chairpersons mid-term report to the mmc eisd mid-year report … reports... · 2014-11-03 ·...
TRANSCRIPT
Chairpersons Mid-Term Report to the MMC EISD
Mid-year report 2013/2014
City Power Mid-Year Report – July to December 2013
16 January Page 2 of 82
Table of Contents
1. CHAIRPERSON’S SUMMARY ................................................................................................................... 3
2. EXECUTIVE SUMMARY ........................................................................................................................... 4
HIGHLIGHTS AND ACHIEVEMENTS ................................................................................................................................... 4 CHALLENGES ............................................................................................................................................................ 5 RISKS AND MITIGATIONS .............................................................................................................................................. 6 GROUP / DIVISION PERFORMANCE OVERVIEW .................................................................................................................. 7
3. PERFORMANCE MONITORING .............................................................................................................. 16
ALIGNMENT TO MAYORAL PRIORITY IMPLEMENTATION PLAN (PIP) AND SERVICE DELIVERY BUDGET IMPLEMENTATION PLAN
(SDBIP) .......................................................................................................................................................... 16 GROWTH AND DEVELOPMENT STRATEGY-INTEGRATED DEVELOPMENT PLAN REPORT (IDP) .................................................... 23 BALANCED SCORECARD WITH KEY PERFORMANCE AREAS AND INDICATORS .......................................................................... 28
4. SERVICE DELIVERY REPORT ................................................................................................................... 31
ANALYSIS OF THE MASTER CAPITAL PROGRAMME ........................................................................................................... 31 SPECIFIC SERVICE DELIVERY PROGRAMMES ........................................................................................................ 35 INFRASTRUCTURE MAINTENANCE ................................................................................................................................. 36 .RETAIL SERVICES ...................................................................................................................................................... 38
5. FINANCIAL MANAGEMENT ................................................................................................................... 44
FINANCIAL ASSESSMENT ............................................................................................................................................. 44 STATEMENT OF FINANCIAL PERFORMANCE ..................................................................................................................... 44 STATEMENT OF FINANCIAL POSITION ............................................................................................................................ 49 CASH FLOW STATEMENT ............................................................................................................................................ 51 SUPPLY CHAIN MANAGEMENT ..................................................................................................................................... 53 FLEET MANAGEMENT ................................................................................................................................................ 57 AUDIT FINDINGS ....................................................................................................................................................... 58
6. HUMAN RESOURCES MANAGEMENT ................................................................................................... 64
TALENT PLANNING .................................................................................................................................................... 64 SKILLS DEVELOPMENT AND TRAINING............................................................................................................................ 65 TRAINING OF EXTERNAL DELEGATES:............................................................................................................................. 67 REMUNERATION MANAGEMENT .................................................................................................................................. 67 POLICY REVIEW ........................................................................................................................................................ 67 PERFORMANCE MANAGEMENT .................................................................................................................................... 68 CHANGE MANAGEMENT ............................................................................................................................................. 68 ER REPORTING ......................................................................................................................................................... 68
7. RISK, ASSURANCE AND COMPLIANCE ................................................................................................... 70
RISK MANAGEMENT .................................................................................................................................................. 70 UPDATE ON RISK MANAGEMENT PROCESS ..................................................................................................................... 71 STRATEGIC RISKS REPORT .......................................................................................................................................... 74
8. GOVERNANCE ...................................................................................................................................... 78
BOARD MEETINGS..................................................................................................................................................... 78 DIRECTORS AND TOP MANAGEMENT REMUNERATION ...................................................................................................... 79 BOARD FUNCTIONING AND FINANCIAL MANAGEMENT ..................................................................................................... 80
Page 3 of 82 14 January Draft 3
1. CHAIRPERSON’S SUMMARY City Power is a municipal entity wholly owned by the City of Johannesburg. The performance targets are agreed with the shareholder and captured in the business plan before the start of the financial year. This report reflects the performance for the mid-year for the 2013/14 financial year. In my view the Board is well balanced, with a broad range of skills and experience which has been augmented by the appointment on 25 July 2013 of Mr D Naidu and the reappointment of Dr Y Ndema to the Board. The Chairperson is also pleased to announce that Mr K Mokhobo has taken up his appointment with effect from 19 July 2013. Both Mr K Mokhobo and Mr T Sithole had been appointed to the Audit Committee during the 2
nd Quarter.
The governance report under section 12 of this report describes the work of the Board and its sub-committees over the first six months. The governance processes of the Board are designed to ensure that the Board and its sub-committees carry out their responsibilities effectively. The attendance at Board and sub-committee meetings is a reflection of the strong commitment of the Members and the Chairperson is pleased with the robust participation of all the Members. The Chairperson is also pleased with the participation of the Members in the Senior Management recruitment process which resulted in the finalisation of the recruitment of the Director: Engineering Services, Director: Retail and Director: Risk, Assurance and Compliance. These appointments became effective in the second quarter. The appointment of a Director: Finance must still be finalised. The Board met six times during the two quarters which is more often than normal, however, pressing events demanded the Board’s attention. Besides the ordinary scheduled meetings three special meetings were held to deal with urgent matters including the unprotected strike action which took place on 4 September 2013 to 9 September 2013 and budget matters which had to be finalised early in December 2013. Of great concern to the Board, was the emergence of criminal acts which accompanied the unprotected strike action. While the Board fully respects the rights of employees to lawfully withhold their labour, the Board strongly condemns all criminal activity especially acts of sabotage to the network and the quality of supply. The Board and Management together with the Shareholder have escalated this type of behaviour to Provincial and National level. The Company is working together with all relevant agencies to ensure that the responsible individuals are held accountable both within the Company and within the criminal justice process. The Company is also working together with the relevant agencies to ensure that there are proper mechanisms in place to manage this risk. The Chairperson of the Board and the Chairperson of the Audit Committee also had a number of engagements with the Shareholder during the year. These interactions address a number of issues including the unlawful strike action mentioned above as well as the Company’s audit readiness. The Chairperson of the Board would like to draw your attention to two areas of particular concern to the Board; these are losses and the Company’s failure to achieve the targeted surplus for the mid-year. The revenue target was not met for the mid-year due to Bulk Purchases volumes reduction and unbilled accounts for the period under review. The unbilled accounts also contributed to the increase in non-technical losses. Overall, for the first half of the year the Company has continued to improve on last year’s performance. The Company has achieved some of the targets, but Management has assured the Board that they are taking the necessary action to ensure the achievement of the annual targets.
City Power Mid-Year Report – July to December 2013
16 January Page 4 of 82
2. EXECUTIVE SUMMARY This report presents the performance of City Power for mid-year (July to December 2013). The report is divided into sections that cover all operational functions of the Company in line with the strategic objectives. The sections that are covered by the report include the following:
• Performance Monitoring • Service Delivery Report • Financial Management • Human Resources Management • Risk, Assurance and Compliance • Governance
Highlights and Achievements
Below are some of the Company’s major highlights, achievements and challenges for the first half of the year.
• There were successful Stakeholder engagements of 14 434 customers held in Devland, Alexandra and River Park. These engagements facilitated successful installation of Prepaid Meters, resulting in the increase in prepaid revenue collected in these areas by 73% (R8m) in comparison with the same period last financial year.
• There is a reduction in the average cost per kWh which has led to R79.5m savings on Cost of Sales.
• Revenue collection target has been exceeded for Mid-Year to 96.45%.
• Though City Power has experienced low revenue, prepaid sales have increased by 10% (R31 m) in comparison with the same period in the last financial year.
• The process of automation of Business Reports to improve Data Integrity and Governance Processes has begun.
• Arrests were made on Scrap Metal Dealers for buying City Power cables and other assets.
• City Power received ISO 9001 Re-certification by SABS.
• DIFR for the period under review is below threshold of less than 1.
• The vendor portal component of the SCM automation project is fully implemented.
• Procurement spend on companies that are 50% black owned has been exceeded for the period (10% actual vs 8% target).
• A BEE supplier summit was successfully hosted.
• Board approval of 2013/14 adjustment budget and 2014/15 full year budget, both of which have been submitted to the shareholder for final approval.
• More than 17 472 meters have been installed including prepaid and smart meters.
• Naren’s Farm informal settlement has been electrified as part of the service delivery programme within non-proclaimed areas.
• Continuous supply of power to the FNB Stadium for the late Nelson Mandela’s memorial service as well as all the public mourning sites that were erected around Johannesburg.
• Agreement was reached between management and organised labour that the two twelve hour shift system for field services will be implemented with effect from 1 February 2014. In addition the work and pay rules were also agreed upon.
City Power Mid-Year Report – July to December 2013
16 January Page 5 of 82
Challenges
The challenges facing the organisation include:
Challenges Intervention
Surplus being less than budget by R607m Decrease losses by correcting unbilled customers Monitor and investigate prepaid error reports Control expenditure by implementing budget control Transfer capex expenditure from repairs and maintenance to capex
Procurement spend on companies that are 30% black women owned has not been achieved for the period (3% vs 5%)
Utilise contracts with 30% black women to increase procurement
Slow progress on planned capital expenditure.
A recovery plan has been drawn up covering risks (material, suppliers, contractors, community unrest) and mitigation actions. A strategy has been designed to eliminate the current “hockey stick” effect on capital expenditure
Unprotected strike action in relation to the implementation of a shift system
The change management program in relation to the shift implementation was intensified Resolute action was taken against those who embarked on the strike action.
The high rate of theft and vandalism of infrastructure
A phased approach for the installation of modern security measures at its installations has been introduced City Power is also investigating other security measures to secure its underground cables and overhead systems. Casting of concrete over cable trenches where cables are regularly stolen has begun Installation of vibration alarms on transmission lines pylons has commenced Installation of load centre alarms has commenced Installation of electronically controlled man-hole covers has commenced Communication and awareness as well as public engagement is ongoing
The high number of MV outages A network criticality study has started to create a complete reliability model of the City Power Operating Networks. This will help City Power to create and establish network performance targets, as well as aid in operational decision making. A network performance risk register has been created to identify areas on the network that need urgent maintenance, refurbishment or replacement to prevent
City Power Mid-Year Report – July to December 2013
16 January Page 6 of 82
Challenges Intervention potential outages. Root cause analysis of faults that have occurred are investigated to determine what action needs to be taken and to prevent repeat trips.
Corrected and cleaned data not adequately updated on relevant source systems.
The establishment of the metering and meter data committee will keep track and ensure that the appropriate data is updated on the relevant systems
Increased non-technical losses affecting revenue Auditing of businesses converted to prepaid metering has commenced City Power is in the process of clearing the unbilled accounts and investigating accounts with large credit balances. Normalisation of the non-vending meters is in place, prioritizing the high LSM areas.
City Power is currently auditing stands that have Rates Accounts but are not being billed for electricity services. Priority will be on business zoned properties.
Risks and Mitigations
Risks Mitigations
Delays in finalization of land purchases for servitudes Engage with Johannesburg Property Company to finalize a binding Service Level Agreement that will fast-track land acquisition and transfer
Possibility of not realizing planned expenditure due to procurement delays.
Examine expedited procurement methods.
Overtime Expenditure Management and control of overtime. Cap overtime to align with labour legislation and to ensure the wellbeing of City Power staff Introduction of a shift system for field services planned for 1 February 2014.
Infrastructure theft and Vandalism Phased installation of modern security systems. Laying of concrete over cable trenches where there has been repeated cable theft. Continued engagement of the community including communication and awareness.
Inadequate ability to provide auditability of reported data
Through audits, Implement and enforce data policies, standards and procedures for all data domains Automation of report generation to minimize human intervention and ensure auditability of reported data.
Staff expectations of salary increases through Pay Progression
Robust communication to manage the expectations
City Power Mid-Year Report – July to December 2013
16 January Page 7 of 82
Group / Division Performance Overview
RETAIL SERVICES
Highlights and Achievement • There was a Successful Resellers Forum discussing issues of tariffs, billing and collections.
• There were successful Stakeholder engagements affecting 14 434 customers in Devland, Greater Alexandra and River Park which facilitated the successful installation of Prepaid Meters. This resulted in increased prepaid revenue by 73% (R8 million).
• There is a reduction in the average cost price per kWh which has led to R79.5 million savings on Cost of Sales.
• Revenue collection target has been exceeded for the first half of the year to 96.45%.
• Obtaining an Unqualified Audit.
• 12 1-on-1 sessions were held with Time Of Use (Key) Customers to obtain insight into challenges faced by TOU customers in relation to electricity provision. These outcomes can be used to influence the future design and setting of tariffs with a view to ensuring competitiveness in City Power’s tariffs.
Challenges
Challenges Interventions
• Poor Meter Reading Performance • Intensification of disconnecting inaccessible meters in the short term.
• Segment areas with low meter reading performance and prioritise these for installation of smart meters.
• Improve turnaround time on replacement of faulty meters, provision of changed meter information and updating of the billing system.
• Reduction in Revenue • Auditing of businesses converted to prepaid metering.
• Clear the unbilled accounts and investigate the accounts with large credit balances.
• Normalise the non-vending meters prioritizing the high LSM areas.
• Review revenue budget due to 3.8% reduction in bulk purchases.
• Increase in Non-Technical Losses • City Power is currently auditing stands that have Rates Accounts but are not being billed for electricity services. Priority will be on business zoned properties.
Risks and Mitigations Risks Mitigations
AG Audit Risk • Resolving the unresolved AG issues for all findings related to Meter Reading and Vending customers by March 2014.
City Power Mid-Year Report – July to December 2013
16 January Page 8 of 82
ENGINEERING SERVICES
Highlights and Achievement • Commencement of construction of two major substations (Longlake and Lufhereng) that will
create capacity and allow for downstream electrification projects.
• Rotable process to refurbish transformers and switchgear continues to provide readily available equipment especially for emergencies breakdowns.
• All major substations & bulk intake points have been inspected and tested and programmes developed to deal with high risk equipment.
• Installation and configuration of Mediant 1000 Gateway completed in October 2013, for PABX and MS Exchange integration. This will enable voicemail functionality through Outlook.
Challenges Item Challenge Interventions
1 Stability of ICT environment, full compliance to statutory requirements and disaster recovery.
Engineering Services commissioned full compliance audit on systems, infrastructure and governance to identify areas of vulnerability.
2 Limited technical capability which results in over-reliance on external service providers.
Engineering Services is investing in capability building to develop and retain core competencies.
3 Incomplete and inaccurate plant data to allow for fully functional asset management programmes.
A three (3) year programme is being launched to physically collect plant data at different voltage levels of the network.
4 Network outages due to aging infrastructure, theft and vandalism.
An increase in capital investment targeting the affected areas is required. Programmes also need to be developed for high risk equipment such as aging transformers.
5 Slow progress on planned capital expenditure.
Recovery plan has been drawn up covering risks (material, suppliers, contractors, community unrest) and mitigation actions. A strategy has been designed to eliminate the current “hockey stick” effect on capital expenditure
City Power Mid-Year Report – July to December 2013
16 January Page 9 of 82
Risks and Mitigations Item Risk Mitigation
1 Public injuries and fatalities due to unauthorized access to live equipment
Educate the general public on the dangers of live electrical equipment. Improve security measures at high risk sites
2 Fraud and corruption Exercise vigilance in investigating and dealing with any suspected acts of fraud and corruption. Monitor expenditure patterns and scope creep on all contractors and consultants
3 Delays in finalization of land purchases for servitudes
Engage with Johannesburg Property Company to finalize a binding Service Level Agreement that will fast-track land acquisition and transfer
4 Community unrest in the build-up towards election, which may delay projects in communities
Intensive communication campaigns prior and during project roll-out. Utilize resources who understand local dynamics and consult with community leadership
Trends • Theft and vandalism.
• Electricity supply constraints
• Developments around Kelvin power station
• Electrification of informal settlements
ENGINEERING OPERATIONS
Highlights and Achievement • Engineering Operations participated in ensuring the continuous supply of power to the FNB
Stadium for the late Nelson Mandela’s memorial service as well as all the public mourning sites that were erected around Johannesburg.
• There has been a general improvement in employee safety standards and no serious or fatal incidents have been reported. Several depots have achieved notable injury free man hour milestones.
• There has been steady improvement in the public lighting resolution turnaround time from 5.1 days in quarter one to 3.3 days in quarter two.
• City Power’s ISO 14001 and OHSA 18001 licences were audited and recertified.
• Normalisation of 10 000 prepaid meters and 98% of key customer meter installations.
• Agreement was reached between Management and organised labour that the two twelve hour shift system for field services will be implemented with effect from 1 February 2014. In addition the work and pay rules were also agreed upon.
Challenges
City Power Mid-Year Report – July to December 2013
16 January Page 10 of 82
Challenges Interventions
1 The high rate of theft and vandalism of infrastructure
A phased approach has been introduced for the installation of modern security measures. City Power is also investigating other security measures to secure its underground cables and overhead systems. Casting of concrete over cable trenches where cables are regularly stolen has begun Installation of vibration alarms on transmission lines pylons has commenced Installation of load centre alarms has commenced Installation of electronically controlled man-hole covers has commenced Communication and awareness as well as public engagement is ongoing
2 The high number of MV outages A network criticality study has started to create a complete a reliability model of the City Power Operating Networks. This will help City Power to create and establish network performance targets, as well as aid in operational decision making. A network performance risk register has been created to identify areas on the network that needs urgent maintenance, refurbishment or replacement to prevent potential outages. Root cause analysis of faults that have occurred are investigated to determine what action needs to be taken and to prevent repeat trips.
3 The limited SCADA coverage An assessment of City Power’s SCADA master stations has begun with a benchmarking exercise against other electricity utilities. This will feed into the plans to upgrade the existing master stations as well as the full SCADA rollout.
4 Faulty and inaccessible LPU meters
A comprehensive technical audit of LPU customers was introduced and is due for completion at the end of February 2014. The audit seeks to ensure that all LPU meters are fully functioning and that consumption is accurately recorded.
5 The high number of bypassed or faulty prepaid meters
A technical audit on prepaid meters was introduced in an attempt to ensure that all meters are fully functional.
Trends • The on-going prevalence of infrastructure theft and vandalism continues and this results in
unplanned outages, customer dissatisfaction and unsustainable repair/replacement expenditure.
• Illegal connections continue to be a challenge. In many instances, illegal connections are re-instated soon after being removed.
Risks and Mitigations
Risks Mitigations
1 Overtime Expenditure Management and control of overtime. Cap overtime to align with labour legislation and to ensure the wellbeing of City Power staff. Introduction of a shift system for field services planned for 1 February 2014.
City Power Mid-Year Report – July to December 2013
16 January Page 11 of 82
2 Infrastructure theft and vandalism Phased installation of modern security systems. Laying of concrete over cable trenches where there has been repeated cable theft. Engagement of the community. Communication and awareness.
3 Obsolete low voltage overhead mains
Phased replacement program to install ABC
City Power Mid-Year Report – July to December 2013
16 January Page 12 of 82
FINANCE
Highlights and Achievement • The vendor portal component of the SCM automation project is fully implemented.
• Procurement spend on companies that are 50% black owned has been exceeded for Quarter 2 (10% actual against a target of 8%).
• A supplier BEE summit was successfully hosted
• City Power achieved a Level 4 BBBEE certificate which is an acceptable level for municipalities.
• Board approval of 2013/14 adjustment budget and 2014/15 full year budget, submitted to the Shareholder for final approval.
Challenges Item Challenges Intervention
1 Surplus being less than budget by R607m
Decrease losses by correcting unbilled customers Monitor prepaid error reports and investigate Control expenditure by implementing budget control Transfer capex expenditure from repairs and maintenance to capex
2 Equipment such as busses and generators are old and have become very expensive to maintain
Funding is made available for the replacement of generators, and will be replaced during the financial period. The replacement of busses is to be included in 2014/15 budget.
3 Procurement spend on companies that are 30% black women owned has not been achieved for the period (3% vs 5%)
Utilise contracts with 30% black women to increase procurement
Risks and Mitigations
Risk Mitigation
Fleet cannot service all depots fully on a shift system due to staff shortage. Only 3 transport operators currently provide service to City Power
Filling of additional operator vacancies to be approved; and recruitment to commence thereafter
City Power Mid-Year Report – July to December 2013
16 January Page 13 of 82
HUMAN RESOURCES
Highlights and Achievement • The South African Institute for Electrical Engineers (SAIEE) in conjunction with the South
African Institute for Civil Engineers (SAICE) awarded 12 of the Company’s graduates with training and mentorship programs. This is in alignment with the creation of employment opportunities for the youth.
• The Workplace Skills Plan 2011-2012 was approved by the EWSETA on 27 September 2013.
• An enhanced bonus formula, that takes into account the Company’s gatekeepers, i.e. Clean Audit and Company Score was developed and approved by the Board on 19 October 2013.
• As part of the revamping of the Training Centre, a public auction to dispose obsolete equipment took place on 28 November 2013. This process raised R371 000.
• A total of 350 bursary applications for 2014 were received of which 12 candidates are recommended to be awarded with full bursaries to study Accounting or Electrical Engineering. Of these 12 candidates, 5 are black females and 7 are black males.
• The positions of Director: Retail, Engineering Services and Risk, Assurance and Compliance were filled in the months of September, October and November 2013, respectively in an effort to stabilize the structure at the leadership level.
Challenges Challenges Intervention
Delayed implementation of Shift Work
Agreement was reached at LLF for the implementation of Shift Work on 1 February 2014
Employees accumulating excessive annual leave due to exigencies of service eg: the 2010 Soccer World Cup and as a result annual leave has accumulated over the years in contravention of our conditions of service.
A normalisation period from June 2013 to June 2015 was granted within which period all accumulated leave must be utilised.
Unprotected strike action in relation to the implementation of a shift system
The change management program in relation to shift implementation was intensified Resolute action is being taken against those who embarked on the unprotected strike action.
Risks and Mitigations Risk Mitigation
Staff expectations of salary increases through Pay Progression
Robust communication to manage the expectations
Trends
• A total 11 appointments were confirmed between July 2013 and December 2013, compared to 3 in the same time period of the previous financial year.
• A total of 11 resignations were received between July 2013 and December 2013 as compared to 3 received in the same time period of the previous financial year. 6 Of these resignations were from the Engineering Operations Group.
• A total number of 13 employees retired between July 2013 and December 2013 as compared to 7 that retired in the same time period of the previous financial year
• At the end of the 2012/2013 financial year a total of 95.2% performance compacts and scores were received as compared to 95% received at the end of the 2011/2012 financial year.
City Power Mid-Year Report – July to December 2013
16 January Page 14 of 82
Risk, Assurance and Compliance
Highlights and Achievement
• The draft smart metering processes have been documented to enable the system integration and functional alignment to CoJ billing processes. Metering and billing business rules have been reviewed with CoJ and aligned to the smart metering programme.
• The automation of the current business reports using Microsoft Power Pivot has begun. This will improve data integrity and governance as business intelligent reporting and enforcing data governance and auditability of the performance data.
• The Anti-Fraud and Anti-Corruption Policy has been reviewed and approved.
• All City Power employees have been issued with new access cards for the phase 1 -
integrated security systems project.
• In line with the key components of the Security Strategy which are technology, intelligence
and physical security, the following projects were executed in high risk areas which lead to
reduction in cable theft.
- Deployment of intelligence resources in hot spot areas e.g. Austin View, Turfontein,
Chrisville and Eickenhof.
- Visible patrolling in Emmarentia, Hursthill, Kensington, Kensington B and Bryanston
in partnership with the South African Police Service and other security stakeholders.
- Deployment of security guards at all our major substations which are Prospect, Delta,
Fordsburg, Orlando and Roodetown, as a result there was no theft and vandalism
reported at these substations.
- Responding to alarms and use of armed response vehicles.
• Arrest made on Scrap metal dealers for buying City Power cables and other assets, fines
were also issued for non-compliance to Second hand goods.
• City Power DIFR ration for the month under review is below threshold of less than 1 (actual
0.35).
• ISO 9001 Re-certification by SABS.
• ISO 14001 & OHSAS 18001 Surveillance audit – 14/15 October 2013 by SABS.
• Conducted EAP shift preparatory workshop to ensure readiness of staff for the proposed shift
cycles.
Lowlights
• For the period under review we had two public fatalities (controllable) in the Randburg and
Siemert areas respectively.
Challenges Challenge Intervention
1 Corrected and cleaned data not adequately updated on relevant source systems.
The establishment of the metering and meter data committee will keep track and ensure that the appropriate data is updated on the relevant systems
2 Delays in the execution and finalisation of internal audits due non- availability of the officials from various departments.
Distribute audit plan to clients once the audit plan has been approved. Continuous engagement with audit clients Escalation of delays to EXCO
Risks and Mitigations
City Power Mid-Year Report – July to December 2013
16 January Page 15 of 82
Risks Mitigations
Inadequate ability to provide auditability of
reported data
Implement and enforce compliance through data
audit policies, standards and procedures for all
data domains
Automation of report generation to minimize
human intervention and ensure auditability of
reported data.
Delays in executing internal audits as per
the annual audit plan due to departmental
delays
Escalation of delays to EXCO
Increased medical costs. Increase and maximise Education and
Awareness by 10% Absenteeism.
On the job productivity impairment.
Public fatalities Training and Awareness Campaigns to inform all
parties/persons exposed.
Compliance to policies, standards, procedures,
Ensure the implementation of Root Cause
Analysis
Increase in theft and vandalism on
electrical network infrastructure
Deployment of intelligence in hot-spot areas and
syndicates have been identified
Intervention through SAP and other external
stakeholders (Eskom, Transnet, etc)
Roll out of alarm system on the network
Deployment of physical security on major sub-
stations – this intervention has reduced previous
theft and vandalism
Replacing overhead copper cables with Aerial
Bundle cable (ABC) and covering underground
cable with concrete (both on-going) – This
intervention has reduced the number of incidents
in hotspot areas.
Trends Increasing number of public liability claims due to theft and vandalism.
Page 16 of 82 14 January Draft 3
3. PERFORMANCE MONITORING
Alignment to Mayoral Priority Implementation Plan (PIP) and Service Delivery Budget Implementation Plan (SDBIP)
COJ Key Priorities
BSC Perspective
Intervention Name
Group Responsible
City Power Initiatives
Status Expected Outcomes
Sustainable Human Settlements Resource Sustainability
Customer Accelerated Visible Service Delivery (Demand Plan)
ES Electrification: programme Electrification programmes comprising bulk infrastructure and low voltage networks
Construction of the new substation in Lufhereng has commenced. Electrification projects are now being rolled out in other areas including unproclaimed areas.
Access to electricity to improve quality of life.
Sustainable Human Settlements Resource Sustainability
Customer Accelerated Visible Service Delivery (Public Lighting)
ES Provision of Public Lights
Installation of public lights is currently underway in Slovoville, Naledi, Protea Glen and Nomzamo.
Improving quality of life and contributing to safety of communities.
Sustainable Human Settlements Resource Sustainability
Customer Accelerated Visible Service Delivery (Demand & Acquisition Plan)
ES Development of Demand & Acquisition Plan
The Demand & Acquisition Plan has been approved by the Board.
Roll out of infrastructure programmes to stimulate economy, improve network reliability, reduce unplanned outages and refurbish equipment prone to failure. Maintain compliance to NRS 048 and NRS 047.
City Power Mid-Year Report – July to December 2013
16 January Page 17 of 82
COJ Key Priorities
BSC Perspective
Intervention Name
Group Responsible
City Power Initiatives
Status Expected Outcomes
Sustainable Human Settlements Resource Sustainability
Customer Accelerated Visible Service Delivery (Stakeholder Plan)
RS Development of Stakeholder Plan Implementation of Customer Services Charter and the Service Level Agreement
There were successful Stakeholder engagements affecting 14 434 customers in Devland, Greater Alexandra and River Park which facilitated the successful installation of Prepaid Meter. Engagements will continue in all areas identified for projects.
Accelerated Visible Service Delivery (eg.100% compliance to the SLA, electrification, PL)
Active Engaged Citizenry SMME and Entrepreneur Development And Support
Customer Developmental Service Delivery (Developmental Service Delivery Plan)
ES Develop Developmental Service Delivery plan
This is currently in the planning phase.
Sustainable job opportunities.
Financial Resilience and Sustainability, Smart City Resource Sustainability
Financial Revenue War Plan
RS Improve metering data accuracy and completeness Deployment of statistical and check metering Deployment of smart meters Deployment of prepaid meters, Remote Access Terminal system (RATS) and protective structures
Process for collecting accurate data is ongoing as part of prepaid projects in Tshepisong, Devland and Greater Alexandra.
Achieve 90% data accuracy by 2015 Attaining an unqualified audit in a sustainable manner Achieving 100% payment level for key and LPU customer by June 2013 Reduce losses to 10% by 2015 Achieving 98% meter reading by June 2013 (100% Compliance to the by-law)
City Power Mid-Year Report – July to December 2013
16 January Page 18 of 82
COJ Key Priorities
BSC Perspective
Intervention Name
Group Responsible
City Power Initiatives
Status Expected Outcomes
Conversion of LPU to AMR
Sustainable Human Settlements Resource Sustainability
Internal Asset Management (Including PL Maintenance)
EO Monitoring of Public Lighting performance (5 days turnaround time) through the PL War Plan. Root cause analysis on faults to reduce repeated outages. Additional security measures to reduce the number of outages. Re-instatement of MDT.
The PL turnaround time achieved in quarter two was 3.3 days. Three of the four network performance indicators (SAIDI, SAIFI, CAIFI), were met.
Accelerated Visible Service Delivery (eg.100% compliance to the SLA, electrification, PL) Attaining an Unqualified audit in a sustainable manner Achieving full compliance to NRS 047 and 048 immediately
Resource Sustainability Green Economy
Internal Asset Management (Energy Plan)
RS Development of Energy Plan Introduction of Domestic Time of Use (TOU) and Green Tariffs by 2015
Energy Plan has been drafted, a workshop had been held with relevant groups. Follow up workshop will be held next quarter.
2013/14: Energy Plan
City Power Mid-Year Report – July to December 2013
16 January Page 19 of 82
COJ Key Priorities
BSC Perspective
Intervention Name
Group Responsible
City Power Initiatives
Status Expected Outcomes
Use of distribution system costs
Retail Services is gathering data and researching has commenced for the introduction of TOU tariffs
Resource Sustainability Green Economy
Internal Asset Management (Energy Efficiency Programmes)
ES Roll out of solar water heaters for domestic customers. Retrofitting of energy efficient technologies in municipal owned buildings. Proposal for tariffs enabling full integration of PV installations. programme
The Building Retrofit project is at the procurement stage. The Low pressure solar water heater programme is currently underway. Submission for a new tariff regime has been made to NERSA.
Installing 110 000 solar water heaters by December 2016. Roll out of building retrofit programme in 2013/14 financial year. Enabling tariff environment by December 2015.
Smart City Green Economy Resource Sustainability
Internal Asset Management (Smart Grid)
ES Development of Smart Grid Plan Ripple control and smart meters AMI
The City Power smart grid plan will be finalized by end of Q4 2014. Roll out of meters to commence in Jan 2014 in 52 suburbs.
Reduce losses to 10% by 2015. Achieving 98% meter reading by June 2013 (100% Compliance to the by-law). Platform will integrate with other streams within the City (water, electricity, sanitation and waste).
City Power Mid-Year Report – July to December 2013
16 January Page 20 of 82
COJ Key Priorities
BSC Perspective
Intervention Name
Group Responsible
City Power Initiatives
Status Expected Outcomes
Sustainable Human Settlements Resource Sustainability
Internal Asset Management (Data and Process Management)
RAC Improve network data accuracy and completeness Review and implement core and support value chains
Developed a web based tool that will be used to update network data remotely through –out the business.
Achieve 90% data accuracy by 2015 Accelerated Visible Service Delivery (eg.100% compliance to the SLA, electrification, PL)
Sustainable Human Settlements Resource Sustainability
Internal Asset Management Plan (Asset Management Plan)
ES Deploy best practices in the management of assets.
High risk power transformers identified and plans in place to reduce risk. Master planning is now entrenched as a practice. Maintenance plans developed.
Achieve ISO 55001 in 2016.
Resource Sustainability
Internal Risk Management
RAC Review Business Continuity Plan (BCP) and Disaster Recovery Plan (DRM)
Consultants have been appointed to review the current BCP & DRM plans and implement the recommendations
Business Continuity and Disaster Recovery Plan
Sustainable Human Settlements Resource Sustainability
Learning & Growth
LLF Agreement HR Allowances (Travel, Cellphone, Data Card, Hot Skills)
Travel Top-up, Cellphone and Data Card Allowances were implemented with effect from June 2013. Hot Skills Allowance was discontinued
Consistent implementation of Allowances and compliance to the Remunerations Policy
City Power Mid-Year Report – July to December 2013
16 January Page 21 of 82
COJ Key Priorities
BSC Perspective
Intervention Name
Group Responsible
City Power Initiatives
Status Expected Outcomes
Structural Re-Alignment
All structures - related deliverables were achieved as mapped in the HR Journey Map as at 31 July 2013
Right people in the right place
Acting Allowance Organised Labour to submit a signed off agreement
Compliance to existing acting provisions
50th Percentile / Pay
Progression The framework, principles, criteria, methodology have been finalised with all key stakeholders HR in partnership with Deloitte is currently in the process of finalizing the job profiles, job evaluation, job grading and moderation
Retention of key skills
Essential Services / Rules of Engagement
Organised Labour to submit a signed off Essential Services proposal
Availability of essential service staff in event of labour unrest
Shift Policy / Overtime
Shift Work will be implemented on 1 February 2014
Accelerated Service Delivery
City Power Mid-Year Report – July to December 2013
16 January Page 22 of 82
COJ Key Priorities
BSC Perspective
Intervention Name
Group Responsible
City Power Initiatives
Status Expected Outcomes
Annual Leave Leave plans are being managed by Line Managers to ensure the control of accumulated leave
Reduction of accumulated leave to ensure compliance with the Conditions of Service
Gratuity / Performance Management
Gratuity as a once off incentive was discontinued. An enhanced bonus formula, that takes into account the Company’s gatekeepers, ie. Clean Audit and Company Score was developed, approved and successfully implemented
High Performing Culture
Page 23 of 82 14 January Draft 3
Growth and Development Strategy-Integrated Development Plan Report (IDP)
The NRS047 index was impacted by the 1.5 hour, 7.5 hour and 24 hour restoration times KPI’s required by NERSA. The actual restoration times versus the targets are reflected in the table below. The unauthorised work stoppage had an adverse impact on the KPI as all the outages could not be restored timeously.
Restoration Time Actual Performance (Mid Year) NERSA Target
Within 1,5 hours 27.3% 30%
Within 3,5 hours 62.3% 60%
Within 7,5 hours 83.3% 90%
Within 24 hours 96.3% 98%
The planned vs. unplanned maintenance target of 70% was not achieved. The mid-year performance was 67.2%. During October and November, the planned vs unplanned maintenance reduced due to the high number of outages from adverse weather conditions and the high rate of theft and vandalism. In December, the majority of staff were on leave. Although the target was met in the first quarter, the impact of the performance in the second quarter reduced the overall mid-term performance.
Target Actual Target Actual Target Actual
Improve
Network
performance
and quality of
supply
Improved
restoration
times, reduction
in unplanned
Outages,
improved
network health
CAIDI Minutes 279.71 279.71 308.40 279.71 504.27 279.71 413.97
CAIFI Number 5.65 5.65 2.73 5.65 2.26 5.65 3.27
SAIDI Minutes 1 337.00 1 337.00 352.80 1 337 621.22 1 337 974.32
SAIFI Number 5 5 1.14 5 1.23 5 2.35
Planned: Unplanned
Maintenance% 70.00 70.00 75.05 70.00 62.63 70.00 67.16
HV Outages: NPR Number 66.00 16.00 17.00 15.00 11.00 24.00 28.00
Maintain High Quality
of Service Levels
(NRS 047 Index %)
% 89.30 79.80 35.14 79.80 34.36 89.30 34.96
Maintain High Quality
of Supply Levels
(NRS 048 Index %)
% 95.00 95.00 66.11 95.00 99.33 95.00 100.09
PIPImpact on
CommunityKPI Unit
CP IDP
ProgrammeTotal Target
Sustainable
Human
Settlements
Smart City
Resource
Sustainability
Investment
attraction,
retention and
expansion
Green
Economy
Quarter 1 Quarter 2 YTD
City Power Mid-Year Report – July to December 2013
16 January Page 24 of 82
The target for NRS 048 is 95% consisting of LV, MV & HV KPI’s. For the October and November month, there were no measuring instruments on the LV category due to recorders being faulty. However, NRS 048 Compliance for LV for the month of December was recorded at 100%.
142 houses were electrified during Quarter 2. Increased electrification numbers are reliant upon existing network capacity and related infrastructure. Therefore, Eskom supply constraints must be taken into account. The Additional Capacity has not changed from the previous reporting period since no bulk substation was commissioned in the reporting period. The After Diversity Maximum Demand also remains unchanged. The solar water heater (SWH) is a flagship project that has economic benefits to domestic customers and contributes to energy efficiency. A total of 8516 units were installed during Quarter 2 against a target of 7500. A total of 10 271 solar water heaters have been installed thus far, representing Year to Date figures. This is against a target of 15 000 units for the Mid-Term reporting period.
Target Actual Target Actual Target Actual
Refurbishment
of ageing
infrastructure
Improved
restoration
times, reduction
in unplanned
Outages,
improved
network health
Average age of
infrastructure (HV)Years 39 39 39 39 39 39 39
Additional Capacity MW - - - - - - 0
Electrification Number 2 000 700 800 433 142 1 133 942
Provision of public
LightsNumber 7 000 1 100 458 1 967 326 3 067 784
Improve After Diversity
Maximum DemandKvA 0.3 0.3 0.0 0.3 0.0 0.3 0.0
Improve Energy Mix
(MW)% New New 0.00 New 0.00 New 0.00
Solar Water Heaters Number 15 000 7 500 1 755 7 500 8 516 15 000 10 271
Reduction in Green
House Gases% - - 0.00 - 0.00 - 0.00
Impact on
CommunityPIP
CP IDP
ProgrammeKPI
Sustainable
Human
Settlements
Smart City
Resource
Sustainability
Investment
attraction,
retention and
expansion
Green
Economy
Unit Total Target
Expansion and
Strengthening
of Network
More people
with access to
electricity,
Economic
Demand Side
Management
Climate Change
& Energy
Diversification
Quarter 1 Quarter 2 YTD
City Power Mid-Year Report – July to December 2013
16 January Page 25 of 82
Overall meter reading performance has slightly decrease to 82.03% Different metering categories movements are as follows from July to December 2013:
• Manually read LPU moved from 68.08% to 58.58%
• LPU AMR 64.8%
• Domestic AMR moved from 85.98% to 83.73%
• Manually read Domestic moved from 86% to 85.39%
The factor influencing meter installations is customer buy-in. The engagement with the customers has improved and hence the much improved Meter Roll Out numbers, specifically the Automatic Meter Reader (AMR) as well as the Pre-paid Meter installations. A total of 17 472 meters were installed during Quarter 2 (12 200 Pre-paid, 5 772 AMR). The total numbers of meters installed for the Mid-Term period is 29 183.
Target Actual Target Actual Target Actual
Payment Levels % 96.00 96.00 89.30 96.00 105.01 96.00 96.45
Meter Reading
performance% 96.00 96.00 85.06 96.00 82.03 96.00 82.03
Meter Roll Out Number 100 000 10 400 11 711 9770 17 472 20 170 29 183
Losses (Technical/ &
Non-Technical)% 9.00 9.20 38.43 16.70 19.96 12.68 30.03
% of ESP customers
with FBE provided % 100.00 100.00 57.34 100.00 100.00 100.00 100.00
KPI Unit
Sustainable
Human
Settlements
Active
engaged
citizenry
Resource
Sustainability
YTD Total Target
Quarter 1 Quarter 2
Revenue step
change
programme
Relief in Tariffs,
Smart City,
reduction in
accounted for
electricity
PIPCP IDP
Programme
Impact on
Community
City Power Mid-Year Report – July to December 2013
16 January Page 26 of 82
Target Actual Target Actual Target Actual
EPWP Number 3 000 750 215 750 340 1 500 555
50% black owned
companies% 5.00 8.00 9.78 8.00 10.62 8.00 10.09
30% black woman
owned company% 8.00 5.00 3.06 5.00 4.14 5.00 3.46
Customer / stakeholder
satisfaction index% 60.00 60.00 56.60 60.00 56.60 60.00 56.60
Filling of vacancies
aligned to agreed
Affirmative Action (AA)
targets
% 85.00 85.00 89.03 85.00 89.10 85.00 89.10
Filling of vacancies
aligned to agreed
Gender Equity (GE)
targets
% 24.00 24.00 23.31 24.00 23.36 24.00 23.36
Filling of vacancies
aligned to agreed
People with Disabilities
(PWD) targets
% 2.00 2.00 2.98 2.00 2.88 2.00 2.88
DIFR Ratio 1.00 1.00 0.35 1.00 0.35 1.00 0.35
ISO accreditation Audit report Keep certif icate w ith
minor f indings
Keep certif icate
w ith minor findingsIn Progress
Keep
certif icate
w ith minor
findings
Keep
certif icate
w ith minor
f indings
Keep
certif icate
w ith minor
f indings
Keep
certif icate
w ith minor
f indings
Unqualified Audit Audit report #N/A
Unqualif ied audit
w ith matters of
emphasis
In Progress
Unqualif ied
audit w ith
matters of
emphasis
Unqualif ied
audit w ith
matter of
emphasis and
other matters
Unqualified
audit w ith
matters of
emphasis
Unqualif ied
audit w ith
matter of
emphasis
and other
matters
Financial
resilience and
sustainability
Smart City
Resource
Sustainability
Improve
Customer
Centricity and
people
development
Development
Service Delivery
Improved
services
Continuous
Improvement of
the business
Improved
services
PIPCP IDP
Programme
Impact on
CommunityKPI Unit
YTD Total Target
Quarter 1 Quarter 2
City Power Mid-Year Report – July to December 2013
16 January Page 27 of 82
The Satisfaction performance is based on the last financial years Survey; new Customer Satisfaction Survey will be conducted in the last quarter. The Expanded Public Works Programme (EPWP) delivered a total of 340 jobs in Quarter 2. A total of 555 jobs were created during Quarter 1 and Quarter 2, against a target of 1500. Construction of bulk projects will commence in Quarter 3 which will significantly improve the number of jobs created.
City Power Mid-Year Report – July to December 2013
16 January Page 28 of 82
Balanced Scorecard with Key Performance Areas and Indicators
Financial Perspective
Gross profit is less than budget due to decrease in revenue and increase in non-technical losses.
The Total Capex Spend (quarterly spend vs. quarterly target) improved from 49% in Quarter 1 to 76% in Quarter 2.The details of the Capex Spend are discussed in Section 4 of this report.
2012/13
Actual Baseline Target Actual Target Actual Target Actual
Optimise Profit
Margin
Gross Profit %:
Sales/Cost of
Sales
Gross Profit %:
Sales/Cost of Sales % 25.80 17.22 2.09 38.55 36.75 26.62 18.95
Sustainable Value
Creation
Improve Net
Cash Generated
from Operating
Activities
Improve Net Cash
Generated from
Operating Activities
Rbn 2.48 1.49 -1.09 1.49 -0.17 1.49 -0.17
Reduce Losses Total Losses %Reduce Total
Losses% 30.13 14.50 38.43 14.50 21.32 14.50 30.57
Optimise Capex
Spend
Total Capex
Spend as % of
Targeted Capex
Spend
Total Capex Spend
as % of Targeted
Capex Spend
% 100.00 100.00 48.59 100.00 75.92 100.00 65.22
(a) Financial
PIP Align-ment Value Propositions Key Performance
Area
Unit
Financial
Resilience and
Sustainability
Key Performance
Indicator
Quarter 1 Quarter 2 Year to Date
City Power Mid-Year Report – July to December 2013
16 January Page 29 of 82
Customer Perspective
Internal Perspective
Learning and Growth
2012/13
Actual Baseline Target Actual Target Actual Target Actual
Promote Energy
Efficiency
Reduction in
Green House
Gases
GHG % New 0 0.0 0 0.0 0 0.0
Green
Economy
Promote Energy
Efficiency
Improve Energy
Mix (MW)
Improve Energy Mix
(MW)MW TBR New 0.0 New 0.0 New 0.0
Active Engaged
Citizenry
Improved Customer
/ Stakeholder
Experience
Improve
Customer /
Stakeholder
Satisfaction
Satisfaction Index
%% 67.22 69.90 50.42 69.90 52.22 69.90 51.32
Maintain High
Quality of Service
Levels
(NRS 047 Index %)
% 80.69 79.80 35.14 79.80 34.36 89.30 34.96
Maintain High
Quality of Supply
Levels
(NRS 048 Index %)
% 99.82 95.00 66.11 95.00 99.33 95.00 100.09
SMME &
Entrepreneur
Development &
Support
Socioeconomic
Development
Socioeconomic
Development
Socioeconomic
Development Index# 46.45 46.45 22.14 46.45 24.93 46.45 23.50
Value Propositions Key Performance
Area
Quarter 1 Quarter 2UnitPIP Align-ment Year to DateKey Performance
Indicator
Maintain High
Quality of Service
Levels
Quality Supply and
Availability
Sustainable
Human
Settlements
2012/13
Actual Baseline Target Actual Target Actual Target Actual
Resource
Sustainability
Manage Core Value
Chains
Monitor and
Improve
Compliance and
Assurance
Compliance and
Assurance Index Status 1.5 3.0 0.0 3.0 1.0 3.0 1.0
Key Performance
Area
PIP Align-ment Unit
(c) Internal
Year to DateQuarter 1 Quarter 2Key Performance
Indicator
Value Propositions
City Power Mid-Year Report – July to December 2013
16 January Page 30 of 82
• The staff complement for the reporting period is 1 597 which includes permanent and contract employees.
• The Company’s target for Affirmative Action is 83%. The Company achieved 89.10% for all levels and 76.49% for Supervisory and above levels.
• The Company’s target for Gender Equity 24%. The Company achieved 23.36% for all levels and 29.85% for Supervisory and above levels.
• The Company’s target for People with Disabilities is 2%. 46 employees have voluntarily declared their disability. This amounts to 2.88% of the total workforce.
Although there are various KPI targets not met, the following interventions have been implemented:
• Establish Exco bi-weekly meetings where all the non-performance KPI’s are discussed
• Develop interventions for the KPI’s not met
2012/13
Actual Baseline Target Actual Target Actual Target Actual
Resource
Sustainability
High Performing
Teams
Improve Team
Performance
High Performance
Team Index% 73.0 73.5 42.5 73.5 33.8 73.5 43.8
Key Performance
Area
(d) Learning and Growth
PIP Align-ment Unit Year to DateQuarter 1 Quarter 2Key Performance
Indicator
Value Propositions
City Power Mid-Year Report – July to December 2013
16 January Page 31 of 82
4. SERVICE DELIVERY REPORT
Analysis of the Master Capital Programme
The original approved City Power Capital budget for the 2013/14 financial year is R1,7 billion. This approved budget is inclusive of R57 million worth of loans, R1,1 billion own funding, R60 million DSM funding, R200 million Engineering services contribution and the remaining R164 million is The made up of grants and public contributions. The mid-year expenditure is as shown in the table below:
The expenditure for Quarter 2 amounted to R296m compared to the quarterly budget of R390m. The year to date amounted to R418m compared to the year to date budget of R642m. The first four months of the financial year have been taken up by activities to finalize designs and commence with supply chain procurement processes.
Project Detail
(By Project)
Total
Budget for
the year
YTD
budget
YTD
Actual
YTD
Variance
YTD Actual
vs YTD
Budget
YTD Actual
vs YE
Budget
Committed
YTD Actual +
Committed vs
YE Budget
R'000 R'000 R'000 (%) (%) R'000 (%)
Electrification 61380 26147 25458 689 97% 41% 11 816 61%
Service
Connections 120730 47795 30400 17395 64% 25% 3 216 28%
Township
Reticulation 0 0 570 -570 - - 72 -
Upgrading of
Electrical
Network
128861 51224 61782 -10558 121% 48%8 941
55%
Network
Development 6000 2350 1126 1224 48% 19% 4 544 95%
Building
Alterations/
Construction
60220 17270 161 17109 1% 0755
2%
Office
Equipment/Comp
uters
4067 1870 1846 24 99% 45%69
47%
Computer
Software 41000 15000 266 14734 2% 1% 299 1%
Tools and Loose
Gear 9488 3530 1062 2468 30% 11% 2 092 33%
Plant and
Machinery 59110 27000 1876 25124 7% 3% 3 637 9%
Meters and Load
Man 625800 225950 201534 24416 89% 32% 183 569 62%
Scada 10000 4500 0 4500 0% 0% 0 0%
Protection 28221 11300 5524 5776 49% 20% 2 044 27%
Furniture 1775 840 365 475 43% 21% 59 24%
Public Lighting 27715 10173 8720 1453 86% 31% 2 816 42%
Refurbish of Bulk
Infrastructure 542691 196651 77579 119072 39% 14% 120 985 37%
Insurance 0 0 212 -212 - - 436 -
TOTAL 1 727 058 641 600 418 481 223 119 65% 24% 345 350 44%
City Power Mid-Year Report – July to December 2013
16 January Page 32 of 82
All projects have forecasts for expenditure and progress. These will be used to report and track
progress in order to ensure successful execution of the capital programme. The graph below depicts
the recovery path in expenditure. The figures shown are based on individual projects which are then
rolled up to categories.
The table below shows monthly recovery projections for the remaining two quarters of the current
financial year. The figures on the table were projected based on the risk assessment covering the
suppliers; contractors; material availability and communities in areas where projects are undertaken.
26,630,000
133,370,000
251,176,000
371,179,000
508,043,000
641,600,000
822,508,701
1,003,417,403
1,184,326,104
1,365,234,806
1,546,143,507
1,727,052,209
7,388,000
82,921,000122,058,000
219,958,690
348,231,456
417,700,136
495,442,195
740,519,699
1,083,768,356
1,469,496,347
1,636,772,476
1,727,077,325
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
1,600,000,000
1,800,000,000
2,000,000,000
Base Projections
Revised Projections
City Power Mid-Year Report – July to December 2013
16 January Page 33 of 82
CONTROLLABLE CAPEX The expenditure for the second quarter on Controllable capital projects, which are projects funded from COJ loans, DSM levy, Grant funding, Own cash and Adopt a light funding amounted to R281m compared to the quarterly budget of R367m which is R86m below the target as a result of the execution plans and acquisition plans being finalised while some of the projects had to go out on tender to start the procurement process. A noticeable expenditure recovery will be realised in the third quarter. The year to date expenditure amounted to R387m compared to the year to date budget of R594m.
( Controllable) Project Detail (By Project)
Budget for
Quarter 2
Actual for
Quarter 2
Var for the
Quarter
Total Budget for the year
YTD Budget
YTD Actual
YTD Variance
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Electrification 16,369 24,579 -8,210 26,147 26,147 25,458 689
Public Lighting 6,064 7,117 -1,053 10,173 10,173 8,673 1,500
Electrical
Infrastructure 193,545 169,434 24,111 312,024 312,024 265,363 46,661
Power Systems 6,968 5,524 1,444 11,300 11,300 5,524 5,776
Other Capex &
asset purchases 39,466 3,963 35,503 65,510 65,510 5,577 59,933
Refurbish of Bulk
Infrastructure 104,417 70,387 34,030 168,651 168,651 76,658 91,993
TOTAL 366,829 281,005 85,824 593,805 593,805 387,254 206,551
Electrical Infrastructure Electrical infrastructure comprises of Upgrade of Electrical Networks, Network development, Meters and Load management. The second quarter expenditure amounted to R169 million which is R25m below the budget of R194m. The year to date expenditure amounted to R265m compared to the year
to date budget of R312m.
AVAILABLE BUDGETJan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14
BULK INFRASTRUCTURE R 416 771 380 R 77 578 720 R 339 192 660 R 19 318 204 R 74 483 373 R 101 093 905 R 137 153 524 R 40 595 241 R 20 467 876
DSM EE R 0 R 0 R 0
DSM/ LOAD MANAGEMENT R 5 400 000 R 4 344 160 R 1 055 840 R 0 R 0 R 1 055 839 R 0 R 0 R 0
ELECTRIFICATION R 46 380 000 R 25 458 026 R 20 921 974 R 1 172 105 R 5 475 000 R 7 894 800 R 6 000 000 R 380 000 R 0
FIRE & SECURITY R 80 000 000 R 0 R 80 000 000 R 10 000 000 R 30 000 000 R 25 000 000 R 10 000 000 R 5 000 000
INFORMATION TECHNOLOGY R 51 000 000 R 265 833 R 50 734 167 R 0 R 0 R 20 734 000 R 20 000 000 R 5 000 166 R 5 000 000
METERS R 700 000 000 R 197 190 143 R 502 809 857 R 39 853 806 R 103 073 407 R 119 155 877 R 130 805 474 R 63 494 783 R 46 426 511
NETWORK DEVELOPMENT R 6 000 000 R 1 126 499 R 4 873 501 R 0 R 4 873 501 R 0 R 0 R 0 R 0
OPERATING CAPITAL R 21 660 000 R 5 310 690 R 16 349 310 R 100 000 R 5 765 000 R 5 460 000 R 2 924 305 R 1 300 000 R 800 000
PROTECTION R 28 221 157 R 5 524 263 R 22 696 894 R 617 490 R 3 855 736 R 5 738 869 R 7 657 864 R 2 826 939 R 2 000 000
PUBLIC LIGHTING R 79 234 463 R 8 720 356 R 70 514 107 R 1 610 454 R 5 847 000 R 14 800 366 R 25 736 825 R 21 519 000 R 1 000 462
SERVICE CONNECTIONS R 120 730 000 R 30 399 512 R 90 330 488 R 6 190 000 R 8 095 488 R 8 075 000 R 7 890 000 R 3 090 000 R 3 090 000
TELECOMMUNICATIONS R 15 000 000 R 0 R 15 000 000 R 0 R 4 000 000 R 5 500 000 R 2 500 000 R 2 000 000 R 1 000 000
UPGRADE OF ELECTRICAL NETWORKR 138 661 000 R 61 781 934 R 76 879 066 R 8 880 000 R 18 609 000 R 21 740 000 R 16 060 000 R 10 070 000 R 1 520 000
SCADA R 10 000 000 R 0 R 10 000 000 R 0 R 2 000 000 R 5 000 000 R 3 000 000
TRAINING R 8 000 000 R 0 R 8 000 000 R 1 000 000 R 2 000 000 R 2 000 000 R 2 000 000 R 1 000 000
TOTAL R 1 727 058 000 R 417 700 136 R 1 309 357 864 R 77 742 059 R 245 077 505 R 343 248 656 R 385 727 991 R 167 276 129 R 90 304 849
PROJECTIONS
FINANCIAL
PROJECTIONS
FINANCIAL
PROJECT CATEGORIESTOTAL APPROVED
BUDGET
ACTUAL
EXPENDITURE (Total Budget -
Actual Exp.)
PROJECTIONS
FINANCIAL
PROJECTIONS
FINANCIAL
PROJECTIONS
FINANCIAL
PROJECTIONS
FINANCIAL
City Power Mid-Year Report – July to December 2013
16 January Page 34 of 82
Power Systems Power Systems comprises of Protection. The expenditure for the second quarter is R6m compared to the quarterly budget of R7m which is R1m below Budget. The year to date expenditure amounted to R6m compared to the year to date budget of R11m.
Public Lighting The expenditure for the quarter amounted to R7m compared to the quarterly budget of R6m which is R1m above the target. The year to date expenditure amounted to R9m compared to the year to date budget of R10m.
Electrification The expenditure for the second quarter amounted to R25m compared to the quarterly budget of R16m which is R9m above the quarterly budget. This is a result of fast tracking the expenditure that was not spent in the first quarter. The year to date expenditure amounted to R25m compared to the year to date budget of R26m.
Bulk Infrastructure The expenditure for the second quarter amounted to R70m compared to the quarterly budget of R104m. This reflects a negative variance of R34m as result of the delays in commencing with the Sebenza Substation project due to a legal challenge by one of the tenderers; this the biggest substation project in the current and next three financial years. The category includes projects such as Cydna Substation, Transformer replacement programme and Eskom payments for Strengthening of Network. The year to date expenditure amounted to R77m compared to the year to date budget of R169m.
Non Controllable Capex The non-controllable capital projects are projects which are funded by public contributions. The expenditure for the quarter amounted to R15m compared to the quarterly budget of R24m and this reflects a negative variance of R9m as a result of low levels of service connection applications. The year to date expenditure amounted R31m compared to the year to date budget of R48m.
(Non - Controllable)
Project Detail (By
Project)
Budget for
Quarter 2
Actual for
Quarter 2
Var for the
Quarter
Total Budget for the year
Ytd budget
YTD Actual
YTD Variance
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Electrification 0 0 0 0 0 0 0
Public Lighting 0 20 -20 0 0 47 -47
Electrical
Infrastructure 0 0 0 0 0 0 0
Service
Connections 96,530 14,871 81,659 120,730 47,795 30,400 17,395
Township
Reticulation 0 429 -429 0 0 570 -570
Refurbish of
Bulk
Infrastructure 0 0 0 0 0 0 0
Insurance 0 100 -100 0 0 212 -212
TOTAL 96,530 15,420 81,110 120,730 47,795 31,229 16,566
City Power Mid-Year Report – July to December 2013
16 January Page 35 of 82
PUBLIC LIGHTING The expenditure for the quarter amounted to R20 thousand which is as a result of funds received from developers for service connections. The year to date expenditure amounted to R47 thousand.
SERVICE CONNECTION The expenditure for the quarter amounted to R15m compared to the quarterly budget of R24m. The funds are received from the public for service connections. The year to date expenditure amounted to R30m compared to the estimated budget of R48m.
TOWNSHIP RETICULATION The expenditure for the quarter amounted to R429 thousand as a result of funds received from the developers for connections. The year to date expenditure amounted to R570 thousand. Capex claims are claims done on the loans granted by COJ to City Power as we spend on the loan funding. The Capex claims for the quarter amounted to R12m and to date R16m has been claimed. Funding claims
Project Detail (By Project)
Quarter 1 Quarter 2 TOTAL
R'000 R'000 R'000
Network development
229 249 478
Refurbish of bulk infrastructure - loans
4,342 11,322 15,664
TOTAL 4,571 11,571 16,142
SPECIFIC SERVICE DELIVERY PROGRAMMES
Supply and Demand Side Management (SSM and DSM) A number of renewable energy and DSM initiatives have been developed to align the city with the
international requirement to reduce carbon emissions.
The status of the SSM and DSM projects which City Power has undertaken is listed and explained
below:
• Installation of Solar Water Heaters – this project is on-going, 10 271 SWHs have been
installed for the reporting period.
• Installation of Energy Efficient Lighting – 80% of the projects are in the execution phase,
which is being driven with energy efficient lighting. City Power is continuously researching
lighting technologies which is a variable that affects installations & their associated lead
times.
• Energy Efficient Building Retrofits – this project is currently in the procurement stage.
Electrification
A total of 942 connections have been completed during the reporting period against a target of 1133
connections.
City Power Mid-Year Report – July to December 2013
16 January Page 36 of 82
Public Lighting
This KPI shows the level of public lighting for USDG Funded projects in the City. For the Quarter, a
total of 326 lights have been installed. A total of 784 public lights have been installed during the
Quarter 1 and Quarter 2 period, against a target of 3067.
Expanded Public Works Programme (EPWP)
One of the City Power strategies in addressing unemployment and ensuring maximization of job
creation has always been to minimize the use of excavating machinery and only use manual labour
on all our CAPEX (Capital Expenditure) projects. During project implementation phase, City Power
approaches the political heads (Councillors) in the area or political wards where these projects are
being implemented.
A list of candidates is therefore submitted to City Power’s contractors as part of employment and
selection process. The successful candidates are then temporarily employed by the contractors who
give on job training and report on monthly basis as part of City Power’s EPWP contribution.
The total number of jobs created for the Mid-Term reporting period is 555 against the year-to-date target of 1500.
Infrastructure Maintenance
Power Outage Management
An outage is defined as a complete loss of electricity supply and arises due to a variety of reasons some of which are outlined below:
• Network performance related (NPR) e.g. overloading, cable faults, equipment failure etc
• External causes which are mainly due to third party activities e.g. tampering, theft, damage by civil contractors etc.
The duration and frequency of outages impact customers differently depending on the type of consumer (domestic, commercial, industrial), therefore, interruptions need to be properly managed as they are an inconvenience and sometimes lead to huge financial losses to customers. As a result, the provision of electricity within the City is closely monitored to ensure that the quality of supply (QoS) provided meets acceptable standards. In terms of reporting, outages are classed as HV (High Voltage) or MV (Medium Voltage). Only outages which are network performance related (see definition above) are reported on in terms of this document.
High Voltage (Bulk) This KPI shows the number of outages experienced on the high voltage network (HV) which is at voltages above 33kV. Outages on these networks generally affect large areas and as a result the maintenance of these networks and capital investment into these networks are always prioritized as to ensure that interruptions are kept to a minimum Total number of HV NPR outages (July – December 2014): 28. This is within the target of 31.
City Power Mid-Year Report – July to December 2013
16 January Page 37 of 82
Medium Voltage
This KPI refers to the outages experienced on the medium voltage network (MV) which is at voltages between 1kV and 33kV. Outages on this network are more localized and, therefore, generally affect smaller areas and as a result are less severe than HV outages. However, due to the size and extent of the network, higher number of customers connected to the MV network normally experience more outages. Total number of NPR outages recorded is 557. The main reasons for these outages include equipment failure, cable insulation failure and theft and vandalism. The mitigating actions in place to reduce these outages relate mainly to security and measures to reduce theft and vandalism. Equipment failures and insulation failures are as a result of aging equipment and cables.
Network Performance Indicator (SAIDI) reporting
Over the last couple of years, a new system to report network performance has been under development. This system will ensure that there is direct linkage between interruptions and the number of customers affected thus enabling City Power to report supply reliability more accurately. Reporting on this new system is based on internationally recognised KPI’s such as SAIDI (System Average Interruption Duration Index). Additionally, City Power has started the network criticality study to create a complete reliability model of the City Power Operating networks. This will allow the organisation to set targets based on the performance of the network and will also aid in operational decision making.
City Power performed well in CAIFI, SAIDI and SAIFI.
Public Lighting Maintenance Through continuous performance monitoring and improvement in execution, the public lighting turnaround time (TAT) has dropped from 5.1 days in quarter 1 to 3.3 days in quarter 2.
City Power Mid-Year Report – July to December 2013
16 January Page 38 of 82
Retail Services
Tariff Proposal 2014/15
In terms of the updated (draft) on our tariff position, restructuring and rationalizing City Power tariffs is
still considered key. This includes but is not limited to the following;
• The introduction of Network access as well as Maximum Demand charges.
• Normalization of Cross-subsidies (Commercial / Business contributing the most).
• Alignment of TOU tariffs to Demand tariffs.
• Introduction of a Reseller tariff.
• Introduction of a tariff to that supports Photovoltaic installations, etc.
We continue to work around these in line with the NERSA guidelines’ and continue to observe the set
timelines around the approval processes ahead of the implementation in July 2014.
Cost of Sales
Bulk purchases have consistently shown a declining trend in the initial half of 2013/14. Current
volumes are at 3.8% below budget
Jul Aug Sep Oct Nov Dec TOTAL
Budget 1,249.58 1,279.03 1,110.84 1,038.54 1,093.63 990.95 6,762.57
Actual 1,225.07 1,238.36 1,083.29 1,018.36 1,006.09 936.34 6,507.51
0.00
500.00
1,000.00
1,500.00
2,000.00
13/14 Bulk Purchases - GWh
City Power Mid-Year Report – July to December 2013
16 January Page 39 of 82
Bulk Purchases (R’000)
There is a saving of R271 million on bulk purchases mainly due to reduction in volumes.
Meter Reading Performance
Meter Reading Performance
June July August September October November December
Manual LPU 57.29% 61.26% 63.64% 68.08% 70.67% 62.38% 58.58%
Manual
Domestic 84.19% 82.71% 86.06% 86.43% 85.79% 86.09% 85.39%
Domestic AMR 80.24% 81.61% 85.01% 85.98% 85.15% 84.28% 83.73%
LPU AMR 65.08% 63.80% 64.51% 61.33% 60.86% 59.42% 64.79%
Overall
Performance 80.59% 79.45% 82.48% 82.74% 82.39% 82.08% 82.03%
Below are the reasons for not achieving the meter reading performance target:
LPU numbers are based on billing registers and the ratio is 1:3 per meter.
Customer Categories
Unread Inacces-
sible Faulty
Incorrect Addres-
ses
System Updates
Illegal connec-
tions Totals
Manual LPU - 166 505 - 189 674 1 534
LPU AMR - 0 8 073 - - - 8 073
Manual Domestic 7 800 1 464 1 241 4 532 617 957 16 611
Domestic AMR - - 707 - 533 - 1 240
TOTAL 7 800 1 630 10 526 4532 1339 1631 27 458
Jul Aug Sep Oct Nov Dec TOTAL
Budget 1,191.33 1,218.26 793.52 625.11 646.05 606.84 5,081.11
Actual 1,148.0 1,177.0 715.0 614.5 594.6 561.0 4,809.96
0.00
500.00
1,000.00
1,500.00
2,000.00
13/14 YTD Bulk Purchases - R'millions
City Power Mid-Year Report – July to December 2013
16 January Page 40 of 82
RAT (Remote Access Terminal) System-
Non-visibility of meters in the Lehae area is being investigated with the supplier to resolve the problem. Alexandra and Far East Bank number of visible meters is low because the meter installation is still in progress.
AREA NO OF RATS INSTALLED NO OF METERED STANDS NO OF METERS
VISIBLE ON RATS VARIANCE
LEHAE 7 3,108 620 2,488
RIVERPARK 12 773 773 0
ALEXANDRA 17 7,161 853 6,308
FAR EAST BANK 58 4,174 1,886 2,288
TOTAL 93 15,216 4,127 11,084
One of the challenges experienced is that not all meters are visible through the RAT System.
Energy Management Plan Progress
A draft Plan has been developed and is undergoing further consultation. The intent of the plan is to highlight to the business, areas of leverage that the business has in ensuring the provision of sustainable electricity. The plan is also intended to highlight ways in which to reduce Johannesburg’s carbon footprint in a cost effective and efficient manner. The first round of consultation took place on 24 October 2013. This was the first opportunity to encourage the relevant stakeholders participate in shaping this document. It also includes Key milestones as well as targets upon which the success of the plan will be benchmarked. The intent is now to consolidate final inputs and follow the relevant governance processes to obtain
approval.
Payment Levels
Details 1st Quarter 2nd Quarter
YTD
Total Collection for the quarter 89.3% 105.0%
96.4%
July August September October November December
72%
115%
88%
108%
95%
111%
Payment LevelPayment LevelPayment LevelPayment Level
City Power Mid-Year Report – July to December 2013
16 January Page 41 of 82
Revenue
The reduction of revenue is attributable to the following:
• Reduction of bulk purchases
• Increase in prepaid customers not buying
• Uncleared billing exceptions and unbilled customers
-
500,000
1,000,000
1,500,000
July August September October November December
Budget Sales 1,213,442 1,488,259 1,092,629 1,012,972 995,713 981,109
Actual Sales 952,018 1,089,943 978,207 914,951 899,869 996,061
BUDGET vs. ACTUAL REVENUE
26%
13%61%
Contribution to Low Revenue (Rands)
Attributable toreduction PurchaseVolume
Attributable to PrepaidLosses
Attributable toConventional Losses
City Power Mid-Year Report – July to December 2013
16 January Page 42 of 82
Debtors Age Analysis
Description <= 30 Days <= 60 Days <= 90 Days 90 Days and
Above
Total
Current Quarter
1 109 300 348 443 286 264 3 161 773 4 905 781
23% 6% 5% 66% 100%
Last Quarter
1 312 835 315 322 268 054 3 141 144 5 037 355
26% 6% 5% 62% 100%
Stakeholder Management
Resellers Forum
As an electricity supplier to the residents of Johannesburg, the tariffs as approved by NERSA are passed through to the customers through billing done by the City of Joburg. In the event where there is a block of flats with only one bulk point of supply, City Power would supply and bill at a bulk meter (i.e. the body corporate). The body corporate is then expected to apportion and charge for the consumption to all users within the establishment. This would be properly achieved through the installation of check meters (pre-paid or conventional meters) by the body corporate. Due to inconsistencies in practice by resellers coupled with the fact that this practice is not regulated, this has resulted in both the body corporates and the tenants lodging complaints to either City Power or to NERSA for various reasons including:
• Body Corporates complain about the sustainability of their business.
• Tenants complain about inconsistencies or lack of transparency on the charges by body corporates (especially if these charges are not in line with the bylaw )
Due to the resellers business not being regulated, City Power has opted to develop a resellers’ tariff to attempt to mitigate the above complaints. As part of developing the Resellers Tariff, City Power invited electricity resellers in Johannesburg into a session which has enabled City Power to communicate its intention. Through this City Power has obtained insight into their business dealings. This engagement has also allowed resellers to influence the design of the Resellers Tariff, ahead of the 2014/15 tariff approval process. Over and above that, the resellers are expected to assist City Power in identifying the unbilled, unmetered and incorrectly billed customers which may be contributing to the losses and revenue loss.
Compliance with NRS 047 Metering Requirements Performance on overall meters read that are within the By-Law compliance has improved to 89.11%. Although there is improvement from the previous quarter on meter reading rate, the minimum
compliance standard is still not achieved.
Query Management There is non-compliance with NRS 047 on query resolution. The total number of queries has reduced as compared to the 1
st quarter. It should be noted that the numbers reported below are as at end of
November 2013.
City Power Mid-Year Report – July to December 2013
16 January Page 43 of 82
Electricity related queries
Quarter no date 180 +days 180 days 150 days
1 12 518 612 901
2 9 292 255 417
Call Centre Requirement Call Centre standards have not been met due to disruption of service by the labour unrest at R&CRM. Performance was also impacted by City Power’s staff being on strike. As indicated above in the report, non-meeting the restoration times also increase repeat calls.
City Power Mid-Year Report – July to December 2013
16 January Page 44 of 82
5. FINANCIAL MANAGEMENT
Financial Assessment
Statement of Financial Performance
As at 31 December 2013
Overall Financial Performance
Surplus The surplus translates a negative variance of R35m and R607m against the budget for the quarter and YTD respectively. However there is a big improvement on the performance of the second quarter against the first quarter. During the first quarter the variance against the surplus was a negative 656%, while the negative variance in the second quarter is 6%. The reasons for the variances are set out below:
Service Charges Service charges for the quarter and YTD are less than budget by R163m and R937m respectively due to a decrease in volumes, unbilled customers, and bypasses prepaid meters.
Description % Contribution R'000
Total Revenue Shortfall 100% 937,000
Attributable to reduction Purchase Volume 27% 249,000
Attributable to Prepaid Losses 13% 120,045
Attributable to Conventional Losses 61% 567,955
Figures in Rand thousand Trend Variance Trend Variance
Actual Budget % Actual Budget %
Revenue 3 186 530 3 237 956 -2% 6 581 747 7 334 310 -10%
Service charges 2 827 005 2 989 755 -5% 5 847 495 6 784 139 -14%
Other income 312 038 190 520 64% 607 257 433 460 40%
Government grants 6 497 32 000 -80% 44 497 61 500 -28%
Interest revenue 34 984 20 216 73% 71 440 44 283 61%
Fees earned 4 941 4 215 17% 8 992 8 429 7%
Rental income 75 424 100% 143 847 -83%
Canteen revenue 989 826 20% 1 923 1 652 16%
Expenditure 2 634 610 2 650 705 -1% 6 514 452 6 659 858 -2%
Bulk purchases 1 690 483 1 788 003 -5% 4 642 833 4 901 105 -5%
Debt impairment 163 647 111 696 47% 338 127 256 139 32%
General expenses 258 073 236 183 9% 516 017 472 365 9%
Personnel costs 184 578 198 360 -7% 372 815 396 719 -6%
Finance costs 88 679 99 281 -11% 179 410 200 146 -10%
Repairs & maintenance 162 783 118 162 38% 288 115 236 323 22%
Administration 27 479 35 192 -22% 59 415 70 384 -16%
Depreciation & amortisation 58 888 63 830 -8% 117 718 126 676 -7%
Surplus before taxation 551 920 587 250 -6% 67 295 674 453 -90%
Taxation 0 0 0% 0 0 0%
Surplus 551 920 587 250 -6% 67 295 674 453 -90%
Quarter 2 YTD
City Power Mid-Year Report – July to December 2013
16 January Page 45 of 82
Other Income Other Income for the quarter and YTD is R121m and R174m more than budget respectively, due to the following:
• New Connections exceed the budget by R20m and R41m for the quarter and YTD respectively due to the increases in request by customers for new connections and upgrades. New connections are a non-controllable budget item as the number of new applications or upgrades cannot be determined during the budget process and is based on the prior year requests.
• Sales to Eskom: While current performance is better than previous year, the current performance is below budget by R60 million. Sales to Eskom are based on Kelvin’s ability to generate.
• Sales to Eskom- R'Million Jul Aug Sep Oct Nov Dec YTD
2013/14 Actual 66.600 106.260 70.690 87.145 89.964 88.356 509.015
Budget 95.785 95.785 92.695 95.785 92.695 95.785 568.529
2012/13 Actual 46.315 56.648 61.451 85.015 68.044 48.335 365.807
Budget 46.315 56.648 61.451 85.015 59.937 60.378 369.743
This was partially offset by: DSM Levy that is less than budget by R7m and R25m for the quarter and YTD respectively. DSM levy is calculated based on the units sold. The units sold are less than budget resulting in a decrease in DSM Levy. The DSM Levy was reviewed from 2c/kWh to 1c/kWh in the financial year 2013/2014 and the review will be done during mid-term budget review.
• Engineering Contributions are less than budget by R18m and R44m for the quarter and YTD respectively. There were fewer requests received for development site connections than estimated/budgeted for.
• Sundry Revenue is less than budget by R8,6m and R14,8m for the quarter and YTD respectively as there were less insurance claims registered than reported.
• Sale of obsolete material is R2m and R4m less than the budget for the quarter and YTD respectively as no sale of obsolete material has taken place to date.
Government Grants Grants are less than the budget by R26m and R17m for the quarter and YTD respectively as grants were only received for the month of July and December. Interest revenue exceeds the budget by R15m and R27m for the quarter and YTD respectively. This is mainly due to the increase in interest on the bank account, as the cash balance exceeds the budgeted cash balance by R1bn.
Service Charges: 2012/13 and 2013/14 comparative performance (R'000)
Description Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 YTD
Actual 952 107 1 090 052 978 332 930 894 899 955 996 156 5 847 495
Budget 1 213 529 1 488 240 1 092 615 1 012 959 995 700 981 096 6 784 139
Description Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 YTD
Actual 1 239 812 1 224 341 1 184 965 846 326 782 661 977 080 6 255 185
Budget 1 154 703 1 416 217 1 039 738 963 937 947 514 933 617 6 455 726
City Power Mid-Year Report – July to December 2013
16 January Page 46 of 82
OPERATING OVERHEADS: FOR THE MID-YEAR ARE LESS THAN BUDGET BY R145m The reasons for the variances are set out below: Bulk Purchases Bulk purchases are R98m and R258m less than the budget for the quarter and YTD respectively due to the kWh purchased which is less than the budget by 3%, and the average purchase price is also 6% less than the budget. It should be noted that the Eskom agreement has come to an end at the end of December. This agreement was signed to cover the cost on Kelvin. This will have a major impact on the availability charge that needs to be paid to Kelvin.
The table below shows Availability Payments paid up to December as well as budgeted Availability going forward
2013/14 Kelvin Availability Payments
R'million Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June TOTAL
Original Budget 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 360.0
Revised Availability 51.1 46.8 18.0 19.5 17.7 19.1 11.5 9.2 11.8 14.0 16.4 46.5 281.6
*Note: January – June 2014 reflects the projected availability payments Debt Impairment Debt Impairment exceeds the budget by R52m and R82m for the quarter and YTD respectively. The current budget for debt impairment was reduced during the budget process, as the City expected a better collection level and therefore it is not in line with the current level of debt. The provision for bad debts is calculated as per SAP CoJ system. City Power recalculates the provision for bad debts at year end using the final age analysis and the collection level.
Bulk Purchases: 2012/13 and 2013/14 comparative performance (R'000)
Description Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 YTD
Actual 1 134 405 1 132 551 685 395 577 165 582 076 531 241 4 642 833
Budget 1 161 330 1 188 256 763 517 595 109 616 052 576 841 4 901 105
Description Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 YTD
Actual 1 081 052 1 121 978 698 060 572 162 516 279 520 962 4 510 492
Budget 1 146 190 1 241 733 659 705 558 738 582 080 723 455 4 911 900
Debt impairment: 2012/13 and 2013/14 comparative performance (R'000)
Description Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 YTD
Actual 54 880 62 837 56 763 53 307 52 326 58 014 338 127
Budget 46 061 57 241 41 140 37 898 37 196 36 602 256 139
Description Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 YTD
Actual 73 193 70 314 70 251 52 677 46 273 58 019 370 727
Budget 34 518 40 865 35 542 32 458 31 789 41 224 216 397
City Power Mid-Year Report – July to December 2013
16 January Page 47 of 82
General Expenses are R22m and R44m more than the budget for the quarter and YTD respectively mainly due to the following:
• Fleet costs exceed the budget by R13m and R26m for the quarter and YTD respectively due to an increase in petrol prices and additional vehicles utilised and additional vehicles (generators) that were needed.
• Commission paid exceeds the budget by R2m due to the increase in transactions by customers utilising vending machines and other third parties for payments at the Post Office & Pick & Pay.
• Professional fees are more than the budget by R13m and R7,7m for the quarter and YTD respectively. There were more consultants utilized during the second quarter of the financial year.
• Security is R8,3m and R4,7m more than the budget due to the strike when additional security had to be arranged to protect infrastructure.
• Stores and materials are R4,4m and R39m more than budget for the quarter and YTD respectively due the installation of solar water heaters during the period.
• Assessment rates are R3,8m and R5m more than the budget for the quarter and YTD respectively due to in appropriate budgeting.
• Legal expenses are more than the YTD budget by R4,2m due to inaccurate budgeting and additional attorneys used to attend to legal matters.
This was been partially offset by:
• Demand side management is less than budget by R15m and R30m for the quarter and YTD respectively as the capitalisation of projects have not started yet.
• Final check readings are less than budget by R1,9m and R3,9m for the quarter and YTD respectively. Fewer check readings were done to date due to the increase in correct readings received.
• Telecommunications is R4m and R6m less for the quarter and YTD respectively due to software licenses which were not paid during the months under review. The software payments are made annually. The budget is however spread over a 12 month period.
• Meter reading is R3,7m less than the YTD budget as fewer meters were read as at December.
Personnel cost Personnel cost is R13,7m and R24m less than budget for the quarter and YTD due to the following:
• Basic salaries are R15,6m and R31m less than the budget for the quarter and YTD respectively due to the non – filling of vacant positions.
• Car allowance is R3m and R6m less than budget for the quarter and YTD respectively due to the signing of the LLF agreement. The LLF stated that the first 1 200km travelled will not be claimed.
• Leave provision is less than the budget by R4m and R6,8m for the quarter and YTD respectively due to the budget being spread equally throughout the year while actual leave fluctuates depending on the seasons.
• Standby allowance is less than the budget by R2m and R3,7m for the quarter and YTD
respectively due to shortage of staff as a result of vacant positions. • Hot Skill allowance is R3,5m and R7m less than budget for the quarter and YTD
respectively due to the termination of the allowance.
City Power Mid-Year Report – July to December 2013
16 January Page 48 of 82
Offset by:
• Overtime exceeds the budget by R9m and R25m for the quarter and YTD respectively. Cable theft resulted in extensive overtime worked to restore power outages. Additionally, the overtime budget for the year was based on the implementation of shifts which resulted in the overtime budget being reduced. Due to the delays in implementing shifts, the overtime budget was exceeded
• Insurance WCA exceeds the budget R4,8m for both the quarter and YTD respectively due to non-payment of the expense in the month of December.
• Acting allowance exceeds the budget by R1,5m and R2m for the quarter and YTD respectively due to inaccurate budgeting while there are more people acting in vacant positions due to restructuring.
Finance Cost Finance cost is less than the budget by R10,6m and R20,7m for the quarter and YTD respectively due to interest payable on Capex loans which is less than budget. This was predominately due to the outstanding Capex claims and therefore a lower loan balance. Interest on loans is only payable when the funds are deposited into the bank account. Repairs and Maintenance Repairs and Maintenance is more than the budget by R44,6m and R51,7m for the quarter and YTD respectively due to excessive theft and vandalism. Emergency capital work was done on Repairs and Maintenance budget and needs to be journalised to CAPEX. Administration Administration costs are less than budget by R7,7m and R10,9m for the month and YTD respectively due to COJ fleet lease costs being less than the budget. Depreciation & amortisation Depreciation has decreased by R4,9m and R8,9m during the quarter and YTD respectively due to the non capitalisation of projects as these projects are not completed yet.
City Power Mid-Year Report – July to December 2013
16 January Page 49 of 82
Statement of Financial Position
Inventories Inventories exceed the budget as the purchase of smart meters are included in stock, this was however not budgeted for. Loans to Shareholder Loans to shareholder are less than the budget due to the following:
• An amount of R90m for customers deposits has been reversed as no proof was submitted by COJ to support the amount which resulted in a decrease in loans to shareholder as well as less work which was done for COJ. Cash received from COJ on customers was duplicated resulting in a liability. The budget was based on the assumption that COJ would own City Power's cash for the last days of the month and pay it in the next month.
Variance
Figures in Rand thousand Actual Budget %
Current assets 4 290 299 4 593 706 -7%
Inventories 143 454 98 733 45%
Loan to shareholder 96 789 529 794 -82%
Trade and other receivables 87 163 71 919 21%
Consumer receivables 1 581 648 3 018 186 -48%
Cash and cash equivalents 2 381 246 875 074 172%
Non-current assets 8 437 800 8 359 591 1%
Property, plant and equipment 8 211 977 8 209 637 0%
Intangible assets 225 823 149 954 51%
Total Assets 12 728 099 12 953 297 -2%
Current liabilities 2 008 275 2 675 073 -25%
Loans from shareholders 428 960 470 792 -9%
Trade and other payables 1 208 728 1 218 567 -1%
VAT payable 269 106 869 630 -69%
Provisions 101 481 116 084 -13%
Non-current liabilities 4 324 579 3 821 865 13%
Loans from shareholders 2 974 736 2 368 736 26%
Retirement benefit obligation 27 595 37 156 -26%
Deferred income 24 813 - 100%
Deferred tax 1 109 213 1 115 601 -1%
Consumer deposits 188 221 300 372 -37%
Total Liabilities 6 332 853 6 496 938 -3%
Share capital and premium 112 466 112 466 0%
Accumulated surplus 6 282 780 6 343 893 -1%
Total Net Assets 6 395 246 6 456 359 -1%
Total Liabilities and Net Assets 12 728 099 12 953 297 -2%
TrendYTD
City Power Mid-Year Report – July to December 2013
16 January Page 50 of 82
Trade and other receivables Trade and other receivables exceed the budget by R15m predominately due to the increase in sales to Eskom and an increase in capacity from Kelvin. Consumer receivables Consumer receivables are less than the budget by 48%. Contributing factors are:
• Revenue initiatives (Revenue Step Change and Zero Tolerance Project) resulted in accounts being corrected.
• Decrease in units sold to customers as well as an increase in the provision for bad debts.
Cash and Cash Equivalents The opening balance on cash and cash equivalents was R1,3 billion more than budget due to an increase in payment levels during 2012/13 financial period, which resulted in an increase in the closing balance during 2012/13 financial year. Less cash was received during the period under review as the payment levels are below budget.
Intangible assets During the 2012/2013 financial year unbudgeted additional capacity was purchased from Eskom resulting in the amount carried in intangible assets in the current year exceeding the budget. Loans from Shareholders (Short term) The amount is less than budget due to capital claims not yet received. The budget assumed that no capital claims would be outstanding. The short term portion of loans from the shareholder is only calculated based on actual loan funding received. Vat Payable Due to the decrease in revenue vat payable is less than budget. City Power pays VAT on a cash basis; therefore VAT is only paid over to SARS if the cash is actually received from the customers. Provisions Provisions are less than budget due to the payment of bonuses during the month of December. Loans from Shareholders (Long term) The increase is due to an increase in the amount owned to COJ regarding cash received from customers that was duplicate (R302m). This is partially offset by capital claims that is still outstanding Retirement benefit obligation A lower number of employees qualified for retirement resulting in a decrease in the liability. Deferred income Deferred income relates to connection fees received. The fees are recognised as deferred income until such time as the connection is made, at which stage the income is recognised in the statement of financial performance. The budget is based on the principle that all connections have been completed at period end.
Cash: 2012/13 and 2013/14 comparative performance (R'000)
Description Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 YTD
Actual 2 673 068 2 399 196 1 803 672 2 201 495 2 169 414 2 381 246 2 381 246
Budget 973 551 1 306 022 797 665 826 385 987 988 875 074 875 074
Description Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 YTD
Actual 1 122 056 1 325 902 913 808 1 084 419 1 377 088 1 494 738 1 494 738
Budget 2 449 517 2 664 790 1 980 385 2 014 067 2 132 009 2 041 750 2 041 750
City Power Mid-Year Report – July to December 2013
16 January Page 51 of 82
Consumer deposits The decrease in consumer deposits is as a result of more refunds of deposits than anticipated.
Cash Flow Statement
For the period ending 31 December 2013
The net closing cash position as at December 2013 amounts to R2,3bn compared to the budget of R875m. This reflects a positive variance of R1,4bn. The net movement in cash shows an outflow of R324m compared to a budgeted outflow of R691m. The positive variance of R367m is explained as follows:
Cash generated from operating activities is R1,6bn less than the budget mainly as a result of the increase in payment to suppliers regarding outstanding invoices from June to December as well as the decrease in cash received due to low payment levels. The cash impact from investing activities is R48m more than budgeted outflow due to an increase in PPE spend, this was partially offset by the decrease in finance cost.
Variance
Figures in Rand thousand Actual Budget %
Cash flows from operating activities -173 031 1 485 751 -112%
Receipts 6 973 576 7 181 981 -3%
Sale of goods and services 6 929 079 7 120 481 -3%
Grants 44 497 61 500 -28%
Payments -7 146 607 -5 696 230 25%
Suppliers -7 146 607 -5 696 230 25%
Cash flows from investing activities -637 100 -588 958 -8%
(Purchases)/disposal of property, plant and equipment -532 270 -351 095 52%
Proceeds from sale of property, plant and equipment - - 0%
(Purchases)/disposal of intangible assets 3 140 -82 000 104%
Interest income 71 440 44 283 61%
Finance costs -179 410 -200 146 -10%
Cash flows from financing activities 486 009 -1 588 124 131%
Movement in consumer deposits -0 20 924 -100%
Repayments of shareholder loan -386 210 -350 867 -10%
Increase/(decrease) in shareholder loan 872 219 -1 258 181 169%
Finance lease payments - - 0%
Net increase / (decrease) in cash and cash equivalents -324 123 -691 330 53%
Cash and cash equivalents at the beginning of period 2 705 369 1 566 405 73%
Cash and cash equivalents at the end of the period 2 381 246 875 074 172%
TrendYTD
City Power Mid-Year Report – July to December 2013
16 January Page 52 of 82
Cash flow from financing activities is R2bn more than budget due to the delay in COJ refunding the loan portion of capital expenditure, as well as the overpayment of cash received from CoJ.
Financial Ratios
Percentage of Salary to Total Opex
Cash: 2012/13 and 2013/14 comparative performance (R'000)
Description Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 YTD
Actual 2 673 068 2 399 196 1 803 672 2 201 495 2 169 414 2 381 246 2 381 246
Budget 973 551 1 306 022 797 665 826 385 987 988 875 074 875 074
Description Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 YTD
Actual 1 122 056 1 325 902 913 808 1 084 419 1 377 088 1 494 738 1 494 738
Budget 2 449 517 2 664 790 1 980 385 2 014 067 2 132 009 2 041 750 2 041 750
Key Performance Area Key Performance TargetActual Actual Comments
2012-13 2013-14
Current ratio Above 1:1 2.04 2.14
Solvency ratio Above 2:1 1.92 2.01
Due to decrease in cash balance and
increase in consumer debtors
Debt to Revenue ratio Below 45% 24% 30%
Remuneration to
Expenditure ratio Below 30% 21% 20%
Maintenance to
Expenditure ratio 7% 11% 15%
Interest to Expenditure
ratio Below 30% 7% 6%
Net Operating Ratio Above 15% 4.24% -7%
Due to decrease in revenue and a slight
increase in operating expenditure
Cash cover 45 Days 106 165
Days in debtors 55 Days 96 49
1st Quarter
R'000
2nd Quarter
R'000
YTD
R'000
Total Staff Costs 188 237 184 578 372 815
Total Opex 927 491 944 127 1 871 618
% of Salary to Opex 20% 20% 20%
City Power Mid-Year Report – July to December 2013
16 January Page 53 of 82
Supply Chain Management
Procurement Policies and Practices
Accreditation of Black Economic Empowerment in respect to both the supplier and contractor.
Accreditation of suppliers and contractors is done on an ongoing basis by the BEE unit and reviewed
regularly to ensure validity and correctness of information on the database. Supply Chain
Management Policy is in line with COJ Integrated Supply Chain Management Policy.
Procurement/BEE Spend
Category Unit Quarter 1 Quarter 2 YTD
Procurement spend from suppliers that are 50% black owned
R000's 466 861 301 579 768 440
% Spend % 9.8 10 9.82
Procurement spend from suppliers that are 30% black women owned
R000's 145 943 117 535 263 478
% Spend % 3.1 4.1 3.24
Contract Management
Contracts are monitored on a regular basis by both the end user and supply chain in order to ensure
that there is full compliance with the scope of work and that spend is within the approved budget. This
ensures that supplier performance is closely monitored in order to identify areas of poor performance
or non-performance so that corrective measures can be put in place and implemented as early as
possible.
Enforced penalties on contractors
None for the period.
Reports on unsatisfactory work
None reported for the period.
City Power Mid-Year Report – July to December 2013
16 January Page 54 of 82
Bids advertised during the period under review.
No. Bid description Closing date
1. Testing on Power Cables and fault location on
cable
29/07/2013
2. Transformer & Switchgear Testing service during
commissioning and maintenance
29/07/2013
3. HV & MV Switchgear maintenance 30/09/2013
4. Provision of Medical and Pharmaceutical
Suppliers for Occupational Health Clinic
27/09/2013
5. Implementation of SharePoint 04/10/2013
6. Appointment of Various Strategic Partner
Consultants to assist City Power (SOC) LTD in
the Project Proposals, Detail Designs, EIA’s and
Master Plans
11/10/2013
7. Mandatory and Apprentice Training 14/10/2013
8. Specialist Consulting Services Around Shift Model
Implementation
30/09/2013
9. Replacement of the Existing Feederboard with the
New 17 Panel Feederboard at Industria
Substation
18/10/2013
10. Manufacture, Supply, Delivery and Installation
and Cold Commissioning of 11/6.6Kv
Transformers
14/10/2013
11. Call Centre Solution 11/10/2013
12. ICT Network Management and Monitoring Tool 11/10/2013
13. Tetra Support and Maintenance 11/10/2013
14 Upgrade of the Virtual Infrastructure and Storage
Environment
11/10/2013
15. Upgrade of Existing 88/11Kv Nirvana Substation 21/10/2013
16. Security Services for Electrical Infrastructure 21/10/2013
17. Security Services for National Key Point 21/10/2013
18. Crime Intelligence Services 21/10/2013
19. Battery and Charger (DC) Maintenance 21/10/2013
20. Construction of 90MVA Firm Capacity 88/11kV
New Roodetown Substation
08/11/2013
21. Designing and Printing of Diaries, Wall Calendars
and Desk Pads
01/11/2013
22. Replacement of Old Feederboard and Installation
of new 17 Feederboard
18/10/2013
23. Decommissioning and Removal of Two Lattice
Towers and construction of Two Lattice Towers at
Cydna Substation
04/11/2013
City Power Mid-Year Report – July to December 2013
16 January Page 55 of 82
Bids/Contracts approved during the mid-year
Contractor Name Description Period Budget Vote R’000
Award Value R’000
Ndozi Multi Projects Flo Trading Enterprise Unapfano Building and Project
Supply and Delivery of Hardware and Plumbing Material
3 Years R18 000 R9 900
Bidmark Holding (Pty) Ltd
Supply and Delivery of Forklift - Diesel
Once off purchase
R900 R627
CBI – Electric: African Cables
Maintenance of High Voltage (33kV – 132kV) Cable Networks
3 Years R20 000 R20 000
Mafoko Security GNG Security Linda Security Collett Security
Security services of electrical infrastructure
3 Years R111 000 R111 000
Collett Security Security services of National Key Points
3 Years R12 000 R12 000
Alectrix (Pty) Ltd Portable three phase test for protection relays and measurement transducers.
Once off purchase
R1 234 R1 234
Blue Media
Provision of a photographer
3 Years
R350
R350
Pacinamic (Pty) Ltd Design, printing and delivery of diaries, wall calendars and desk pads
3 Years R1 800 R1 800
HNS Design layout and printing of brochures
3 Years R2 000 R2 000
NV Financial Supply and 2 Years R9 000 R5 000
No. Bid description Closing date
24. RTU ROLLOUT (SCADA) 26/11/2013
25. Appointment of an Architect to Design and Project
Manage Alterations at City Power Basic Training
Centre in Reuven Johannesburg
29/11/2013
City Power Mid-Year Report – July to December 2013
16 January Page 56 of 82
Contractor Name Description Period Budget Vote R’000
Award Value R’000
Solutions Mndhavazi Trading
Delivery of Canteen Groceries and Meat
R4 000
Garona Communications and Projects
Provision of Corporate Gifts and Clothing
3 Years R2 500 R1 500
LX Printing Printing and Distribution of Notices to Customers
3 Years R4 000 R3 000
Black Box Entertainers
Provision of Industrial Theatre
3 Years R3 000 R2 500
Origin Consulting ICT Network Monitoring and Management Tool
3 Years R8 500 R8 421
TOTAL R194 284 R 183 332
Deviation/exception procurement for the period
Item ProcurementType
Date Description Amount Reason for deviation
1 Emergency Procurement
02/07/13 Emergency replacement of cable in Nick Toomey Street
R55 295 Emergency repair to avoid a total loss of supply to Penny Street substation.
2 Emergency Procurement
10/07/13 Emergency replacement of cable in Nick Toomey Street
R47 015 Emergency repair to avoid a total loss of supply to Penny Street substation.
3 Emergency Procurement
12/07/13 Emergency repair / replacement of air conditioners
R30 000 The room is overheating and this could cause major damage to the equipment to the value of R1m.
4 Emergency Procurement
21/07/13 Emergency repairs to feeder cable supplying Roodepoort substation
R70 000 Roodetown / Roodepoort No 2 33kV feeder was stolen and this is the only feeder cable supplying Roodepoort substation.
5 Emergency Procurement
14/08/13 Emergency repair to a 88kV cable fault between San Souci / Ridge Substation
R682 155 This was an emergency procurement where power had to be restored and CBI African Cables are the OEM.
6 Emergency Procurement
04/09/13 Production of a dvd covering strike activities
R32 000 Management directive
7 Emergency Procurement
09/09/13 Emergency cable repairs at Penny Street Substation
R1 010 259 Cable stolen leaving the whole of Penny Street substation without power.
8 Emergency Procurement
09/09/13 Additional security resources to secure substations and other hotspots for 2 months.
R9 011 569 Unexpected unprotected strike by City Power employees
9 Emergency Procurement
17/09/13 Cable fault on the Cydna / Rosebank
R1 100 000 Quick repair to ensure the stability of the two stations
10 Emergency Procurement
21/09/13 Loss of supply from tripped cable
R120 000 To restore supply at Roodepoort substation.
City Power Mid-Year Report – July to December 2013
16 January Page 57 of 82
Item Procurement/Order
Number
Date Description Amount Reason for deviation
11 Emergency Procurement
07/10/13 Emergency repair of cable in the Westgate Shopping Centre area
R120 000 33Kv cable between Roodetown and Manufacture stolen
12 Emergency Procurement
21/10/2013 Emergency repairs to restore supply to Robertville substation.
R15 000 000 Tower vandalised on the Sentraal / Robertville number 1 & 2 88kV overhead transmission lines
13 Emergency Procurement
23/10/2013 Emergency outage notices
R22 395 Loose connection on the 88Kv Bus Bars at Nursery substation had to be repaired urgently to avoid unplanned loss of supply.
14 Emergency Procurement
29/10/2013 Emergency repair of transformers and cable at Ridge Sub Station
R600 000 Cable repairs to ensure stability of supply to Ridge substation as there are a numerous hospitals feeding from the station.
15 Emergency Procurement
18/11/2013 Emergency repair of the cable at Florida substation
R700 000 There are only 2 feeders to Lea Glen substation; there is a risk if the number 1 feeder faults. This is an industrial area and it also feeds Rand Water Board.
16 Newspaper Adverts - BDFM
Jul – Dec 2013
Publishing of newspaper articles
R645 373 Contract process concluded only in December 2013
17 Newspaper Adverts - Sowetan
Jul – Dec 2013
Publishing of newspaper articles
R963 249 Contract process concluded only in December 2013
TOTAL R30 209 314
Fruitless and wasteful expenditure
No irregular, fruitless and wasteful expenditure were discovered during the period under review.
Fleet Management
Fleet availability
• 97.94% availability was recorded for category A vehicles ( light duty vehicles e.g. LDV, Sedan’s, Hatch back’s, Panel Vans )
• 85.97% availability was recorded for category B vehicles (Heavy duty Vehicles e.g. Aerial platforms & Crane trucks)
The current fleet is sufficient to service City Power areas of supply. Any additional vehicles are hired
on an ad hoc basis as and when the vehicles are required.
City Power Mid-Year Report – July to December 2013
16 January Page 58 of 82
City Power owned Generators
Registration number KVA 1
st year of
registration Comment Managed by Intervention
SRT 767 GP 630 2005 Engine Failure EQSTRA We hire generators sets on request via external service provider (Avis) so that service delivery is not hindered.
Plan is to purchase additional new generators in order to replace old generators which are always failing due to their conditions
FYW 589 GP 200 2002 Engine Failure EQSTRA
SRT 770 GP 630 2005 In for repairs EQSTRA
SRT 219 GP 630 2005 Engine Failure EQSTRA
JFK 612 GP 200 1980 Working EQSTRA
SGH 082 GP 275 1980 Working EQSTRA
FZJ 152 GP 500 1994 Engine Failure EQSTRA
NXW 771 GP 630 UNKNOWN Engine Failure N/A
FYW 609 GP 50 UNKNOWN Engine Failure N/A
Annual budget for vehicle related costs
• The budget for fleet for the year is R78.2m; actual cost as at end of December is approximately R58m
Accident Costs
These costs are covered within our insurance policy.
For the year the costs associated with accident repairs were as follows: Month No. of accidents Cost of Accidents
July 44 R382 285
August 19 R322 638
September 25 R156 775
October 17 R119 708
November 17 R61 838
December 6 R23 857
Audit findings
The table below is an extract of the findings as reflected in the Auditor-General’s Management letter. Management is currently in a process of implementing action plans in addressing findings raised and Internal Audit will be giving assurance on an ongoing basis on the effectiveness of action items implemented.
City Power Mid-Year Report – July to December 2013
16 January Page 59 of 82
Finding Classification Rating Number of times reported in previous 3 years
Status of implementation of previous year(s) recommendation
Mis
sta
tem
en
ts
in f
ina
nc
ial
sta
tem
en
ts
Mis
sta
tem
en
ts
in a
nn
ua
l p
erf
orm
an
ce
No
n-
co
mp
lia
nc
e
wit
h l
aw
s &
re
gu
lati
on
s
Inte
rna
l c
on
tro
l d
efi
cie
nc
y
Se
rvic
e
de
liv
ery
M
att
ers
a
ffe
cti
ng
th
e
au
dit
or’
s r
ep
ort
Oth
er
imp
ort
an
t m
att
ers
A
dm
inis
tra
tiv
e
ma
tte
rs
Financial Annual financial statements
Misstatements in annual financial statements
� � � 3 In progress
Consumer debtors Consumer debtors: Possible misstatement of City Power’s provision for bad debts
� � 0 Not reported in previous years
Consumer debtors: Understatement of bad debts write off
� � 0 Not reported in previous years
Validity of credit balances � � 0 Not reported in previous years
Consumer debtors: Valuation of consumer debtors
� � 0 Not reported in previous years
Credit control and provision for bad debts policies not approved
� � 0 Not reported in previous years
Consumer deposit Customers billing without deposit
� � 0 Not reported in previous years
Consumer deposits in the TB/AFS do not agree to the supporting Schedule
� � 0 Not reported in previous years
Understatement of credit balances disclosed in the AFS and TB
� � 0 Not reported in previous years
Leases
Insufficient disclosure in terms of GRAP 13
� � 0 Not reported in previous years
Understatement of operating lease commitments
� � 0 Not reported in previous years
Service level agreement not signed
� � � 0 Not reported in previous years
Provisions
Insufficient disclosure in terms of GRAP 19
� � 0 Not reported in previous years
Employee benefit obligations
Insufficient disclosure in terms � � 0 Not reported
City Power Mid-Year Report – July to December 2013
16 January Page 60 of 82
Finding Classification Rating Number of times reported in previous 3 years
Status of implementation of previous year(s) recommendation
Mis
sta
tem
en
ts
in f
ina
nc
ial
sta
tem
en
ts
Mis
sta
tem
en
ts
in a
nn
ua
l p
erf
orm
an
ce
No
n-
co
mp
lia
nc
e
wit
h l
aw
s &
re
gu
lati
on
s
Inte
rna
l c
on
tro
l d
efi
cie
nc
y
Se
rvic
e
de
liv
ery
M
att
ers
a
ffe
cti
ng
th
e
au
dit
or’
s r
ep
ort
Oth
er
imp
ort
an
t m
att
ers
A
dm
inis
tra
tiv
e
ma
tte
rs
of GRAP 25 in previous years
GRAP disclosure requirements
GRAP disclosure requirements
� � 0 Not reported in previous years
Incorrect disclosure of budget information
� � 0 Not reported in previous years
VAT
Incorrect disclosure in accordance to GRAP
� � 0 Not reported in previous years
VAT not disclosed in accordance with GRAP disclosure requirements
� � 0 Not reported in previous years
Misstatement identified in the testing of VAT output transactions
� � 0 Not reported in previous years
Receivables
Misstatement of trade and other receivables
� � 0 Not reported in previous years
Consumer deposits not recorded
� � 0 Not reported in previous years
Incorrect classification of related party receivables and sundry receivables
� � 0 Not reported in previous years
Incorrect classification – Income received in advance
� � 0 Not reported in previous years
Non-compliance to general provisioning policy in calculating the provision for bad debt at year end
� � 0 Not reported in previous years
Payables
Insufficient disclosure in terms of GRAP 1
� � � 0 Not reported in previous years
Differences in goods received not yet invoiced (GR/IR)
� � 0 Not reported in previous years
Leave accrual incorrectly calculated
� � 0 Not reported in previous years
City Power Mid-Year Report – July to December 2013
16 January Page 61 of 82
Finding Classification Rating Number of times reported in previous 3 years
Status of implementation of previous year(s) recommendation
Mis
sta
tem
en
ts
in f
ina
nc
ial
sta
tem
en
ts
Mis
sta
tem
en
ts
in a
nn
ua
l p
erf
orm
an
ce
No
n-
co
mp
lia
nc
e
wit
h l
aw
s &
re
gu
lati
on
s
Inte
rna
l c
on
tro
l d
efi
cie
nc
y
Se
rvic
e
de
liv
ery
M
att
ers
a
ffe
cti
ng
th
e
au
dit
or’
s r
ep
ort
Oth
er
imp
ort
an
t m
att
ers
A
dm
inis
tra
tiv
e
ma
tte
rs
Fair value adjustment incorrectly calculated
� � 0 Not reported in previous years
Completeness of trade and other payables
� � 0 Not reported in previous years
Taxation
Differences in taxation schedules
� � � 0 Not reported in previous years
Misstatements in income tax and deferred tax
� � � 0 Not reported in previous years
Non-compliance with disclosure requirements
� � 0 Not reported in previous years
Property, plant and equipment
Non-disclosure of Depreciation method for Leased assets
� � 0 Not reported in previous years
Non-disclosure of change in useful life of assets in the financial statements
� � 0 Not reported in previous years
The excel spread sheet system used to maintain asset registers for the entity is not adequate
� � 0 Not reported in previous years
Network assets are not tagged/bar coded
� � 3 In progress
Complex/Grouped assets – Assets not adequately verifiable
� � 3 In progress
Employee cost
Positions vacant for a period longer than 12 months
� � 0 Not reported in previous years
Minimum competency levels for Senior Managers and SCM officials
� � 0 Not reported in previous years
Employee file – All employee information not on file
� � 0 Not reported in previous years
Expenditure
Incorrect accrual raised for bulk purchases
� � 0 Not reported in previous years
City Power Mid-Year Report – July to December 2013
16 January Page 62 of 82
Finding Classification Rating Number of times reported in previous 3 years
Status of implementation of previous year(s) recommendation
Mis
sta
tem
en
ts
in f
ina
nc
ial
sta
tem
en
ts
Mis
sta
tem
en
ts
in a
nn
ua
l p
erf
orm
an
ce
No
n-
co
mp
lia
nc
e
wit
h l
aw
s &
re
gu
lati
on
s
Inte
rna
l c
on
tro
l d
efi
cie
nc
y
Se
rvic
e
de
liv
ery
M
att
ers
a
ffe
cti
ng
th
e
au
dit
or’
s r
ep
ort
Oth
er
imp
ort
an
t m
att
ers
A
dm
inis
tra
tiv
e
ma
tte
rs
Contingent liabilities
Overstatement of contingent liabilities
� � 0 Not reported in previous years
Irregular expenditure
Differences identified � � 0 Not reported in previous years
Related parties
Amounts not in agreement with related party confirmations
� 0 Not reported in previous years
Predetermined Objectives (PDO)
No policy in place for responsibilities relating to collecting, coordinating and compiling of performance information
� � 0 Not reported in previous years
No policy for roles and responsibilities for ensuring data integrity and quality assurance
� � 0 Not reported in previous years
Jobs reported for Expanded Public Works Program differ with evidence provided
� 0 Not reported in previous years
Key performance indicators not measurable
� � 0 Not reported in previous years
Compliance
Procurement and contract management
Supply and installation of low pressure SWH – Bid No: 1883 GS
� � 0 Not reported in previous years
Internal control deficiencies relating to procurement and supply chain management
� � 0 Not reported in previous years
Employee and supplier did not declare interest
� � 1 In progress
Awards made to persons in service of the state – Non-compliance to SCM regulation 44
� � 3 In progress
SCM Deviations not disclosed – Awards below R200 000
� � 3 In progress
SCM Deviations not disclosed – Awards above R200 000
� � 3 In progress
City Power Mid-Year Report – July to December 2013
16 January Page 63 of 82
Finding Classification Rating Number of times reported in previous 3 years
Status of implementation of previous year(s) recommendation
Mis
sta
tem
en
ts
in f
ina
nc
ial
sta
tem
en
ts
Mis
sta
tem
en
ts
in a
nn
ua
l p
erf
orm
an
ce
No
n-
co
mp
lia
nc
e
wit
h l
aw
s &
re
gu
lati
on
s
Inte
rna
l c
on
tro
l d
efi
cie
nc
y
Se
rvic
e
de
liv
ery
M
att
ers
a
ffe
cti
ng
th
e
au
dit
or’
s r
ep
ort
Oth
er
imp
ort
an
t m
att
ers
A
dm
inis
tra
tiv
e
ma
tte
rs
Revenue
Disregarded meter readings and unreasonable estimates – City Power
� � 1 In progress
No controls in place to ensure revenue from street pole adverts are complete and accurate
� � 0 Not reported in previous years
Policies and procedures
Policies and procedures not reviewed
� � 0 Not reported in previous years
Budgets
Overspending of capital budget
� � 0 Not reported in previous years
Information Technology (IT)
Information System Audit � � 3 In progress
User access control � � 3 In progress
City Power Mid-Year Report – July to December 2013
16 January Page 64 of 82
6. HUMAN RESOURCES MANAGEMENT
Talent Planning
As a result of organisational re-alignment, the Recruitment Department has been strategically elevated to the Talent Management Department.
To respond on time and appropriately to the need for talent, City Power has taken a conscious and strategic decision to introduce strategic workforce planning – which is a management process that will be used to plan for future talent needs, shortages, developmental interventions, changes and related challenges.
Finding the right people for the right roles is always going to be a delicate balance of strategic foresight and planning. It is against this background that engagement with line management is on-going.
The Human Resources Group is in the process of finalising the alignment of the strategic workforce planning process with the Company’s strategic direction. As part of the planning process, HR has gathered and analysed people related data and information which will facilitate the development of the Strategic Workforce Plan for the next five years.
The process of identifying critical vacancies (both shift and non-shift related) has been finalised.
In order to capacitate shift work implementation, a total of 37 positions have been advertised. These appointments will increase the staff complement by 340 employees.
It is anticipated that the majority of new recruits will resume duties during the month of February 2014.
Staff complement
The staff complements for the reporting period is 1597 which includes permanent and contract employees.
The Company’s target for Affirmative Action is 83%. The Company achieved 89.10% for all levels and 76.49% for Supervisory and above levels.
African Coloured Indian White African Coloured Indian White
Top Management
(Directors)3 - - 1 4 2 - - - 2 6
Senior Management 11 1 2 4 18 3 - - 1 4 22
Professionally qualified
and experienced
specialists and mid-
management Managers
and Professionals
159 11 5 73 248 110 3 2 7 122 370
Skilled technical and
academically qualified
workers, junior
management, supervisors
and Technicians
58 14 3 31 106 20 2 1 9 32 138
Artisans (All types) 224 15 3 59 301 24 1 - - 25 326
Administrative 37 1 1 2 41 77 4 1 22 104 145
Semi-skilled and
discretionary decision
making
479 7 - 4 490 33 2 - 1 36 526
Elementary positions 16 - - - 16 46 2 - - 48 64
Total (Permanent and
Contract)987 49 14 174 1 224 315 14 4 40 373 1 597
Categories Male Male
Total
Female Female
Total
TOTAL
City Power Mid-Year Report – July to December 2013
16 January Page 65 of 82
The Company’s target for Gender Equity is 24%. The Company achieved 23.36% for all levels and 29.85% for Supervisory and above levels.
People with Disabilities
The Company’s target for People with Disabilities is 2%. 46 Employees have voluntarily declared their disability. This amounts to 2.88% of the total workforce. .
Staff Movements
Skills Development and Training
The on-going development of employees in the workplace is a priority for City Power. Attendance of technical and non-technical training interventions are monitored and assessed regularly.
African Colored Indian White African Colored Indian White Male Female
Top Management
(Executives)- - - - - - - - - - -
Senior Management - - - - - - - - - - -
Professionally qualified
and experienced
specialists and mid-
management Managers
and Professionals
2 1 - 3 1 - - 1 - - 8
Skilled technical and
academically qualified
workers, junior
management, supervisors
and Technicians
8 2 1 8 - - - - - - 19
Semi-skilled and
discretionary decision
making
8 1 - 2 3 1 - 3 - - 18
Unskilled and defined
decision making- - - - - 1 - - - - 1
Total Permanent 18 4 1 13 4 2 - 4 - - 46
Temporary employees - - - - - - - - - - -
Total (Permanent and
Contract)18 4 1 13 4 2 - 4 - - 46
Female TOTALForeign NationalsCategories Male
Male Female Male Female Male Female Male Female
Recruitment 0
Appointments 8 2 10
Promotion 2 1 3
Transfer 1 1
Resignation 4 3 1 2 1 11
Early Retirement 2 2
Retirement 7 2 9
Retrenchment 0
Medical Boarding 0
Dismissal 0
Demotion 0
Deceased 5 3 1 9
Termination of Contract 7 1 1 1 10
Total Movements 35 9 1 0 0 1 7 2 55
Staff Movement TOTAL
African Coloured Indian White
City Power Mid-Year Report – July to December 2013
16 January Page 66 of 82
Bursars:
• A total of 350 bursary applications for 2014 were received of which 12 candidates are recommended to be awarded with full bursaries to study Accounting or Electrical Engineering. Of these 12 candidates, 5 are black females and 7 are black males
• Currently 9 Bursars are enrolled with the Company. This total is made up of 9 black males.
• Details of the current bursars and their fields of study:
Gender Race Learning Institution Qualification
enrolled for
M A University of KZN ND Electrical
Engineering
M A Wits University BSc Electrical
Engineering
M A University of JHB BSc Electrical
Engineering
M A University of JHB BSc Electrical
Engineering
M A DBN University of
Tech.
ND Electrical
engineering
M A Wits University BSc Electrical
Engineering
M A University of PTA BEng
Electrical
Engineering
M A Wits University BSc Electrical
Engineering
M A Vaal University of
Tech.
BSc Electrical
Engineering
Learners:
• There are currently 8 learners with the Company. This is made up of 7 black males and 1 black female.
Mentorship programme:
• The South African Institute for Electrical Engineers (SAIEE) in conjunction with the South African Institute for Civil Engineers (SAICE) awarded 12 of the Company’s graduates with training and mentorship programs. This is in alignment with the creation of employment opportunities for the youth.
Integrated Skills Development Programme:
• HR submitted a business case to the Department of National Treasury to access funds so as to enable City Power to train interns (already qualified academically) on a full time basis.
• The request made was R3,6m. It is envisaged that the National Treasury will respond to HR by no later than February 2014.
Training Centre Upgrade:
• HR is in the process of upgrading and renovating the Training Centre to upskill internal and external staff in new technologies.
• The Training Centre upgrade comprises the following:
• Relocation of the Library
• Removal of all the outdated mechanical equipment
City Power Mid-Year Report – July to December 2013
16 January Page 67 of 82
• Building of new offices, lecture rooms and store rooms
• Replacement of the electrical training equipment.
• Pictures of before and after the public auction to sell off redundant mechanical equipment:
Before After
• The end state is to obtain approval from SETA to operate the Training Centre as a fully accredited Academy.
• City Power currently has two accredited training facilities, namely the MV (Medium Voltage) Simulator in Roodepoort and the Cable School at Reuven.
Social Responsibility Programme:
• HR has finalised a Social Responsibility Policy for City Power. The aim of this policy is to identify young learners (grade 3) from disadvantaged communities within the municipal boundary of Johannesburg to be trained up to and including university level.
• City Power will then offer financial support for this period and should a position at completion of the study period be available, the person would be appointed.
Amount spent on training employees:
• An amount of R3,02 million was spent on training for the period July 2013 to December 2013.
Training of External Delegates:
• Training in Electrical Safety, Safe Operating Procedures and Electrical Switching is done on a continuous basis for internal staff and external companies at the Roodepoort Training Centre.
• Training in cable terminations and cable jointing is done at the Cable School at Reuven.
• Average income generated is R1m per annum on average.
• A significant amount more income can be generated once the training facilities are fully renovated and built.
Remuneration Management
• A Pay Progression Framework was approved by the Board and implementation is dependent on the conclusion of the job evaluation and grading process.
Policy Review
The following policies were recently reviewed by HR in consultation with Organised Labour. These policies will be submitted to EXCO for approval. These policies are:
• Talent Acquisition and Selection Policy and Procedure.
City Power Mid-Year Report – July to December 2013
16 January Page 68 of 82
• Bursary Policy.
• Employee Educational Assistance Policy and Procedures for Under- and Post Graduate Studies and Scholarships.
• Apprenticeship, Experiential Learning, Internship and Learnership Policy and Procedural Guidelines.
• Sexual Harassment Policy.
• Job Evaluation Policy.
• HR Business Support Policy.
• Integrated Performance Management System Policy (IPMS).
Performance Management
The Integrated Performance Management System Policy has been reviewed so that performance can align to the Company Strategy and the balanced scorecard i.e. Financial, Customer, Internal Processes and Learning & Growth Perspectives. The alignment supports performance of individuals, Groups and the Company. The revised policy includes the Group and Central Moderation Committees for quality assurance. HR performed quality assurance through the practical audits in all depots following the submission of performance scores. The purpose of these practical audits is also to ensure the availability of individual compacts and the correctness of performance scores.
Change Management
Since inception of the December 2012 structural re-alignment programme, which amongst others led to the approval and implementation of the 30 May 2013 LLF Agreement, the following projects and initiatives were undertaken by HR with company-wide communication of changes in order to:
• Create change awareness post the 30 May 2013 LLF Agreement by reaching out to the different segments of the population
• Firm up the change network structures (Agents, Champions, Leaders) from all depots for capacity building and sustainability
• Empower the affected population (Travel Top-up recipients, Electricians, Trade Workers, Finance Group, Engineering Operations Group)
• Approval of responses to the Frequently asked Questions to ensure consistency in communication
ER Reporting
A total of 70 disciplinary cases were concluded between July 2013 to December 2013. The outcome of these cases is depicted in the table below:
City Power Mid-Year Report – July to December 2013
16 January Page 69 of 82
Month
Written
Warning
Final
Written
warning
Suspension
without pay
Other
Sanctions Dismissals
Not
Guilty Withdrawn TOTAL
Jul-13 0 0 0 0 0 0 0 0
Aug-13 0 1 0 0 0 0 0 1
Sep-13 0 0 0 0 0 0 0 0
Oct-13 0 51 0 0 0 0 0 51
Nov-13 0 0 0 0 0 0 0 0
Dec-13 0 8 9 0 0 1 0 18
Total - YTD
0 60 9 0 0 1 0 70
Precautionary Suspensions: The precautionary suspensions reduced from 6 to 5. Investigations on the outstanding cases are still underway.
Strike management: From 4 to 6 September 2013, a total of 437 employees participated in an unprotected strike action in relation to the implementation of a 3-shift system. The principle of no work no pay was applied and employees were issued with Final Written Warnings, valid for 12 months. Employees, who opted not to accept the Final Written Warnings, were subjected to a formal disciplinary hearing. Shift Work will be implemented on 1 February 2014.
City Power Mid-Year Report – July to December 2013
16 January Page 70 of 82
7. Risk, Assurance and Compliance
Risk Management
Risk Management Process Background Enterprise Risk Management is the holistic management of all risks. It is a structured, consistent and continuous process across the whole of City Power for risk identification, assessment, decision making and reporting. The Enterprise Risk Management Framework is the set of components for designing, implementing, monitoring, reviewing and continually improving risk management throughout City Power. The City of Johannesburg (CoJ) has established the Group Risk Advisory Services unit within the Group Assurance Services Department. The Group Risk Advisory Unit is responsible for the enterprise risk management process and operates in accordance with the approved Group Governance Framework and Policy, which are also applicable to all Departments and Entities. City Power is continuously ensuring alignment and compliance to CoJ requirements such that its Risk Management Process is aligned and adopted to the City`s Enterprise Risk Management Process as depicted by the diagram below: RISK MANAGEMENT PROCESS
Mo
nit
ori
ng
an
d R
evie
w
Co
mm
un
icat
ion
an
d C
on
sult
atio
n
Risk Treatment
Risk Evaluation
Risk Analysis
Risk Identification
Risk Assessment
Establishing the context
City Power Mid-Year Report – July to December 2013
16 January Page 71 of 82
Update on Risk Management Process
The City Power Board now has a Risk, Assurance & Compliance Committee. The main role of the Committee is to:
• Assist the Board in fulfilling its responsibility of ensuring that there is an effective and embedded risk management process in place throughout the Company.
• Make recommendations to the Board concerning the levels of risk tolerance and the risk appetite of the Company.
• Ensuring that Management has effective policies and plans for risk and compliance management that will enhance the Company’s ability to achieve its strategic objectives.
• Ensuring that Management has effective processes that identifies and monitors the management of legislative and regulatory compliance together with the key risks facing the Company in an integrated and timely manner.
• Ensuring that Management has a comprehensive, timely and effective process for the disclosure of Risks and legislative and regulatory compliance. The Committee does not assume the functions of Management, which remain the responsibility of the Accounting Officer/ Accounting Authority.
Risk identification The City Power risk identification process is aligned to the COJ framework. The Company Risks are identified annually and they form part of the risk register. These risks are influenced by the executive committee, taken to the Audit Committee of the Board and then approved by the Board. The approved risks are then incorporate into the business plan. Risk Assessment and Treatment Once risks have been identified, they must then be subjected to a consistent assessment process to ensure that City Power achieves an objective and holistic result that can inform its risk profile. Risk is measured in two ways:
By the likelihood or frequency of the risk occurring By the severity / impact on City Power of the risk occurring
The City of Johannesburg has developed a two-stage assessment process to assess and quantify the identified risks. Stage One – Impact and likelihood The first stage involves an assessment of the potential impact (or severity) of each risk, and then the likelihood of the event actually occurring. Each risk is scored on a scale of one to five. The Table below shows the criteria used to assess the potential Impact / Severity of each risk occurring. THE CRITERIA USED TO ASSESS THE POTENTIAL IMPACT / SEVERITY OF EACH RISK OCCURRING
Assessment of impact / severity Financial Reputation Stakeholders Customers
1
No
t sig
nific
an
t
Event would have little financial impact on either income or budget
Contained within individual service area. From a regulatory perspective, minor fines or penalties may have been suffered.
Employees may have suffered minor first aid injuries. Event may have resulted in localised staff morale problems.
Customers may have been minimally impacted. Event may impact minimally on achieving a performance target.
City Power Mid-Year Report – July to December 2013
16 January Page 72 of 82
Assessment of impact / severity
Financial Reputation Stakeholders Customers
2
Min
or
Event would have moderate financial impact (>2% on budget/income or >2%) on either income or budget.
Affects significant number of service areas but with likely short-term impact on public memory. From a regulatory perspective, fines or penalties >R50k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (suburban newspaper).
Employees may have suffered temporary disabling injuries. Event may have resulted in staff loss causing minor to moderate consequences.
Event may impact on achieving a performance target where a major milestone was missed by more than 1 month, impacting on a client segment.
3
Mo
de
rate
Event would have serious financial impact (>4 -6% on budget/income or >4%) on either income or budget.
Regulator inquiry with medium-term impact on public memory. From a regulatory perspective, fines or penalties >R100k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (local newspaper not front page).
Employees may have suffered multiple temporary disabling injuries. Event may have resulted in staff loss, causing serious consequences.
Event may impact on achieving a performance target where a major milestone was missed by more than 3 months and subsequent interruption over several days to customers.
4
Ma
jor
Event would have very serious financial impact (>8% on budget/ income or >8%) on either income or budget.
Medium-term public impact with minor political implications. From a regulatory perspective, fines or penalties >R150k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (national TV headlines) and loss of service >1 month.
Employees may have suffered multiple permanent disabling injuries. Event may have resulted in staff loss, causing very serious consequences.
Event may impact on achieving a performance target where a major milestone was missed by more than 6 months, resulting in a major customer impact.
5
Ca
tastr
op
hic
Event would have catastrophic financial impact (>15-25% on budget/income or >15%) on either income or budget.
Long-term impact on public memory and major political implications. From a regulatory perspective, fines or penalties >R500k may have been suffered. Customers may have been impacted resulting in complaints with media coverage (national TV headlines) and loss of service >6 months.
Employees may have suffered fatalities. Event may have resulted in staff loss, causing catastrophic consequences.
Event may impact on a performance target, where a major milestone was missed by more than 8 months to over 1 year.
Table below shows the criteria used to assess the likelihood of the risk occurring:
Likelihood Descriptor
Description Probability
Almost Certain – 8-9
Event has occurred within the last year repeatedly. The event is certain to occur within this financial year.
Likely – 6-7 Event has occurred within the last financial year. The event is likely to occur within this financial year.
Possible – 4-5 The event has a probability of occurring at some time, in the next year.
Event has been recorded within organization as well as within the sector in the last 2 years.
Unlikely – 2-3 Very few recorded or known incidents. Reasonable opportunity to occur or has occurred within other organizations within sector.
The event may occur at some time, within the next 2 years.
Rare - 1 Event may occur in exceptional circumstances. No recorded incidents or little opportunity for occurrence.
No event recorded in the last 3 years.
City Power Mid-Year Report – July to December 2013
16 January Page 73 of 82
The product of this Stage One assessment of impact and likelihood is an "Inherent Risk Score", which can range from a minimum of 1 to a maximum of 25, by multiplying the frequency and impact scores. Stage Two – Development of Risk Drivers and Risk Casual Model Risk drivers are those elements which tend to be the cause of the risk occurring. Risk drivers are a key process in risk management as they provide an in-depth understanding of the risk. Analysis of the drivers’ lead to the effective monitoring of the risk as well as the development of control measures to mitigate or manage the risk. These will be measured and monitored as per the next phase of this project. The formulation of risk drivers is to assist with the understanding of the risk (i.e. make the risk more tangible) and in the formulation of controls, both pre- and post and to manage / minimise the risk drivers, which in turn reduces the overall headline risk. If the drivers are not identified, then the process only provides a snapshot of the risks at a point in time. Monitoring and reporting Both the Strategic and Operational risks of the Company are monitored on a monthly and quarterly basis and the Strategic Risk Register of the Company forms part of the Risk, Assurance & Compliance Committee’s standing agenda items Auditing The monitoring and reporting process will be audited continuously.
City Power Mid-Year Report – July to December 2013
16 January Page 74 of 82
Strategic Risks Report
TOP 13 STRATEGIC RISKS STATUS REPORT
Objec-tives
Risk Description
Background to the risk
Risk Consequence Residual Risk
Current controls Q2 Mitigation Actions
1 Revenue Collection
Poor Revenue Collection
1. Inadequate credit control measures 2. Billing not correct/ complete
Poor cash flow and liquidity problems.
Orange 1. Conversion from conventional to pre- paid 2. Manage the Service Level Agreement with the City. 3. Advised the City to segment customer as required by accounting standards and NERSA. 4. Advised the City to re-introduce key customer executives.
The relationship with CoJ is yielding results (refer to 2 Quarter report), the current challenge is speed of prepaid conversion. The country will be going through elections next year and collection on domestic customers might be a problem, thus prepaid conversion would have assisted in this regard.
2 Improve Asset manage-ment
Cable theft Increase in copper price led to increase in network tempering and vandalism
1. Power interruptions. 2. Company image. 3. High insurance claims. 4. Loss of revenue. 5. Increase in operational expenditure.
Red 1. Improved security in hot spot areas. 2. Implemented Crime Intelligence systems. 3. Crime prevention strategy in place. 4. Implementation of crime prevention technologies.
1. Review current strategy. 2. Research to be done into new crime prevention technologies. 3. Community involvement and awareness to be addressed.
3 Customer Satisfaction
Customer dissatisfaction.
Causes include: outages, capacity demand, billing, etc. *Low level of positive public opinion (company image) Poor performing Call Centre
1. Low payment level. 2. Poor company image. 3. Loss of NERSA License 4. Loss of Customer Satisfaction
Orange 1. Manage SLA with the City. 2. Working with City to improve processes. 3. Internet faults logging system. 4. SMS messaging system for planned outages.
Value chains are still being updated and will be complete by 30 June 2013. Call centre need to receive more focus.
4 Energy Manage-ment
Inadequate supply of electricity
Inadequate capacity nationally will result in the starting up of the gas turbines and looking for alternative supply of energy.
Inadequate supply of electricity.
Orange 1. PPA agreement with Kelvin has expired where Eskom was giving CP price concessions. 2. Currently no control as all energy is purchased from Eskom.
Alternative sources of energy supply are being considered taking into account the budget constraints. This relates especially to the use of gas turbines where no budget has been allocated. Due to the PPA with Kelvin expiring with the advantages of the Eskom concessions given in that contract no energy is being acquired from Kelvin
City Power Mid-Year Report – July to December 2013
16 January Page 75 of 82
Objec-tives
Risk Description
Background to the risk
Risk Consequence Residual Risk
Current controls Q2 Mitigation Actions
currently. All energy is being acquired from Eskom and costs will be monitored.
5 Funding requirements
Business's inability to fund high capital and operational requirements out of current cash flows nor future tariff applications
Lack of funding. Company not able to obtain own funding.
1. Unable to meet the GDS, IDP, and Business Plan targets including electrification, inner-city project, public light, SHEQ etc. 2. Unable to refurbish the aging network at an acceptable rate *Not enough funds to upgrade the network e.g. 4th and 5th intake points 3. Compliance to MFMA Requirements.
Orange 1. Revenue Generating projects 2. PPP initiatives 3.Sourcing additional Grant Funding
Places to allocate the current year’s surplus will be analysed with the City. This will include looking into off balance sheet financing and obtaining additional grants from Treasury.
6 IT infrastrucutre
Non availability and reliability of Information & communication technology (ICT).
1. Extensive reliance on ICT 2. Lack of investment in ICT due to competing business priorities
1. Low productivity 2. Negative company image 3. Poor business performance
Red Currently reviewing and updating the Information security policies and the Disaster recovery strategy
1.Additional spending to be made on CAPEX for the current IT backbone. 2. Actions to address data management and what is handed over to the business.
7 Human Capital
Fraud & Corruption
Any form of Fraud & Corruption taken place, including financial, asset, gift, collusion, etc. Conflict of interest
Loss of assets and funds. Entity image is tarnished.
Orange 1. A fraud Policy has been introduced. 2. A fraud & corruption prevention plan is in place. 3. An illustrative list of strategic fraud risks is in place.
Presentations have been made to the audit committee and the next action is to conduct road shows to the business.
8 Obtain Unquali-fied Audit Opinion.
Qualified audit report.
Inadequate internal controls. Insufficient Financial Staff. Non-compliance to GRAP standards.
Weak Internal Controls. Non Compliance to GRAP Non-compliance to MFMA Improper Reporting
Red 1. Practicing good governance 2. Actively addressing all issues raised in the previous year's Management Report.
Further war plans for the future to be introduced. Monitoring by Internal Audit on an ongoing basis.
City Power Mid-Year Report – July to December 2013
16 January Page 76 of 82
Objec-tives
Risk Description
Background to the risk
Risk Consequence Residual Risk
Current controls Q2 Mitigation Actions
9 Revenue maximisation
Increase in non-technical losses
1. Meter tampering. Illegal Connections.2. Faulty Meters and no-access unable to bill customers 3. No meters at all
Loss of revenue and or cash NERSA Licence
Red 1. Installation of semi AMR, Tamper proof meters and pre-paid meters with protective structures; 2. Removal of illegal Connections and replaced with tamper proof meters with protective structures. 3. Currently utilising JMPD & SAPS to enforce by-laws. 4. Continuous installation audits; 5. Customer education programmes;
1, LPU ( large power users) will be audited to identify faults 2.Public awareness is to be increased. 3. More electrification will assist in bringing down illegal connections.
10 Improve
Asset management
Network interruptions
1. Age of the network 2. Uncontrollable events such as insufficient capital for upgrading and refurbishment of MV and LV network. 3. Theft & vandalism of infrastructure.
Low productivity Negative company image Poor business performance
Orange 1. Maintenance & Capital Investment programme in place. 2. Asset Management system in place. 3. Crime prevention strategy in place.
Introduction of condition monitoring group and continue to review crime prevention strategies.
11 Energy management
Inadequate capacity to meet the demand. (Eskom & Kelvin)
1. Eskom's failure to supply (generation and transmission) 2. Ability of the Eskom network to sustain the new capacity demand. Inability of Kelvin Power Station to supply at the required level in terms of the PPA.
Load Shedding. Red 1. City Power has applied for increased capacity from Eskom. 2. Investigating distributed generation options. Implementing DSM Programme. Resuscitate Gas Turbines.
Alternative energy sources are to be used. E.g: solar water geysers and solar powered street lights.
12 Human Capital Invest-ment
Potential impact of HIV and Aids on the workplace and the Business
World-wide pandemic. Impact on the organisation is linked to available skills and competencies
Reduced productivity Amber 1. On-going awareness and education 2. Roll out of planned interventions to address the areas identified e.g. Prevalence study, Cost impact analysis, etc
Action plans to address the following:
1. Ongoing HCTs.( HIV,counselling and testing).
2. Cost impact analysis.
3. Stringent
City Power Mid-Year Report – July to December 2013
16 January Page 77 of 82
Objec-tives
Risk Description
Background to the risk
Risk Consequence Residual Risk
Current controls Q2 Mitigation Actions
disease management.
4. Intervention projects for education and awareness.
5. Enhanced HIV/Aids Policy.
13 Human Capital Invest-ment
Lack of focused development of key skills
Process to identify training needs and focused process to address them are not 100% in place
Low productivity Amber 1. Focused and targeted skills development interventions. 2. Increase the number of workplace coaches
The following initiatives will be taken: 1. BTC training facility is being upgraded. 2. Reporting measures include reports on skills development undertaken in the business.
The above risk profile is subject to be audited to determine the effectiveness of control measures and such will form an integral part of the next report. STATUS OF RISK REGISTER City Power has identified 13 Strategic Risks for the current Financial Year but these risks may increase due to the continuous monitoring of the Framework and Business Operations. The key new risks recently identified emanated from the following streams:
• Fraud and Corruption per Department/Group
• Recent Unprotected Strike which resulted in sabotage activities
• National Key Point declaration This process is receiving urgent attention and the RAC Department (under the newly appointed Director) has prioritised some of the challenges facing the organisation and commits to addressing such in due course.
City Power Mid-Year Report – July to December 2013
16 January Page 78 of 82
8. GOVERNANCE
Board Meetings
ALL BOARD & COMMITTEE MEETINGS FOR THE 1
st & 2
nd QUARTERS OF THE FINANCIAL
YEAR Directors
&
Independent Audit Committee
Members
Board HR Risk,
Assurance
&
Compliance
Social
&
Ethics
Quarterly
Review
Audit
NO OF MEETINGS HELD IN
QUARTER 6 3 2 2 2 4
Directors
Rev F Chikane 6 of 6 - - 2 of 2 2 of 2 -
Mr N Galawe 6 of 6 - 2 of 2 2 of 2 - -
Ms Z Hlatshwayo 5 of 6 - - 2 of 2 2 of 2 -
Mr N Hlubi 6 of 6 - - - 2 of 2 4 of 4
Ms N Mohlala 6 of 6 3 of 3 - 1 of 1 0 of 0 -
Mr K Mokhobo (*see note below) 4 of 5 1 of 2 - 1 of 1 - 0 of 0
Mr D Naidu (*see note below) 3 of 3 2 of 2 1 of 1 - - -
Dr Y Ndema (*see note below) 3 of 3 - 1 of 1 - 0 of 0
Mr T Sithole (*see note below) 6 of 6 2 of 3 2 of 2 - - 2 of 2
Mr S Xulu 6 of 6 2 of 3 2 of 2 2 of 2 2 of 2 4 of 4
Independent Audit Committee
Ms L Fosu 0 of 0 - - - - 3 of 4
Mr W Hattingh 1 of 1 - - - - 4 of 4
Mr H Moolla 2 of 2 - - - - 4 of 4
DATES OF MEETINGS :
21 Aug ‘13
30 Aug ‘13
07 Sep ‘13
19 Oct ‘13
29 Nov ‘13
06 Dec ‘13
14 Aug ‘13
21 Nov ‘13
09 Dec ‘13
15 Aug ‘13
25 Nov ‘13
20 Aug ‘13
26 Nov ‘13
15 Jul ‘13
15 Oct ‘13
23 Aug ‘13
28 Aug ‘13
25 Nov ‘13
04 Dec ‘13
*Please see comment below under “Any director movements in that quarter including resignations, new appointments, reshuffling of Board Members in Board committees”.
City Power Mid-Year Report – July to December 2013
16 January Page 79 of 82
Directors and Top Management remuneration
Report on amounts of expenditure on directors’ remuneration per director during the mid-year. Executive Director
Surname Position Total (ZAR)
Mr S Xulu Managing Director (Appointed on 1 September 2012) 1 233 620
1 233 620
Non-Executive Directors
Surname Position Total (ZAR)
Rev F Chikane Chairperson 246 014
Adv G Badela Board Member (**see note below) 17 810
Mr N Galawe Board Member 108 925
Ms Z Hlatshwayo Board Member 110 620
Mr N Hlubi Board Member 195 918
Mr B Mofokeng Board Member (**see note below) 17 810
Ms N Mohlala Board Member 109 510
Mr K Mokhobo Board Member (*see note below) 40 513
Dr M Motebang Board Member (**see note below) 8 905
Mr D Naidu Board Member (*see note below) 30 230
Dr Y Ndema Board Member (*see note below) 50 517
Mr T Sithole Board Member (*see note below) 114 832
1 051 607
*Please see comment below under “Any director movements in that quarter including resignations, new appointments, reshuffling of Board Members in Board committees”. **Payments reflected are for Annual Retainer Fees for the 2012/2013 financial year paid at end of July 2013.
Independent Audit Committee Members
Surname Position Total (ZAR)
Ms L Fosu Independent Audit Member 40 423
Mr W Hattingh Independent Audit Member 65 919
Mr H Moolla Independent Audit Member 65 895
172 237
Executive Committee Members
Surname Position Total (ZAR)
Ms L Jarvis Acting Director: Finance (Seconded - thus not on CP payroll) – to 2013/08/31 -
Mr D Kanfer Acting Director: Finance (Seconded - thus not on CP payroll) – from 2013/09/01 -
Ms S Mafora Director: Human Resources 763 900
Mr N Msomi Acting Director: Engineering Services - to 2013/09/13 General Manager: Field Services PP North – from 2013/09/16 588 440
City Power Mid-Year Report – July to December 2013
16 January Page 80 of 82
Surname Position Total (ZAR)
Mr TM Nzimande Director: Engineering Services – joined 2013/09/16 547 579
Mr T Nkgoedi Director: Retail Services – acted until appointment on 2013/10/01 723 117
Mr D Pieterse Director: Engineering Operations 744 966
Ms NF Msiza Director: Risk, Assurance & Compliance from 2013/11/01 334 317
Mr M Smith Company Secretary 540 867
4 243 187
Board Functioning and Financial Management
Any director movements in the quarter including resignations, new appointments, reshuffling of board members in board committees There were a number of changes to the Board during the quarter under review. At the Mayoral Committee meeting held on 25 July 2013 a resolution was passed confirming the amended 11 March 2013 AGM Resolutions. The retirement of Adv G Badela and resignations of Mr B Mofokeng and Dr M Motebang was noted in the AGM Resolutions. On 19 July 2013, Mr K Mokhobo accepted his appointment to the Board, which occurred at the 11 March 2013 AGM. The Mayoral Committee resolution of 25 July 2013 also reappointed Dr Y Ndema to the Board together with Mr D Naidu and the appointment of Mr T Sithole to the Audit Committee. The Company Secretary’s Office has engaged with the Shareholder’s Group Governance to finalise the signing of the 11 March 2013 AGM Resolutions. A letter dated 21 October 2013 was received from Group Governance on 6 December 2013 informing the Board of the appointment of Mr K Mokhobo to the Audit Committee. Board noted the appointment at its meeting held on 6 December. Report on any special resolutions passed by the Board in that quarter and whether such have been registered with the Registrar
The Board passed no special resolutions during the quarter under review. Confirmation that no loans or advances have been made to the directors in this quarter It is confirmed that no loans or advances have been made to the directors. Confirmation that a register of directors’ declarations of conflict of interest is maintained (Entities should provide a report where directors has declared an interest in a contract by the Entity). It is confirmed that a register of directors’ declarations of conflict of interest is maintained. There were no interests declared by any director in any contract with the entity. Report on any irregular expenditure or any fruitless and wasteful expenditure discovered in the municipal entity. No irregular, fruitless and wasteful expenditure were reported during the period under review. Report on disposal of capital assets.
There has been no report of any disposal of capital assets.
City Power Mid-Year Report – July to December 2013
16 January Page 81 of 82
Abbreviation/ Acronym
Explanation/ Description
AA Affirmative Action
ABC Aerial Bundled Conductor
ADMD After Diversity Maximum Demand
AFS Annual Financial Statement
AG Auditor General
AMR Automated Meter Reading
AMI Automated Meter Infrastructure ( Smart meter)
BBS Behaviour Based Safety
BBBEE Broad Based Black Economic Empowerment
BTC Basic Training Centre
CAIDI Customer Average Interruption Duration Index. The average outage duration that any given customer would experience in a year. Computed as follows: SAIFI /SAIDI
CAIFI Customer Average Interruption Frequency Index. Measures the average number of interruptions per customer interrupted per year. Computed as follows: Total number of customer interruptions/customers experiencing one or more interruptions
Capex Capital Expenditure
CCMA Commission for Conciliation, Mediation and Arbitration
COJ City of Johannesburg
DIFR Disabling Injury Frequency
DoE Department of Energy
DME Department Mineral and Energy
DSM Demand Side Management
EAP Employees Assistant Programme
EPWP Expanded Public Works Programme
EWSETA Energy and Water Sector Education and Training Authority
FBE Free Basic Electricity
FY Financial Year
GDS Growth and Development Strategy
GRAP Generally Recognised Accounting Practice HIV Human Immunodeficiency Virus
HR Human Resources
HV High Voltage
IBT Inclining Block Tariff
IDP Integrated Development Plan
ISO Internal Organisation for Standardization
JMPD Johannesburg Metro Police Department
KPA Key Performance Area
KPI Key Performance Indicator
kWh Kilowatt Hours
LLF Local Labour Forum
LPU Large Power User
MD Managing Director
MDMS Master Data Management System
MOE Municipal Owned Entity
MRQC Meter Reading Quality Control
MV Medium Voltage
MVA Motor vehicle accident
MW Megawatts
MYPD Multi Year Price Determination
NERSA National Energy Regulator of South Africa
NIHL Noise Induced Hearing Loss NRS National Rationalised Standards
NT National Treasury
OPEX Operating Expenditure
PCons Public Contributions
R&CRM Revenue and Customer Relationship Management
RAC Risk Assurance and Compliance Department
City Power Mid-Year Report – July to December 2013
16 January Page 82 of 82
RAT Remote Access Terminal
RNC Revenue Nerve Centre
SABS South African Bureau of Standards
SAIDI System Average Interruption Duration Index. Total duration for an interruption for an average customer for the year. Computed as follows: Customer interruptions duration/Total number of customers served
SAIFI System Average Interruption Frequency Index. The average number of times that a system customer experiences an outage during the year. Computed as follows: Customer interruptions/Total number of customers serviced
SANS South Africa National Standards
SAP System Application and Production in Data Processing
SCM Supply Chain Management
SMD Scrap Metal Dealers STEP Service Delivery, Transformation, Excellence, Performance SHEQ Safety Health Environment and Quality
SLA Service Level Agreement
SWH Solar Water Heating
TAT Turn Around Time
USDG Urban Settlement Development Grant
VDO Vehicle Display Output
YTD Year to Date