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COMPLIANCE MONITORING
REPORT OF DRAKENSTEIN
LOCAL MUNICIPALITY
Monitoring Date: 03 September 2015
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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: 012 401 4794
National Energy Regulator
Kulawula House
526 Madiba Street
Arcadia
Pretoria
PO Box 40434
Arcadia
0007
Tel: +27 (0)12 401 4600
Fax: +27 (0) 12 401 4700
www.nersa.org.za
DISCLAIMER
The content of this report is based on information and evidence obtained from both
the licensee and site verification of plant condition conducted during the monitoring
process. Should this report not be accurate, the licensee must, in writing and within
fourteen (14) days of receipt of this report, advise NERSA about such inaccuracies.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY................................................................... 4
1. INTRODUCTION ........................................................................... 5
2. METHODOLOGY .......................................................................... 6
3. NERSA AND DRAKENSTEIN LOCAL MUNICIPALITY DELEGATES ................................................................................. 6
4. GENERAL INFORMATION ON DRAKENSTEIN LOCAL MUNICIPALITY ............................................................................. 6
5. AUDIT FINDINGS ......................................................................... 7
6. DRAKENSTEIN’S PERFORMANCE ON NERSA COMMUNICATION ....................................................................... 8
7. PROGRESS ON THE IMPLEMENTATION OF THE CORRECTIVE ACTION PLAN ...................................................... 8
8. PLANT CONDITION DURING AUDIT VS. MONITORING TIME 12
9. CONCLUSIONS .......................................................................... 17
10. RECOMMENDATIONS ............................................................. 17
11. NEXT STEP .............................................................................. 17
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EXECUTIVE SUMMARY
The National Energy Regulator (NERSA) conducted a compliance audit on
Drakenstein Local Municipality (‘the Licensee’) from 11 to 13 September 2013 to
determine its level of compliance with the licence conditions. The objective was to
determine the compliance of Drakenstein 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.
Drakenstein 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
07 January 2014, Drakenstein 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 Drakenstein 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 03 July 2014, Drakenstein Local Municipality sent a signed 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 Drakenstein Local Municipality. On
03 September 2015, NERSA conducted a monitoring exercise on the
implementation of the CAP at Drakenstein 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 the issues raised during the audit will
help Drakenstein Local Municipality to be a more efficient and effective licensee.
This is a report on all the findings as per the audit and presents the status quo in
terms of progress made to address the non-compliances 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 Drakenstein Local Municipality to improve the network
conditions and business systems of the Municipality. The level of improvement is
presented in detail in Section 7 of the report.
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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) (‘the Act’), Section 4 (a) (vii), which states
that ‘the Regulator must enforce performance and compliance; and take
appropriate steps in the case of non-performance’. 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.
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2. METHODOLOGY
A corrective action plan template was developed and sent to Drakenstein 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 whether the timelines
of the CAP were realistic in terms of addressing the issues highlighted during
the audit.
The CAP was sent to NERSA; signed by the relevant officials of the Licensee.
NERSA accepted the CAP and initiated a monitoring process that 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 DRAKENSTEIN LOCAL MUNICIPALITY DELEGATES
NERSA was represented by the following officials:
Mr Velly Malaza Senior Distribution Compliance Engineer
Ms Bulelwa Gobe Compliance Monitoring Engineer
Mr Matodzi Mudau Compliance Monitoring Technician
Ms Vuyelwa Poswa Dispute Resolution Officer
Mr Bennie van Heerden Financial Compliance Officer
Drakenstein Local Municipality was represented by:
Mr Deon Louw Executive Manager Infrastructure
Mr Marahwaan Fredericks Electro Technical Engineering Services
Mr Paul de Vries Superintendent
4. GENERAL INFORMATION ON DRAKENSTEIN LOCAL MUNICIPALITY
Drakenstein Local Municipality is the electricity distribution licence holder for the
supply area with licence number NER/D/WC 023 and supplies electricity to
Paarl, Saron, Wellington and Witzenberg.
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It has 42,578 customers, which are categorised as follows: 29,234 prepaid
domestic; 8,720 domestic credit meters; 4,604 commercial and 20 industrial
customers.
There are five bulk intake points under the Drakenstein Local Municipality’s area
of supply and it has a total installed capacity of 172 MVA. The total geographical
area of Drakenstein Municipality is approximately 3,287km².
5. AUDIT FINDINGS
At the time of the audit, the following was highlighted to the Licensee as areas
that need attention and improvement:
(i) Vegetation management at some substations was not satisfactory.
(ii) The service dates of the firefighting equipment in the substations had
expired.
(iii) The condition of most mini-substations was acceptable, but some
safety signs had faded.
(iv) Some mini-substations’ enclosures were rusted and had visible signs
of oil leaks.
(v) Cable trenches in some of the substations were open.
(vi) The Parys Substation was used as a storage room.
(vii) There were no updated single line diagrams in the substations.
(viii) The batteries need attention as some of the battery solution levels
were below the indicated marks.
(ix) There were no updated visitor’s books in the substations.
(x) Signs of oil leaks were present at the transformers in some of the
substations.
(xi) The transformer and cooling fan at Suid-end Substation had been
stolen.
(xii) The pole-mounted transformers Q4/41 and Q4/33 as well as all the
transformers on the same supply line were old, leaking oil and not in
a good condition.
(xiii) Earth wires had been stolen on the pole-mounted transformers.
(xiv) There was a broken insulator on transformer Q4/33.
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6. DRAKENSTEIN’S PERFORMANCE ON NERSA COMMUNICATION
In September 2013, NERSA conducted a compliance audit on Drakenstein
Local Municipality to determine its level of compliance with its licence conditions.
This audit was followed by a number of emails from the National Energy
Regulator to Drakenstein Local Municipality’s Electricity Distribution
Department. The table below shows the communication between NERSA and
the Licensee.
Table 1: Communication Record
7. PROGRESS ON THE IMPLEMENTATION OF THE CORRECTIVE ACTION
PLAN
The Drakenstein Local Municipality displayed commitment in terms of the
implementation of the CAP during the monitoring exercise. The inspected
substations’ buildings were very clean and well kept.
During the monitoring, it was observed that all the old furniture that had been
stored at the Parys Substation during the audit had been removed. It was
however also observed that the condition of Parys Substation’s High Voltage
(HV) plant equipment still needs attention since Transformer No. 4 still had oil
leaks and Transformer No. 2 was also leaking oil, however, plans were in place
to address these issues through a service provider that was awarded a two-year
contract to conduct maintenance on the plant equipment.
The table below depicts the details of the progress made in addressing the
instances of non-compliance at the time of the monitoring of the implementation
of the CAP submitted to NERSA.
NERSA REQUEST DATE OF
REQUEST
LICENSEE
RESPONSE
DATE OF
RESPONSE
Request for Management
comments on draft report
29/10/2013 Positive response 07/01/2014
Reminder on Comments 05/12/2013 Positive response 05/12/2013
Request for Corrective Action Plan 10/03/2014 CAP sent and signed 03/07/2014
Monitoring notification 19/08/2015 Positive response 19/08/2015
Monitoring exercise 02/09/2015 Positive response 02/09/2015
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Table 2: Progress on CAP Implementation
Non-compliance Corrective
action
Target date
for starting of
action
Target date
for
completion
Progress Condition during
monitoring day
Vegetation
management.
Programme in
place for
vegetation
management.
April 2014 Ongoing Vegetation was
cut and an
additional team
from the Parks
Department has
received
authorisation
according to the
ORHVS
requirements to
access the
substations under
supervision to
assist with the
cutting of grass.
Due to the rain
causing the
vegetation to grow
back quickly,
although in some
instances
chemicals were
used, it was
decided to first
install a plastic
cover as a base,
then the normal
HV yard stones in
all the substations
to reduce
vegetation growth
during the
upgrading of the
current substation
fencing with the
new anticlimbing
and anti-cutting
fence technology
and put in
electronic sensors
to curb the break-
ins.
Improved vegetation
management
MSS enclosures
rusted and signs
of oil leaks.
MSS to be
changed.
July 2014 August 2014 Replaced. There
is also a tender to
refurbish all old
MSSs.
The rusted and
leaking MSSs were
replaced with new
ones. A project to
replace similar
MMSs is ongoing.
Safety signs. New signs and
stencils
ordered.
June 2014 January 2015 Completed. The
faded warning
signs were
replaced with new
signs.
Safety signs in
place. Compliant.
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Open cable
trenches.
Concrete
slabs ordered
to cover
trenches.
July 2014 December
2014
Not done yet. A
tender has been
put out for this and
is in progress and
this will follow after
the substation has
been fenced
securely with the
new fencing
technology.
Some trench covers
were closed. The
Suid-end and
Dwarsrivier
substations still had
open cable trenches
in the HV yard. Not
compliant.
Service date of fire
equipment.
All equipment
checked and
brought up to
date.
May 2014 May 2014 Completed Fire extinguishers
were serviced and
up to date on all
inspected
substations.
Complete and
compliant.
Parys Substation
used as
storeroom.
Materials
removed and
placed in
substation
store room.
October 2013 0ctober 2013 Completed Completed. The old
furniture has been
removed. Compliant.
No single line
diagrams at
substations.
Single line
diagrams to
be drawn for
substations by
planning.
June 2014 June 2015 Completed Single line diagrams
were in place in all
inspected
substations.
Compliant.
Suid-end SS
cooling fan stolen.
Work to be
programmed
for
maintenance.
Immediately
after the audit
(2014/15)
2015/16
financial year
Transformer No. 2
will be done (two
transformers were
written off)
At the Suid-end
Substation the old
broken fan was
replaced.
The written off
transformers are
scheduled to be
replaced.
(Transformer
replacement
pending)
Low battery
solution levels
Battery
solutions now
checked every
two weeks as
per
programme.
October 2013 Ongoing Completed and
inspections are
now conducted
every two weeks.
Batteries in good
condition.
Compliant.
Oil leaks on
transformers at
some substations
Remedial
programme in
place to
ensure oil
leaks are
attended to.
July 2014 June 2015 Not attended to.
Contractor has
been appointed for
the 20MVA
transformer and
the tender has
been awarded for
a two-year
contract. The
contractor is to
start soon with
transformer
maintenance.
Oil leaks on
transformers still
need attention. Not
compliant.
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No visitor’s books
at substations.
New books
placed in each
substation.
October 2013 October 2013 Completed. Visitor’s books were
available and were
up to date in all
inspected
substations.
Compliant.
Oil leaks on pole-
mounted
transformers,
stolen earth, and
insulator broken.
Work to be
programmed
for
maintenance.
July 2014 July 2014 Some of the pole-
mounted
transformers that
were leaking oil at
the time of the
audit were
replaced. The rest
(approximately 20)
are scheduled to
be done this
financial year
(2015/16). Stolen
earth replaced.
Pole-mounted
transformers with oil
leaks were replaced
and earths
connected on the
existing steel pole.
The broken insulator
has not yet been
done. Twenty (20)
transformer are still
pending.
Not budgeting
sufficient funds
(6% of total
expenditure).
NERSA tariff
guideline will
be brought to
the attention
of the CFO for
correction
during the
2014/15
financial
year’s budget.
Financial year
2014/15
Ongoing Completed. Now
adhering to the
NERSA guideline.
The maintenance
budget has risen
by 6% but
inflationary it is still
less due to cost of
materials.
No proof was
provided.
Areas do not
correspond with
the physical areas
that Drakenstein
supplied.
A plan
indicating the
area of supply
of Drakenstein
Municipality
must be drawn
up by end of
June 2014.
June 2014 Letter will be
forwarded to
NERSA in order to
update the
licensing data to
reflect the correct
area of supply
details.
The Distribution
Licensing
Department has not
received letter from
Drakenstein Local
Municipality.
Vacant positions Unfilled critical
Positions e.g.
Head of
Electricity.
2015/16
financial year
Ongoing The Municipality
approval is to
allow certain
amount of funds in
the Municipal
budget to fill
vacant positions,
the critical
positions are filled
first. Some
positions for the
Electricity
Department will be
advertised in a
week’s time from
the monitoring day
and one
advertisement
closed three
weeks ago.
Some management
positions were filled.
No proof was
provided. Ongoing.
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The table above indicates that Drakenstein Local Municipality implemented the
majority 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 60%
of the CAP had been implemented by the Licensee. The remainder of the CAP
is in the process of being implemented as some tenders had just been finalised
and other tenders were close to finalisation at the time of the monitoring, for
example the substation fencing tender and the maintenance of HV plant
equipment. 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 Drakenstein Local Municipality was still up to date
at the time of the monitoring and the Licensee had implemented the 2015/16
financial year tariffs as approved by NERSA.
8. PLANT CONDITION DURING AUDIT VS. MONITORING TIME
The following photos depict the condition of the network equipment during the
audit compared to the condition during the monitoring process.
The Parys Substation yard was in good condition. Parys Substation still in good condition.
A blown insulator at Parys Substation. Insulator replaced at Parys Substation.
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Open cable trenches in the switch room. Open cable trenches still not covered.
Old furniture in the Parys Substation switch room. Old furniture removed at Parys Substation.
Oil leaks on transformer 4 at the Parys Substation Still oil leaks on transformer 4 at the Parys Substation
Paint deteriorated and oil leaks at the Parys Substation. Conditions still the same at the Parys Substation.
Bad vegetation management at the Suid-end Substation. Improvement on vegetation management at the Suid-end Substation
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Bad vegetation management at Suid-end Substation. Improvement on vegetation management at Suid-end Substation.
Open cable trenches in the Suid-end Substation yard. Still open cable trenches in the Suid-end Substation
Open cable trench in the Suid-end Substation Cable trenches closed at Suid-end Substation.
Suid-end Substation’s yard stone is not sufficient. Still the same in the Suid-end Substation yard.
Missing cable trench cover in Dwarsrivier Substation. Cable trenches closed at Dwarsrivier Substation
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Open cable trenches in the Dwarsrivier Substation yard. Conditions still the same at Dwarsrivier Substation.
Low battery levels in Dwarsrivier Substation. Well-maintained batteries in Dwarsrivier Substation.
Signs of oil leaks. Mini-substation replaced with new mini-substation.
Rusted enclosure of mini-substation. Rusted enclosure replaced.
Faded warning signs in 2013 Replaced in 2015.
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Earth wires stolen on poles. Earth wires covered with steel pipe.
Earth wires stolen on pole-mounted transformers. Earth wires moved to the top of the steel pole and drilled.
Old pole transformers in a very bad condition. Transformer Q4/41 replaced.
Old pole-mounted transformers in a very bad condition. Transformer Q4/33 replaced.
Broken insulator. Insulator still broken.
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The photos indicate that the condition of Drakenstein Local Municipality’s
network has improved since the audit. A great amount of work has been done
to correct the substandard network, including the replacement of transformers
and mini-substations.
9. CONCLUSIONS
Drakenstein Local Municipality has implemented the CAP. The NERSA audit
team noted the dedication and commitment of Drakenstein Local Municipality to
improve its level of compliance. This commitment is commendable.
10. RECOMMENDATIONS
It is recommended that the Drakenstein Local Municipality fully implement all
the outstanding projects in 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 a few items that still need to be concluded according to the CAP. In
line with the above, the Energy Regulator expects the implementation of the
corrective action plan to continue until all these items have been fully
addressed. Once the remaining projects in the CAP have been concluded,
Drakenstein Local Municipality must send a closeout report to the National
Energy Regulator.
The National Energy Regulator will continue to engage with Drakenstein Local
Municipality on the implementation of the corrective action plans until all the
instances of non-compliance have been addressed. Further engagements on
the compliance issues will be communicated on a continuous basis. It is
expected that the Licensee will now implement a self-monitoring regime to
ensure that the improved areas do not deteriorate.
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:
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The Head of Department
Licensing, Compliance and Dispute Resolution: Electricity
National Energy Regulator
PO Box 40343
Arcadia
0007
Fax: +27 (0)12 401 4700