City of Ekurhuleni Cost of Electricity Supply Study

City of Ekurhuleni Cost of Electricity Supply Study 65th AMEU(SA) CONVENTION 2016 3-5 OCTOBER 2016 EMERALD RESORT AND CASINO Presented by : Stephen Delport, Chief Engineer: Metering and Tariffs Dr Johan Delport, EEMS

Contents 1. Background 2. Application of the P 5 philosophy 3. Results 4. Lessons learnt

OVERVIEW OF THE ENERGY DEPARTMENT ELECTRICITY DISTRIBUTION IN THE CITY OF EKURHULENI Current replacement value of distribution network = R27 billion Value of bill paid to Eskom for July 2016 consumption > R1,35 billion. Number of Major Eskom Intake Points = 56 CoE number of households 1 015 465 Households with access to electricity 82.2% (834 712)

City of Ekurhuleni CoS Background This is not an exercise to balance the books It is to determine the true cost of electricity supply and losses NERSA s Cost of supply framework was not used, but NRS 058 was used NRS 058 (Cost of Supply Methodology for the application in the Electrical Distribution industry) prescribes how to regulate energy prices to different customer classes whilst being fair and equitable and at the same time yielding the expected budgetary income per annum Head of Department Mark Wilson has decided to conduct a cost of supply study in accordance with NRS058 as this methodology has not been incorporated in its tariff base yet. The first study was in 2014, with an update in 2016. The effect of the results are not yet incorporated into the existing electricity tariffs

Cost of Supply Methodology Where Equals Description (c/kwh) Total CoS Total Cost of Supply Total cost of supplying electricity P1 Power All costs related to pay the supplier(s) costs for energy. Technical losses included P2 Parts All costs related to the assets of the Electricity Department. Work with replacement value P3 People All costs related to the people of the Electricity Department P4 Pain Total cost of Non-technical losses P5 Profit If expanded, the surplus can be included in the cost of supply study.

P 1 = Power [1/4] Construct a Supply load profile of all supply points: add load profiles per point of delivery calculate diversity per month Construct a load profile per tariff group with AMR data add load profiles per customer in the tariff group calculate diversity per month per tariff group with similar load profile use a load profile and scale it to the monthly statistics Calculate the technical losses according to voltage levels and add to tariff group

P 1 = Power [2/4] Calculate the difference between Supply and Tariff groups = Non-technical losses each one s contribution to the total electricity (power) cost. Remember calculate the cost of each tariff group AND include the technical losses the cost must be calculated using only the energy SOLD (less than energy sold and technical losses)!! this will give a c/kwh that is more than the c/kwh of all energy taken into account Calculate the c/kwh per tariff group and non-technical losses

2014/07/21 00:30 2014/07/21 04:30 2014/07/21 08:30 2014/07/21 12:30 2014/07/21 16:30 2014/07/21 20:30 2014/07/22 00:30 2014/07/22 04:30 2014/07/22 08:30 2014/07/22 12:30 2014/07/22 16:30 2014/07/22 20:30 2014/07/23 00:30 2014/07/23 04:30 2014/07/23 08:30 2014/07/23 12:30 2014/07/23 16:30 2014/07/23 20:30 2014/07/24 00:30 2014/07/24 04:30 2014/07/24 08:30 2014/07/24 12:30 2014/07/24 16:30 2014/07/24 20:30 2014/07/25 00:30 2014/07/25 04:30 2014/07/25 08:30 2014/07/25 12:30 2014/07/25 16:30 2014/07/25 20:30 2014/07/26 00:30 2014/07/26 04:30 2014/07/26 08:30 2014/07/26 12:30 2014/07/26 16:30 2014/07/26 20:30 2014/07/27 00:30 2014/07/27 04:30 2014/07/27 08:30 2014/07/27 12:30 2014/07/27 16:30 2014/07/27 20:30 kwh Stacked per Tariff Group P 1 = Disaggregated Load Profile [3/4] 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 -

2014/07/21 00:30 2014/07/21 05:00 2014/07/21 09:30 2014/07/21 14:00 2014/07/21 18:30 2014/07/21 23:00 2014/07/22 03:30 2014/07/22 08:00 2014/07/22 12:30 2014/07/22 17:00 2014/07/22 21:30 2014/07/23 02:00 2014/07/23 06:30 2014/07/23 11:00 2014/07/23 15:30 2014/07/23 20:00 2014/07/24 00:30 2014/07/24 05:00 2014/07/24 09:30 2014/07/24 14:00 2014/07/24 18:30 2014/07/24 23:00 2014/07/25 03:30 2014/07/25 08:00 2014/07/25 12:30 2014/07/25 17:00 2014/07/25 21:30 2014/07/26 02:00 2014/07/26 06:30 2014/07/26 11:00 2014/07/26 15:30 2014/07/26 20:00 2014/07/27 00:30 2014/07/27 05:00 2014/07/27 09:30 2014/07/27 14:00 2014/07/27 18:30 2014/07/27 23:00 kwh Stacked per Losses kwh Eskom P 1 = Losses [4/4] 250,000 900,000 800,000 200,000 700,000 150,000 600,000 500,000 100,000 400,000 300,000 50,000 200,000 100,000 - - Technical Losses Non-technical losses Sum of P (kwh) Eskom Intakes (kwh)

P 2 = Parts According to NRS058, it is better to work with replacement cost of assets Get the asset information according to different voltage levels Normally linked to tariff groups Calculate the assets according to the tariff groups the tariff group with the highest voltage will carry only the cost of those assets necessary to supply them the tariff group with the lowest voltage will carry all the assets necessary to supply them Calculate the average cost in c/kwh per tariff group

P 3 = People The ideal situation is if records are kept of all maintenance, linked to a tariff group Normally, the higher the voltage the less maintenance Distribute the cost according to the voltage level Calculate the average cost in c/kwh per tariff group

Ekurhuleni 13/14 Tariff E <=11kV Ekurhuleni 14/15 Resellers <= 400V Ekurhuleni 14/15 Resellers >400V Ekurhuleni 14/15 Tariff A Bus Ekurhuleni 14/15 Tariff B Bus 100A 3P Ekurhuleni 14/15 Tariff B Bus 100A 3P No Ekurhuleni 14/15 Tariff B Bus 125A 3P NOF Ekurhuleni 14/15 Tariff B Bus 150A 3P Ekurhuleni 14/15 Tariff B Bus 150A 3P NOF Ekurhuleni 14/15 Tariff B Bus 160A 3P No Ekurhuleni 14/15 Tariff B Bus 200A 3P No Ekurhuleni 14/15 Tariff B Bus 40A 3P Ekurhuleni 14/15 Tariff B Bus 50A 3P Ekurhuleni 14/15 Tariff B Bus 60A 3P Ekurhuleni 14/15 Tariff B Bus 60A 3P No Online Ekurhuleni 14/15 Tariff B Bus 70A 3P Ekurhuleni 14/15 Tariff B Bus 80A 3P Ekurhuleni 14/15 Tariff B Bus 90A 3P NOF Ekurhuleni 14/15 Tariff B Res Ekurhuleni 14/15 Tariff B Res NOF Ekurhuleni 14/15 Tariff C <=11kV Ekurhuleni 14/15 Tariff C <=11kV No NAC Ekurhuleni 14/15 Tariff C 400V Ekurhuleni 14/15 Tariff C 400V No NAC Ekurhuleni 14/15 Tariff C 400V (Substation Ekurhuleni 14/15 Tariff C Off-Peak 11kV Ekurhuleni 14/15 Tariff C Off-Peak 400V Ekurhuleni 14/15 Tariff D <=11kV Ekurhuleni 14/15 Tariff D > 11kV Ekurhuleni 14/15 Tariff D 400V Ekurhuleni 14/15 Tariff D NCP Ekurhuleni 14/15 Tariff E <=11kV Ekurhuleni 14/15 Tariff E > 11kV Ekurhuleni 14/15 Tariff E 400V Ekurhuleni 14/15 Tariff E 400V (Substation Ekurhuleni 14/15 Tariff E 400V No NAC Ergo Conv Residential Conv Commercial ALL CCC's Street & Masts Lighting & Traff L Deptemental Civic Centre etc. All CCC's Prepaid +FBE c/kwh Total Cost of Supply - Extract 180 160 140 120 100 80 60 40 20 0 Power c/kwh Parts c/kwh People c/kwh PAIN (Non-technical losses) c/kwh Profit (Surplus) c/kwh

P 4 = PAIN Non-technical losses are not only theft!!! Also in the financial department The ideal situation is if check meters can report where the most non-technical losses are Calculate the total cost of non-technical losses (done under P 1 ) and distribute it as a c/kwh to each tariff group.

P 5 = Profit (surplus) According to the philosophy of the Municipality, the profit (surplus) can be distributed to the tariff groups as a c/kwh

CoS tariff results with Surplus (average for year)

CoS tariff results with Surplus (monthly)

CoS tariff results with Surplus (average for year)

CoS tariff results with Surplus (average for year)

Total Cost of Supply Extract of various tariffs Tariff Group Name Pow er c/kwh Parts c/kwh People c/kwh PAIN (Nontechnical losses) c/kwh Profit (Surplus) c/kwh Total c/kwh, excluding surplus Total c/kwh, including surplus Income in c/kwh Tariff A Business 78.6853 21.6221 41.4915 7.9690 9.5788 149.7679 159.3467 159.2372 Tariff B Res 114.3747 21.6221 41.4915 7.9690 9.5788 185.4573 195.0361 141.0023 Tariff C <=11kV 74.2370 19.6406 37.5398 7.9690 9.5788 139.3864 148.9652 121.6891 Tariff C <=11kV No NAC 82.0122 19.6406 37.5398 7.9690 9.5788 147.1616 156.7404 118.124 Tariff C 400V 79.4773 21.6221 41.4915 7.9690 9.5788 150.5599 160.1387 125.3356 Tariff C 400V (Substation Supply) 75.8565 21.6221 41.4915 7.9690 9.5788 146.9391 156.5179 125.91 Tariff C Off-Peak 11kV 78.2243 19.6406 37.5398 7.9690 9.5788 143.3737 152.9525 148.5502 Tariff C Off-Peak 400V 87.8705 21.6221 41.4915 7.9690 9.5788 158.9531 168.5319 146.9479 Tariff D <=11kV 68.4470 19.6406 37.5398 7.9690 9.5788 133.5964 143.1752 95.7715 Tariff D > 11kV 64.1788 4.2077 6.1036 7.9690 9.5788 82.4591 92.0379 86.1888 Tariff D 400V (Substation Supply) 101.3359 21.6221 41.4915 7.9690 9.5788 172.4185 181.9973 141.0008 Tariff E <=11kV 72.3112 19.6406 37.5398 7.9690 9.5788 137.4606 147.0394 111.9694 Tariff E > 11kV 73.9145 4.2077 6.1036 7.9690 9.5788 92.1948 101.7736 114.2018 Tariff E 400V 78.7394 21.6221 41.4915 7.9690 9.5788 149.8220 159.4008 128.6043 Tariff E 400V (Substation supply) Tariff E 400V No 75.7176 21.6221 41.4915 7.9690 9.5788 146.8002 156.3790 122.727

Non-technical losses All CCC's Prepaid +FBE Deptemental Civic Centre etc. Ekurhuleni 14/15 Tariff D <=11kV Ekurhuleni 14/15 Tariff B Res Ekurhuleni 14/15 Resellers <= 400V Ekurhuleni 14/15 Tariff B Res NOF Ekurhuleni 14/15 Tariff E 400V No NAC Ergo Ekurhuleni 14/15 Tariff E 400V Ekurhuleni 14/15 Tariff B Bus 60A 3P No Online Conv Residential ALL CCC's Street & Masts Lighting & Traff L Ekurhuleni 14/15 Resellers >400V Ekurhuleni 14/15 Tariff C <=11kV No NAC Ekurhuleni 13/14 Tariff E <=11kV Ekurhuleni 14/15 Tariff E 400V (Substation Ekurhuleni 14/15 Tariff B Bus 90A 3P NOF Ekurhuleni 14/15 Tariff D NCP Conv Commercial Ekurhuleni 14/15 Tariff C 400V (Substation Ekurhuleni 14/15 Tariff E <=11kV Ekurhuleni 14/15 Tariff D 400V Ekurhuleni 14/15 Tariff C <=11kV Ekurhuleni 14/15 Tariff B Bus 70A 3P Ekurhuleni 14/15 Tariff B Bus 160A 3P No Ekurhuleni 14/15 Tariff C 400V Ekurhuleni 14/15 Tariff B Bus 150A 3P Ekurhuleni 14/15 Tariff B Bus 100A 3P No Ekurhuleni 14/15 Tariff D > 11kV Ekurhuleni 14/15 Tariff B Bus 125A 3P NOF Ekurhuleni 14/15 Tariff B Bus 150A 3P NOF Ekurhuleni 14/15 Tariff C Off-Peak 400V Ekurhuleni 14/15 Tariff B Bus 60A 3P Ekurhuleni 14/15 Tariff B Bus 40A 3P Ekurhuleni 14/15 Tariff B Bus 80A 3P Ekurhuleni 14/15 Tariff E > 11kV Ekurhuleni 14/15 Tariff B Bus 100A 3P Ekurhuleni 14/15 Tariff C Off-Peak 11kV Ekurhuleni 14/15 Tariff A Bus Ekurhuleni 14/15 Tariff B Bus 200A 3P No Ekurhuleni 14/15 Tariff B Bus 50A 3P Ekurhuleni 14/15 Tariff C 400V No NAC c/kwh Income vs Cost per tariff sorted from worst deficit to highest surplus 200 Total Cost of Supply for all tariffs calculated 150 100 50 0-50 -100 Power c/kwh Parts c/kwh People c/kwh PAIN (Non-technical losses) c/kwh Difference in c/kwh cost and income

CoE Resellers Tariff Lessons learnt with regard to Resellers of Electricity With the information currently available, it is not possible to recommend what discount or more favourable tariff a Reseller is entitled to. It is proposed that a study be completed to quantify the actual cost per customer per tariff group to the Municipality. That will include things like meter reading (manual or AMR), bills, stamps, envelopes, chasing of payments, nontechnical losses, etc. The outcomes of this study will help to quantify the benefits that could be passed on to the reseller segments, if any.

Typical Domestic Resellers Profile

Typical Electrification area Profile IBT Tariff

Do an Energy Balance kwh Purchases = Sales + Technical Losses + Non-Technical Losses + Admin Losses!

Conclusion It is recommended that all municipalities execute a detailed CoS study. The good data records of the CoE assisted in making this study somewhat easier as far as that component goes, but the sheer size of a City made the study fairly complex. It is therefor recommended that:- A Municipality rather APPOINT an electricity tariff specialist to do a costof-supply study as guided by NRS 058.

We Thank You!