meeting of 28 July 2006.

    84. 84 Programme 6: Establishing NERSA as an efficient and effective regulator

    85. 85 Programme 6: Establishing NERSA as an efficient and effective regulator (2)

    86. 86

    87. 87 RING-FENCING METHODOLOGY According to Section 13 of the National Energy Regulator Act, all accounts for the three regulated industries have to be ring-fenced all direct costs attributable to an industry are allocated to that industry the ratio of the staff compliment attributed to the industry-specific functions is used to allocate the remaining (common) costs to the respective industries the common costs allocation ratio for electricity, piped-gas and petroleum pipelines industries is 58%:21%:21%

    88. 88 BUDGET AND FUNDING FOR 2012/13

    89. 89

    90. 90 ELECTRICITY INDUSTRY REGULATION Finalisation of the proposed revision of the Electricity Pricing Policy; MYPD3; and Implementation of the Inclining Block Tariffs. Apart from the Regulations on the revised New Generation Capacity, promulgated in May 2011, no legislation or regulations have been promulgated regarding the Cabinets decision in 2007 that Eskom will be responsible for ensuring that adequate generation capacity is made available and that 30% of the new power generation capacity is derived from IPPs;

    91. 91 ELECTRICITY INDUSTRY REGULATION (2) The ability of NERSA to enforce compliance is constrained by a lack of policy to impose penalties in cases of non-compliance; Establishment of end-user forums - NERSA is awaiting the Minister of Energys prescription of the process to be followed in establishing end-user forums as stipulated in the Electricity Regulation Act; Security of supply; Multiplicity of distributors of varying capabilities makes the regulation of the distribution sector difficult; and Carbon Tax.

    92. 92 PIPED-GAS INDUSTRY REGULATION Regulation of certain piped-gas activities not specifically catered for in the Gas Act Compressed Natural Gas (CNG) Monitoring and enforcing Sasols compliance with the regulatory agreement Enforcement of the market value pricing Private sector investment and markets for gas Private sector investment in infrastructure faces many hurdles i.t.o. supply and offtake agreements Regulatory certainty PASA awarded prospecting licences for shale gas to Shell, Sasol and others; Cabinet decided to suspend shale gas prospecting; and Decision of Sasol to invest billions of dollars in shale gas in Canada.

    93. 93 PETROLEUM PIPELINES INDUSTRY REGULATION Supply chain is regulated by different authorities thus compromising the ability of coordinated regulatory oversight as a result of concurrent and/or adjacent jurisdiction; Security of supply of petroleum to the inland areas; Possibility of tariffs almost exclusively used for capital expansion funding by some State Owned Entities; Promoting access to petroleum storage facilities by Historically Disadvantaged South African wholesalers; and Potential shortage of LPG (Maximum Pricing Methodology needs to be reviewed).

    94. 94 CROSS-CUTTING REGULATION Processes being dependent on other role players and therefore being outside of NERSAs control e.g.: Outstanding legislative processes; and Insufficient data in licence and tariff applications. Legislative gaps; and Information Asymmetry.

    95. 95 ORGANISATIONAL Acceptance of NERSAs role and mandate by regulated entities; Attraction and retention of requisite skills; Resourcing of the organisation; Conducive working environment; and Harmonised and documented regulatory processes.

    96. 96 CONCLUSION NERSA is a relatively young regulator; Ongoing refinement of processes is taking place; There is a steep learning curve for both regulator and regulated entities during these process refinements; NERSA is conscious of the regulatory burden it imposes; NERSA is striving for regulatory certainty to create a conducive environment for attracting and ensuring orderly investment;

    97. 97 CONCLUSION (2) Filling legislative gaps is a priority; and NERSA aims to balance the interests of suppliers and customers.

    98. 98

    99. 99 PLANS FOR THE FUTURE (Electricity Industry Regulation) To monitor and enforce compliance by all licencees; Introduction of more Independent Power Producers; Promotion of Renewable Energies in the generation mix; To monitor the implementation of the second Multi-Year Price Determination (MYPD2) by Eskom and to revise the rules for the MYPD2 if necessary; To start preparing for the third Multi-Year Price Determination for Eskom for the period 2013/14 2015/16, to continue giving certainty and predictability in terms of electricity prices;

    100. 100 PLANS FOR FUTURE (Electricity Industry Regulation) (2) To streamline regulatory processes in the areas of licensing and analysis of tariff applications; and To rationalize tariff structures, taking into account regional pricing and geographical differentiation.

    101. 101 PLANS FOR FUTURE (Piped-Gas Industry Regulation) To educate customers in order to assist in the enforcement of Market Value Pricing; To implement a compliance framework for licence conditions; To conduct a study on the integrity of the gas pipeline network; To benchmark licence conditions;

    102. 102 PLANS FOR FUTURE (Piped-Gas Industry Regulation) (2) To highlight to the policy maker the need for a review of the Gas Act to address: Definitions and provisions that hamper effective regulation of the gas industry; Infrastructure Planning and Construction Licences; NERSAs Tariff Mandate (Distribution and Transmission); and Licensing deadlines. Transition to regulating maximum prices; and Monitoring compliance to licence conditions.

    103. 103 PLANS FOR FUTURE (Petroleum Pipelines Industry Regulation) To monitor the escalations in costs as well as the delays in construction of new infrastructure; To monitor and manage as far as possible a tariff spike through tariff structures; Monitoring compliance to licence conditions; To facilitate market entry by historically disadvantaged players; and To facilitate third party access.

    104. 104 PLANS FOR FUTURE (Cross-Cutting Regulation) To conduct a customer education programme / campaign across all 3 regulated industries; To manage the information asymmetry between NERSA and the licencees; To advise policy makers of NERSA views, policy gaps and NERSAs mandate; To coordinate NERSA activities with other regulators with concurrent jurisdiction; and To assess NERSAs processes and methodologies against best in world practices through regulatory analysis, research, benchmarking and auditing.

    105. 105

    106. 106 CONCLUSION NERSA would like to thank the Portfolio Committee for the opportunity to present its Strategic Plan and Annual Performance Plan NERSA is a relatively young regulator Ongoing refinement of processes is taking place There is a steep learning curve for both regulator and regulated entities during these process refinements NERSA is conscious of the regulatory burden it imposes NERSA is striving for regulatory certainty to create a conducive environment for attracting and ensuring orderly investment

    107. 107 CONCLUSION (2) Filling legislative gaps is a priority NERSA aims to balance the interests of suppliers and customers

    108. 108 THANK YOU

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