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ECB Annual Report 2013

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Namibia power scenario

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  • 1 1

    Vision, Mission, Corporate Values ..............................................................................................................................................................4

    Abbreviations/Acronyms ...........................................................................................................................................................................6

    ECB Board Members ....................................................................................................................................................................................8

    ECB Management ........................................................................................................................................................................................9

    Chairpersons 2013 Annual Report Contribution ....................................................................................................................................10

    Access ...........................................................................................................................................................................................10

    Affordability and end user focus ...............................................................................................................................................11

    Electricity sector performance ...................................................................................................................................................11

    Security of supply........................................................................................................................................................................11

    Strengthening stakeholder engagement modalities. .............................................................................................................12

    Chief Executive Officers Report................................................................................................................................................................14Highlights .....................................................................................................................................................................................14

    Cross Cutting Matters ..................................................................................................................................................................16

    Legislative Report .........................................................................................................................................................16

    Electricity and Energy Regulatory Authority Bills .......................................................................................16

    Regulatory Instruments .................................................................................................................................17

    Competition and Fair Play .............................................................................................................................17

    Challenges with Regulation Of Farmer Schemes .......................................................................................17

    Corporate Governance Compliance ...........................................................................................................................................18

    Public Relations and Stakeholder Management .....................................................................................................................18

    Corporate Social Responsibility ...................................................................................................................................19

    Human Resources .......................................................................................................................................................................19

    Recruitment, Selection and Turnover .........................................................................................................................20

    Staff Numbers ...............................................................................................................................................................20

    Staff Turnover ................................................................................................................................................................20

    Promotion......................................................................................................................................................................20

    Key Challenge Experienced .........................................................................................................................................20

    Training and Development ..........................................................................................................................................20

    Employee Wellness ......................................................................................................................................................21

    Information Communication Technology .................................................................................................................................21

    Economic Regulation ..................................................................................................................................................................22

    Tariffs .............................................................................................................................................................................22

    Approved tariffs .............................................................................................................................................22

    Cost Reflectivity of Tariffs ..............................................................................................................................24Local Authority Surcharge .............................................................................................................................24

    Transformation of the Single Buyer to Modified Single Buyer Market Model ........................................24Economic Regulation Projects .....................................................................................................................................25

    Technical Regulation ...................................................................................................................................................................28

    Quality of Supply Profile for the Namibian ESI ..........................................................................................................28Quality of Supply for Local Authorities the Case of Okahandja and Rehoboth ...................................................28

    Applicable Standards ....................................................................................................................................................28

    Dip and Swell Assessment ..........................................................................................................................................28

    Supply Reliability Assessment ....................................................................................................................................28

    Contents

  • 2Voltage Magnitude .......................................................................................................................................................29

    Voltage Unbalance .......................................................................................................................................................29

    Quality of Service Standards........................................................................................................................................29

    Customer Complaints ...................................................................................................................................................29

    Wiremens Licensing in the Namibian ESI ..................................................................................................................30

    Technical Audit of the ESI ............................................................................................................................................31

    Assessment of Power Supply Status to Essential Service Facilities .........................................................................31

    Demand Side Management (DSM) Initiatives .........................................................................................................................31

    Renewable Energy and Energy Efficiency ................................................................................................................................32Renewable Energy Procurement Mechanism ...........................................................................................................33

    Addressing the Security of Supply through the NIRP Development .....................................................................................33

    Overview of the NIRP Process .....................................................................................................................................33

    Planning Parameters and Criteria ...............................................................................................................................33

    The NIRP Reference Demand Forecast .......................................................................................................................34

    Technical Regulatory Tools .........................................................................................................................................................34

    Technical Rules ..............................................................................................................................................................34

    Grid Code .......................................................................................................................................................................35

    Safety Code ...................................................................................................................................................................35

    Optimised Maintenance Guidelines ...........................................................................................................................35

    Distribution Infrastructure Standards ..........................................................................................................................35

    Audit Manual ................................................................................................................................................................35

    Licensing ......................................................................................................................................................................................37

    New Licenses ................................................................................................................................................................37

    Amended Licenses .........................................................................................................................................37

    Renewed Licenses .........................................................................................................................................37

    License Applications under Review .............................................................................................................37

    Independent Power Producers (IPPs) ..........................................................................................................37

    Industry Analysis .........................................................................................................................................................................38

    Performance Management in the Electricity Sector .................................................................................................38

    Licensing Compliance ...................................................................................................................................................38

    Customer Complaints ...................................................................................................................................................39

    Performance of Regional Electricity Distributors .......................................................................................................39

    Performance of Distributors Outside the RED Areas .................................................................................................40

    Performance by Municipal Electricity Distributors.....................................................................................................41

    Performance by Village Authority Distributors ..........................................................................................................42

    Performance by NamPowers Distribution Areas ......................................................................................................42

    Performance of Farmer Schemes ...............................................................................................................................43

    Transmission Overview ................................................................................................................................................43

    Generation Overview ...................................................................................................................................................44

    Key ESI Statistics ..........................................................................................................................................................................45

    Status of Strategic Plan Projects ................................................................................................................................................49

    Regional & International Activities............................................................................................................................................49

    RERA Activities ..............................................................................................................................................................49

    African Forum for Utility Regulators (AFUR) Training ...............................................................................................50

    Electricity Markets, Cross Border Trading and Power Pools .....................................................................................50

    Consumer Participation in Regulation of the Infrastructure Sector .........................................................................50

    World Energy Council ...................................................................................................................................................50

    Annual Financial Statements ...................................................................................................................................................................52

  • 3

  • 4 VisionTo be recognised as a leading regulator for achieving optimum viability and competition in the Namibian energy industry.

    Mission StatementTo regulate and control the Namibian ESI in the interest of all stakeholders with regard to price, quality and reliability

    Corporate Values ProfessionalismTo conduct every task to a standard of excellence and to maintain the highest level of technical competence and personal

    integrity / efficiency so as to ensure the satisfaction of all stakeholders.

    IntegrityTo be accountable and act in accordance with government policy and accept full responsibility of all outcomes; to be transparent.

    open, honest and fair in all dealings and communications with stakeholders.

    InnovationTo innovate through learning, teamwork and knowledge-sharing in order to remain competitive in the market and continue

    to deliver excellent service.

    SustainabilityTo ensure the endowment of Namibias energy resources are available to present and future generations by considering our

    economic, environmental and social responsibility.

    Vision, Mission Statement and Corporate

    Values

  • 5

  • 6Abbreviations /Acronyms

    AFUR ....................African Forum for Utility Regulation

    CBI .......................Capacity Building Institute

    CEC .......................Copper Belt Energy Corporation

    CENORED .............Central Northern Electricity

    CEO ......................Chief Executive OfficerCSI ........................Corporate Social Investment

    DSM .....................Demand Side Management

    ECB ......................Electricity Control Board

    EDI .......................Electricity Distribution Industry

    ELS .......................Commonwealth Special Advisory Services

    Division: Economic and Legal Section

    EPMS ...................Employee Performance System

    ESI ........................Electricity Supply Industry

    ETSIP ....................Education and Training Sector

    Improvement Programme

    Fig ........................Figure

    Gx ........................Generation

    HIV .......................Human Immunodeficiency VirusIPP .......................Independent Power Producers

    KWh .....................Kilo Watt Hour

    LA ........................Local Authority

    LHPC ....................Lunsemfwa Hydro Power Company

    LPU ......................Larger Power Use

    LRNC ....................Long Run National Cost

    MME ....................Ministry of Mines and Energy

    MW ......................Mega Watts

    NAMCOR .............Namibia Petroleum Corporation

    NAMPOWER ........Namibia Power Corporation

    NAMREP ..............Namibia Renewable Programme

    NEF ......................National Energy Regulation

    NIRP ....................National Integrated Resource Plan

    NESC ....................Namibia Electricity Safety Code

    NGO .....................Non-governmental Organisation

    NMC .....................Namibia Medical Care

    NORED .................Northern Electricity Distributor

    NP ........................NamPower

    PPA ......................Power Purchase Agreement

    PV ........................Photovoltaic

    QoS ......................Quality of Supply

    RE ........................Renewable Energy

    REDs ....................Regional Electricity Distributors

    RERA ....................Regional Electricity Regulators

    .............................Association of Southern Africa

    REEEI ....................Renewable Energy and Energy

    Efficiency InstituteREEEP ...................Renewable Energy and Energy

    Efficiency ProgrammeRC ........................Regional Council

    SADC ....................Southern Africa Development

    Community

    SAPP ....................Southern African Power Pool

    SNIED...................Sam Nujoma Innovative Enterprise

    Development

    Tx .........................Transmission

    TOU ......................Time of Use

    ZESA.....................Zambian Electricity Supply Agency

  • 7

  • 8ECB Board Members

    Standing from left to right:

    Mr. Gottlieb HindaMember of the Board. Financial and investment expert. Currently the Head of Business Support & Development at the

    Development Bank of Namibia.

    Mr. Siseho C. SimasikuChief Executive Officer, ex officio Member of the Board

    Mr. Fritz JeskeMember of the Board and the Finance & Audit Committee and Chairperson of the Pricing & Tariffs Committee. Electric

    Engineer with over 35 years experience. Currently CEO of Bicon Namibia Consulting Engineers

    Mr. Gerson KatjimuneMember of the Board and Chairperson the Finance & Audit Committee. Retired Economist. Currently a farmer.

    Seated from left to right: Mr. Jason NandagoChairperson & Member of the Human Resources and Remuneration and Pricing and Tariffs Sub Committee. Economist with

    20 years experience, currently Managing Director of Metropolitan Namibia (Pty) Ltd

    Mrs. Panduleni N. ShimutwikeniVice Chairperson of the Board and Chairperson of the Human Resources and Remuneration Sub-Committee. Lawyer, and

    currently the Secretary to the National Council of Namibia.

  • 9 9

    ECB Management

    From left to right:

    Mr. Francois Robinson: Manager Regulatory Support Services

    Mr. Pinehas Mutota: Manager Economic Regulation

    Mr. Rojas Manyame: General Manager Regulation

    Mr. Siseho C. Simasiku: Chief Executive Officer

    Ms. Mara Uazenga: General Manager Finance and Administration

    Dr. Maxwell Muyambo: Manager Technical Regulation

    Ms. Damoline Muruko: Manager Corporate Communication and Legal Services

    Mr. Kenneth !Gaoseb: Manager Human Resources

  • 10

    Chairpersons Report

    It is with sincere appreciation and a great sense of achievement that I, on

    behalf of the Electricity Control Boards (ECB) board members, present the

    2012 ECB Annual Report.

    Despite the various challenges faced in the Namibian ESI, including short-

    age of generation capacity and rising costs, I am proud to confirm that the ECB has posted notable achievements to improve the plight of the Namib-

    ian electricity consumer regarding access, affordability and availability of

    electricity as well as improving the sector performance. The main focus of

    the review period was further consolidation and enforcement of the regula-

    tory regime to enable the above achievements.

    AccessThe industrialisation status aspirations articulated in the national develop-

    ment plan or Vision 2030 document are complemented by the 2010 SADC

    Regional Energy Access Strategy and Action Plan report which sets specific targets and detailed action plans. To generate the desired impact, Namibias roadmap cannot be implemented in isolation, but through building up on the progressive regional initiatives. For

    this to happen more effectively however, it is the ECB intention to streamline access- related issues to ensure that at both national and

    regional levels, a common denominator is the point of reference.

    These issues include:

    Consensus and consistency on a concise, clear definition of access Consensus on quantitative and qualitative methods used for national statistical data collection, review and verification.

    To illustrate a case in point, the current access to electricity in Namibia is about 45 50%, taking into account the fact that urban Na-

    mibia is regarded as at least 78% electrified and electricity access in rural Namibia is at about 14%. In terms of the 2010 Master Plan on Rural Electricity Distribution, access to electricity is defined as a household being within 500m radius from a low voltage supply point (distribution transformer). During the update and review of the older version of the aforementioned Master Plan, the methodology that

    was used to assess electricity access in rural areas was counting the number of electrified villages (homesteads) in the whole country and use that figure as a ratio of the total number of villages (homesteads) countrywide.

  • 11 11

    Affordability and end user focusThe ECBs role in tariff setting remains crucial in ensuring that there is a healthy balance between affordability and sustainable operation

    of the electricity sector.

    The regulator remains committed ensuring that electricity tariffs remains cost reflective to sustain utility operations, promote economic development, and to attract private sector investment/participation.

    The cost of electricity remained on the increases mainly because of steadily rising generation, transmission and distribution costs. Elec-

    tricity consumers earning low-income and poor households in particular face an increasing burden to pay for their basic energy needs.

    In ensuring that the low income Namibians and the poor households have access to affordable electricity, the ECB commissioned a

    project to devise a support tariff mechanism for low-income or vulnerable electricity users. In addition to promoting tariff affordability

    for low income groups.

    Electricity sector performanceWith zero load shedding experienced in the Namibia ESI to date, the Namibia electricity sector has done exceptionally well in compari-

    son with other players in the SADC region and beyond. Naturally, these high reliability levels always come at high cost and the regulator

    has exercised sufficient prudence in consistently maintaining sustainable cost reflective tariffs as a fundamental requirement. Looking forward, the regulator intends to investigate and support implementation of practical efficiency measures to reduce the additional cost needed to sustain the current reliability levels.

    It is important therefore, that electricity tariffs are not looked at in isolation, but concurrently with verifiable indicators of quality of sup-ply and service standards that will justify the end customers value for money.

    The regional electricity supply situation continues to face challenges caused in part, by lack of adequate investment in the sector.

    Despite the huge potential, many conceptualised power generation projects have not been implemented/realised. Apart from lack of

    political commitment and preference of national priorities to regional ones, non-implementation of cost reflective tariffs has been one of the major reasons. Since many power utilities have not been properly capitalised to enable them to implement generation projects

    on the strength of their own balance sheets, they need to go into partnership agreements with private investors. The fact that electricity

    tariffs are not cost-reflective has discouraged private investors from making investment commitments in the regions power sector, a fact that has on average, worsened the reliability of electricity supply in the region.

    It is unfortunate that those countries including Namibia that relied on electricity imports have not yet.

    Security of supply Reliable supply of affordable Energy is critical for national development and hence a national security issue.

    The power supply situation is currently critical and is expected to remain as such until the Kudu Gas Power Plant comes on stream in

    2018. The countrys current maximum (peak) demand is estimated at about 534 MW and grows by 4% annually. Namibia relies heavily

    on imports of electricity ranging from 40% to 80% depending on the available internal generating capacity subject to seasonal vari-

    ability of climatic/hydrological conditions and other factors.

    Desirous to effectively address Namibias security of supply against the backdrop of perennial insufficient generation capacity within the SADC region, the Ministry of Mines and Energy (MME) developed a National Integrated Resource Plan (NIRP).

  • 12

    The NIRP development project commenced on 1 July 2011 and was completed on 30 April 2013, with the submission of the final report which is expected to become public soon after endorsement and approval by the Minister of Mines and Energy. The first step in preparing the NIRP was to develop a power-system demand forecast for the period 2011-2031. This considered the likely requirements

    in each sector of the economy, reflecting projected economic and population growth rates. The forecast was adjusted by offsets from energy efficiency gains considered possible from implementation of demand-side management programmes. Consideration was also given to the achievement of Vision 2030 in the forecast.

    Between 2012 and 2031 peak demand is projected to rise from 550 MW to 1100 MW while the energy demand is expected to rise

    from 3,5 TWh to 7,5 TWh. A full range of power-generation technologies that could be of interest in Namibia were identified and parameters, such as capital cost, operating cost, production capability and grid-connection costs, were estimated for each technology.

    Using a generation-planning model, a large number of sequences consisting of combinations of generating plants that could satisfy the

    projected power-system needs at a specified level of reliability was analysed.

    The recommended NIRP will require a significant increase in investment in new generation and transmission assets to meet the countrys increased power demands resulting from economic growth. The planned approach will reduce power imports primarily

    through development of the Kudu power plant operating on Namibias offshore natural gas reserves, as well as increased use of

    renewable power by developing solar PV, concentrated solar power (CSP) and wind-power plants. Taking advantage of the fact that

    Namibia has one of the best solar radiation rates in the world, the Government is enabling the development of solar photovoltaic power

    generation technologies through a special purpose vehicle, the Project Steering Committee (PSC) established to facilitate procurement

    of 30 MW through a competitive bidding process. The adopted procurement mechanisms take care of all other renewable energy

    technologies. The demand-side management program, complemented by the envisaged measurement and verification protocols/guidelines, is expected to improve energy efficiency.

    Strengthening stakeholder engagement modalitiesIn order to improve on the engagement modalities with the key stakeholders, the ECB has prioritized Information sharing and keeping

    the ECB up-to-date on relevant technical and engineering matters as an objective on the ECBs Strategic Plan. This is intended to

    enhance regular consultations with MME, our licensees and end-use customers on various matters affecting the Electricity Supply

    Industry as well as timely provision of any relevant information or any other type of assistance that may be required by our stakeholders.

    During the period under review, the ECB continued to promote good governance in the electricity sector by consistently observing the

    principles of transparency, accountability, predictability and stakeholder involvement in its decision-making processes.

    The ECB is excited about the future as it steers the ESI into a new era with a strong requirement for more broad based participation on

    all levels of the economy, where the ESI is required to be an enabler for growth and prosperity.

    I wish to thank our valued stakeholders for their active participation and involvement in regulatory matters of the ESI as their

    contributions were instrumental in enabling the Regulator to achieve its set objectives.

  • 13

  • 14

    Chief Executive Officers Report

    HighlightsThe Electricity Control Board continued to encourage, solicit and facilitate

    stakeholder participation in the affairs and activities of the Electricity Supply

    Industry (ESI). Of great concern to stakeholders and policy makers alike

    was the security of electricity supply in the immediate and medium term,

    given the predictions of severe shortages of power in the SADC region in

    the coming years.

    The power supply situation remains a serious challenge until the expected

    commissioning of the Kudu Gas Power Plant in 2018. The National Utility has

    put measures in place through Short Term Critical Supply (STCS) programmes

    which should help the country manage the crisis until at least 2018.

    I wish to emphasise, however, that NamPower will need the cooperation

    and support of all stakeholders to succeed in effectively managing the

    power supply situation.

    The countrys current maximum (peak) demand is estimated at about 534 MW and on average grows by 4% annually. Namibia relies

    heavily on imported electricity, varying from 40% to 80% during dry seasons when the Kunene River is low in water flow and the Ruacana cannot be operated at full load. This scenario has rendered the countrys electricity supply situation critical as the future of

    electricity supply is almost entirely at the mercy of external policy and decision makers. Namibia has an installed capacity of about

    507.5 MW, but the actual output currently is only about 27% due to various technical and natural challenges such as the ageing of

    the Van Eck power plant, the low water flow in the Kunene River due to poor rainfall, amongst others. Currently, NamPower meets the national demand for electricity by generating at Ruacana Hydropower plant (27%); imports from ZESA (31%) imports from ZESCO

    (12%), imports from Eskom (12%) and imports from Aggreko (18%).

    As far back as 2006, the Regulator commissioned a study whose outcome recommended a number of demand side management

    (DSM) options for Namibia. Major DSM initiatives that have been implemented to date include the distribution of energy saving bulbs

    (CFLs and LEDs), replacement of electric geysers with solar water heaters, the use of ripple control of electric geysers by distributors (City

    of Windhoek, Walvis Bay Town/Erongo RED), and Time of Use Tariffs.

    Namibia is faced with the problem of not fully utilizing the multi-billion dollar Caprivi/Zambezi HVDC Transmission Link/interconnector

    to the countrys benefit due to lack of generation and transmission capacity in northern neighbouring countries (Zambia, Angola and Zimbabwe) and in Namibia itself.

  • 15 15

    The short-term critical supply (STCS) initiatives identified by the utility include the following:a) NamPower generation plants (refurbishment of Van Eck, and replacement of runners at Ruacana);

    b) Import arrangements (including ZESA, Eskom, Zesco and Aggreko);

    c) Preparation for leasing of diesel generators (up to150 MW);

    d) PPA negotiations with Independent Power Producers;

    e) IPP Solar PV Tender for procurement of 30MW; and

    f) Demand side management (up to 110MW saving potential)

    These Short Term Critical Supply initiatives are expected to be implemented during the period running up to 2017. It must be noted

    that most of the STCS projects have serious financial implications as they come at very high cost and hence cannot be sustainable as long term supply options.

    The Kudu Gas Power Plant is expected to be completed and commissioned by 2018, generating about 800MW, 400MW of which will

    be used inside the country with the remaining 400MW earmarked for export to neighbouring countries through their SAPP member

    utilities.

    Many of the projects implemented during the review period also seek to contribute to security of supply and to mitigate the impact

    of shortages in the immediate- to medium-term. However, the National Integrated Resource Plan (NIRP) project currently under way

    will investigate and propose least cost supply options that go beyond the immediate and medium terms. The NIRP project will elevate

    power generation and security of supply from utility level to the national agenda status.

    It is vital that the concept of least cost is understood in the appropriate context, taking cognisance of the clear distinction between

    financial cost which strictly looks at the dollar value per unit and economic cost which transcends a broader spectrum encompassing opportunity cost, socio-economic and other factors affecting general well being of the nation and its inhabitants.

    In our assessment of feasible options, it is important to bear in mind that options that could look financially attractive in the immediate term may not necessarily be economically lucrative in the long run.

  • 16

    Cross Cutting MattersLegislative Report

    Electricity and Energy Regulatory Authority BillsThe ECB, on authority of the Ministry of Mines and Energy, solicited technical assistance from the Commonwealth Secretariats Economic

    and Legal Desks to develop the legal framework needed to support and facilitate the transformation of the regulator from electricity

    regulation to energy regulation. The main outputs were the Energy and Electricity Bills that were developed and fully work-shopped

    with industry stakeholders; these will be finalised before October 2013 and handed over to the Minister of Mines & Energy.

    The objects of the Electricity Bill are:

    a) to achieve the efficient, reliable, sustainable and orderly development and operation of the electricity supply industry and electricity infrastructure in Namibia;

    b) to ensure that the interests and needs of present and future electricity supply industry customers are safeguarded and met, having

    regard to the governance, efficiency, effectiveness and long-term sustainability of the electricity provision industry within the broader context of economic energy regulation in Namibia;

    c) to facilitate investment in the electricity supply industry;

    d) to enhanace access to electricity;

    e) to promote the use of diverse energy sources and the application and use of energy efficiency;f) to promote competitiveness and customer choice; and

    g) to facilitate a fair balance between the interests of customers, licensees, investors and the general public in the electricity supply

    industry.

    The Electricity Bill was subjected to extensive stakeholder consultations facilitated by the Electricity Control Board. The Bill is currently

    undergoing final comments especially around aspects of the electricity market model before it is submitted to the Minister of Mines & Energy, to commence with the legislative promulgation process. The aforementioned will take the form of consultations with the Office of the Attorney General, Cabinet Committee on Legislation and the Legal Drafters under the Ministry of Justice.

    The Namibia Energy Regulatory Authority Bill mainly focuses on provisions regarding the establishment and operation of the to-be-

    established Namibian Energy Regulatory Authority (NERA). The objects of the Bill are to describe NERAs roles and responsibilities, i.e.

    h) regulate electricity, downstream gas including gas pipelines and storage facilities;

    i) regulate downstream petroleum pipelines and storage facilities;

    j) regulate renewable energy, energy efficiency and energy conservation; k) provide for its functions and duties; and

    l) provide for incidental matters related to the operations of the regulator.

    NERA, as the ECBs successor, will thus have a broader mandate and includes additional energy resources that are to be regulated. The

    Energy Regulatory Authority Bill was also subjected to extensive stakeholder scrutiny following a broad consultative process and is

    now at an advanced stage of completion. Submission of the Bill to the Minister of Mines and Energy is awaiting the finalisation of the Electricity Bill. The ECB is positive that both the Electricity Bill and the Energy Regulatory Authority Bill as well as the operationalisation

    of NERA will be finalised during the next review period.

  • 17 17

    Regulatory InstrumentsIn the year under review the ECB Board approved various subordinate legislative instruments, including Technical and Economic Rules,

    Distribution Infrastructure Standards, and the Optimised Maintenance Guidelines for the Distribution Sector. The requisite legal scrutiny

    and promulgation was also undertaken. In addition, an increase of the ECB levy from 1.406c/kWh to 1.5c/kWh was approved.

    Competition and Fair PlaySection 3(d) of the Electricity Act stipulates that the ECB is to ensure that a competitive environment exists in Namibias electricity

    industry, with such restrictions as may be necessary for the security of electricity provision and the safeguarding of other public

    interests. The ECBs Strategic Plan includes an initiative to monitor and ensure the implementation of and compliance with the principles

    of fair play in the countrys electricity sector.

    During the period under review the ECB had several engagements with the Namibian Competition Commission (NCC), culminating

    in the signing of a Memorandum of Understanding (MoU) between the entities. In particular, the MoU serves to co-ordinate and

    harmonise activities within each organisations mandate, and spell out the roles and responsibilities on matters of mutual interest. It

    is expected that the collaboration between the NCC and the ECB will ensure greater consistency in the application of laws governing

    anti-competitive behaviours, as well as in the case of mergers and acquisitions.

    The MoU is an important milestone for the Electricity Supply Industry as a whole, as it aims to:

    a) promote and maintain fair competition and a stable environment within the electricity sector;

    b) promote the development of competitive markets in the electricity industry;

    c) promote co-operation and co-ordination between the parties when dealing with cases of anti-competitive behaviour, as well as

    to facilitate the treatment of mergers and acquisitions within the electricity industry;

    d) undertake any joint investigations, market enquiries or research studies in the electricity industry as the parties may agree;

    e) ensure that the ECB exercises primary authority to set prices and tariffs, enforce performance and compliance and take appropriate

    steps in case of non-performance and establish conditions within the electricity industries and the Commission exercises primary

    authority to detect and investigate the alleged prohibited practices not covered by the Electricity Act and to review mergers within

    the electricity industry, and

    f) improve the understanding of the roles of both the NCC and ECB, by undertaking studies on the effectiveness of competition within

    the electricity industry.

    Challenges with Regulation of Farmer SchemesDuring the period under review, the ECB has embarked upon a project to identify ways to more optimally regulate farmer schemes.

    The project is important because existing electricity distribution licensees do not want to extend their network to farms, which in turn

    implies that farmers must make alternative arrangements to be electrified. One method of electrification is that each farmer invests in their own generation equipment, while other farmers collaborate in farmer schemes to jointly benefit through the electrification of their farms.

    There has been a proliferation of farmer schemes in Namibia, which necessitates regulatory involvement and oversight. A part of the

    ECBs regulatory functions includes that electricity utilities are compliant with the Electricity Act and its regulations. The farmer schemes

    form part of the Namibian ESI, and consequently must operate within the rules governing the sector. The ECB has drafted pro forma

    Shareholder and Supply Agreements which are to be implemented by farmer schemes across the country.

  • 18

    Corporate Governance Compliance The ECB has to comply with the provisions in the Electricity Act 4 of 2007, the recommendations of the King II Report, as well as the

    State Owned Enterprise Governance Act 2006, and relevant subordinate legislation. One of the functions of the ECBs Board is to ensure

    that the regulator remains complaint with relevant Namibian legislative provisions.

    During the period under review, the ECB has adopted a Board Charter and the Board Committees Terms of Reference which guides

    Board members in the execution of their duties.

    The ECB Boards governance structure includes three distinct Board sub-committees. These advise the Board, and perform such tasks as

    the Board may assign to them. The sub-committees are the

    1) Finance, Audit and Risk Committee;

    2) Human Resources and Remuneration Committee; and

    3) Pricing and Tariffs Committee.

    Under the Electricity Act, the Board and each sub-committee are required to conduct at least four scheduled meetings per year. In

    addition, sub-committee meetings can be scheduled as determined by the task at hand.

    The following list presents a summary of the items approved by the Board and Board Committees during the period under review:

    a) ECBs transformation process to the national energy regulator;

    b) NamPowers tariff approval process;

    c) Transmission and Generation Model;

    d) ECBs Finance and Administration Policies and Procedures;

    e) Development and Harmonisation of Distribution and Infrastructure Standards;

    f) Optimised Maintenance Practices Guidelines for the Distribution Sector;

    g) ECB Job Attachment Scheme;

    h) Acquisition of an ECB Building;

    i) Tender documentation for the procurement of 30 MW solar photovoltaic (PV) generation capacity for Namibia;

    j) Procurement Mechanisms for Renewable Energy projects in Namibia;

    k) Financial Model for the assessment of the financial viability of utilities;l) Economic and Technical Rules;

    m) ECBs statistical framework; and the

    n) ECBs Knowledge Management Framework.

    Public Relations & Stakeholder Management

    Stakeholder consultations, Iincreased public awareness, education and branding, continued to be a broad focus area for the ECB and

    are important components of the ECBs regulatory decision-making process.

    During the period under review, the ECB consulted widely, and received extensive feedback on various regulatory matters and decisions.

    Amongst those entities and parties consulted were the Ministry of Mines and Energy, NamPower, the REDs and other regulated entities,

    industry stakeholders including the Renewable Energy Industry Association of Namibia and the Manufacturers Association, consumers

    groups, the media and the general public.

  • 19 19

    Comments and feedback received during such consultative sessions form part of the critical inputs that are taken into account when

    arriving at most of the ECBs regulatory decisions. In this way, topics such as the NamPower tariff adjustments, processing of license

    applications, and the development of subordinate legislation such as rules, standards, codes and regulations were informed and

    influenced by inputs provided by stakeholders.

    The ECB endeavours to provide a public information and empowerment drive on all matters relating to the regulation of the electricity

    industry. To this end, the ECB used various interventions to communicate directly and indirectly with stakeholders. These initiatives

    included, amongst others, the regular updating of the ECBs website, presentations at industry forums such as the Electricity Supply

    Industry Forum, the presence and contribution to numerous media events, including radio and television programs, as well as specific publications.

    In addition, the ECB monitors the daily print and electronic media for energy-related coverage in general, and specifically those of relevance to the countrys electricity sector. The most significant news coverage in the period under review related to electricity tariffs and the security of supply. In most cases, comments and coverage of issues related to the activities undertaken by the ECB were

    reported factually and were neutral.

    Corporate Social Responsibility

    ECB, through its social investment arm, continued to invest in various community projects for the socioeconomic upliftment of the

    Namibian society. Every year the ECB receives numerous applications from across the country.

    During the period under review, over ten institutions ranging from primary to tertiary education, sports, local authorities, environment

    and local and regional authorities received funding and donations from the ECB Social Responsibility Fund.

    ECB currently supports a number of students pursuing their studies in various fields at tertiary institutions in Namibia and the SADC region.

    Human Resources

  • 20

    Staffing

    Recruitment, Selection and TurnoverThe ECB operates in a highly technical industry and requires

    specialist skills. Employee competence, passion and commitment

    are professional attributes that are encouraged at all levels, and

    ensure that key personnel can be retained and recruited. This is

    reinforced by the ECBs continuous commitment to attract and

    retain a committed, competent and motivated workforce, which is

    achieved by appropriately rewarding performance and recognizing

    as well as promoting talented staff. During the period under review,

    only one termination of employment took place.

    Staff NumbersThe figure below depicts the number of staff per functional area. Of a total staff complement of 24, the CEOs Office employs 4 persons, while 10 persons each are working in the Finance & Administration

    and Regulation sections respectively.

    Staff Turnover Over the past five years, the ECBs staff numbers increased, mainly in response to requirements brought about by the restructuring of the Namibian Electricity Supply Industry. As shown in the table below, the ECBs staff turnover rate per year averaged over the past five years stands at some 7% of total staff employed. This is to be compared to a Southern Africa staff turnover rate of some 10% per year,

    which indicates that current staff attrition rates at the ECB compare favourably with regional experiences.

    Table 1: Staff Turnover

    PromotionDuring the period under review one employee was promoted from a specialist portfolio to a managerial position.

    Key Challenge ExperiencedIn the period under review, a key challenge faced by the ECB was due to limited office space. Amongst others, a lack of sufficient office space has resulted in the postponement of the planned establishment of the ECBs knowledge hub, which is one of the key strategic

    objectives and slowed recruitment considerably. Also, the lack of recreational facilities for staff was noticeable.

    Training and DevelopmentOn-going skills development and capacity building is a priority for the ECB. For the period under review, the ECBs total direct training and

    development expenditure increased to some N$588,000, which was spent for training and development initiatives on:

    a) Skills development;

    b) Technical and professional competence development;

    c) Leadership and management development; and

    d) Tertiary Studies.

    2008 2009 2010 2011 2012

    Total Staff 17 19 19 22 24

    Staff turnover 1 0 3 2 1

    % Turnover 6% 0% 16% 9% 4%

    Figure 1: Employees By Functional Area

  • 21 21

    ECB staff attended courses on

    a) Utility Regulation and Strategy;

    b) Managing Competitive Commercial Tenders;

    c) Management Development Programmes; and

    d) RERA-SATH training.

    The ECBs approach to skills development focuses on addressing the most pertinent in-house needs and requirements while ensuring

    that capacity building takes place across all levels throughout the organisation.

    Employee WellnessThe ECBs employee wellness strategy applies a holistic approach which recognizes that staff are human beings and not merely

    workers. Various employee wellness and staff support programs are in place. For this period under review, the ECB introduced a

    medical surveillance programme as part of the organisations comprehensive health and wellness policy. This implied that all staff

    underwent baseline medical assessments, which underpin the preventative health care drive to improve productivity and reduce

    employee absenteeism. Other wellness initiatives included, amongst others, teambuilding, commemoration of the Worlds Aids Day,

    and supporting the cancer awareness campaign by Bank Windhoek.

    Information Communication Technology

    The ECBs strategic plan identifies two ICT initiatives that are to be continuously undertaken, these are the information needs assessment; and the ICT needs assessment.

    For the period under review, the ECB undertook various ICT activities in support of these initiatives. In regard to the ECBs ICT network,

    the internet speed was increased from a 512K to 1024k and an automated offsite backup service was implemented. As a result, the

    internet connectivity was both stable and reliable. Also, the off-site backup allows for the quick recovery of ECB data in case of any

    on-site data loss.

    With regard to software, an enterprise Anti-virus solution was deployed, and a Fixed Asset module was purchased for the ECBs

    accounting system, which allows for the recording and tracking of all fixed assets owned by the ECB. Two modules were added to the existing HR/Payroll system, which now enables employees to apply for leave and overtime electronically. The administration of

    antivirus services is now undertaken centrally, and all disruptions are monitored from a single point.

    In a bid to enhance the efficiency of Board meetings, the ECB has initiated paperless Board meetings. These entail the acquisition and use of iPads for members of the Executive Management Committee as well as all Board members. A commercial cloud storage service

    enables Board Members to access all relevant information electronically. The paperless environment implies that it is no longer required

    to physically prepare Board packs and have them delivered to Board members, which reduces costs for printing, paper and deliveries

    and improves on the speed and efficiency of delivering Board packs.

    The ECBs IT Governance framework stipulates how, when and by whom the ECBs IT resources can be accessed and used. In the period

    under review, the strategic review of the ICT Policy and its alignment with ICT legislation took place. In particular, three IT policies were

    developed, including the:

    a) IT Usage Policy, which provides guidelines for the use of the ECBs computing facilities;

    b) Information Security Policy, which addresses the security of the ECBs data and information systems; and

    c) IT General Control Policies, which is to ensure the structured development, implementation and maintenance of all IT applications

    used at the ECB.

  • 22

    Economic RegulationTariffs

    The regulation of electricity tariffs is one of the principal activities of the ECB. Tariff setting is done in accordance with the White Paper

    on Energy Policy of 1998, which states that tariffs should be cost reflective, reflect the long-run marginal cost of supply, and be based on sound economic principles.

    Electricity tariffs charged by utilities are all regulated. Tariffs are based on a utilitys revenue requirement, including a regulated return

    on assets used for electricity generation, transmission, distribution and supply. The tariff methodology applied by the ECB is known as a

    cost plus methodology. This implies that the revenue requirement (i.e. the cost) of a utility plus a regulated return (i.e. the weighted

    average cost of capital) determines the end-user tariff.

    The revenue requirement includes all allowable costs of the utilities to cover the cost of supply including the primary energy, energy

    imports, bulk electricity purchases, operating and maintenance costs, overheads, asset-related costs, and investment costs. In

    determining the Namibian electricity tariff levels, the ECB consults and takes into consideration the expectations of key stakeholders

    including the Government, private sector and consumers. It also assesses the likely impacts that tariffs may have on the end-consumers

    and the Namibian economy at large before approving tariffs. Each utility needs to have its tariff levels approved by the ECB Board before

    they may be implemented, and this process repeats itself on an annual basis.

    Approved tariffsFor the financial year 2012/2013, the ECB granted NamPower an effective average tariff increase of 17.20% which includes a 2% long-run marginal cost (LRMC) contribution. The LRMC portion was awarded to ensure that NamPower remains on the LRMC price path and

    enable the utility to build sufficient reserves to protect the Namibian consumer against future price shocks.

    Figure 2 depicts the projected electricity price path between 2011/2012 and 2019/2020.

    Figure 2: Projected electricity price path between 2011/2012 and 2019/2020

  • 23 23

    Distribution utilities and Local Authorities were granted tariff increases according to their specific revenue requirements.

    Over the past years, the ECB has ensured that electricity tariffs are consistent with and reflective of the following three main regulatory objectives:

    a) Equitably rewarding of investors (recovery of allowable cost of supply plus the regulated rate of return) while keeping prices

    affordable to consumers;

    b) Ensuring quality of supply and service, taking cognisance of different quality standards and associated costs; and

    c) Maximising operational efficiency through restructuring and performance evaluation and monitoring.

    In general once tariffs have reached cost reflectivity they will reflect the long- run marginal cost of supply. The LRMC includes the cost of introducing new generation projects into the Namibian

    electricity mix and is to incentivise additional investments in the

    sector.

    During the year under review, Namibia continued to be a net

    importer of electricity. It is expected that this situation will

    change once new generation capacity is added to the existing

    power stations, as envisaged in the National Integrated Resource

    Plan (NIRP). In 2012/2013 Namibia imported approximately

    62% of its electrical energy requirements from countries in the

    SADC region, with Zimbabwe (ZESA) being the main source of

    these imports.

    In 2012/2013 Namibia imported some 62% of its electricity

    requirements. During that period, the average tariff of imports

    was higher than the Namibian local bulk generation -price. This

    implies that the end-user tariff is substantially determined by

    imports which the ECB has no influence over. In addition to cost due to imported

    electricity, local tariffs are driven by the

    following factors:

    a) the need for NamPower tariffs to

    remain cost reflective; b) the need for additional investments

    in the generation sector;

    c) increases in the prices of commodities

    and primary energy sources such as

    oil and coal; and

    d) the revaluation of NamPower assets

    which occurs every five years.

    LOCAL GENERATION MWh % Energy Supply

    Local Power Stations

    Ruacana 1 236 597 35%

    Van Eck 84 110 2%

    Paratus 20 0%

    Anixas 8 270 0%

    Total local generation 1 328 997 38%

    IMPORTS MWh % of Energy supply

    Eskom 649 037 19%

    Zesco 433 501 12%

    ZESA 1 049 669 30%

    Aggreko 45 600 1%

    Total imports 2 177 807 62%

    Table 2: Local Generation and Imports in 2012/2013

    Local Generation

    versus Imports

    2008/09 2009/10 2010/11 2011/12 2012/13

    Percentage Energy

    Local Generation 40% 35% 37% 49% 38%

    Imports 60% 65% 63% 51% 62%

    Percentage Cost

    Local Generation 22% 46% 35% 36% 34%

    Imports 78% 54% 65% 64% 66%

    Average price N$/kWh

    Local Generation 0.32 0.43 0.36 0.28 0.45

    Imports 0.52 0.40 0.38 0.47 0.55

    Table 3: The Impact of Imports on Namibian Electricity Tariffs

  • 24

    Cost Reflectivity of TariffsDuring the period under review, NamPower was granted a cost reflective tariff as per the Cabinet directive (Cabinet decision 21/20.09.05/006.) which states that the utility tariffs should reach cost reflectivity by 2010/2011 and remain so thereafter.

    The ECB has allowed tariff increases of distribution utilities to remain cost reflective in those cases where cost reflectivity has already been reached, and to enable others to reach cost reflectivity. This presented a particular challenge to the ECB, mainly because of the high local authority surcharges as well as the distorted tariffs which still exist amongst different distribution utilities and Local Authorities.

    Local Authority Surcharge

    The introduction of the REDs and the resulting handover of the electricity distribution function to REDs had the potential to significantly impact on the financial positions of Local Authorities (LAs) and Regional Councils (RCs). Previously, LAs had used the revenues from electricity sales not only to cover the cost of electricity purchases and distribution but also to cross-subsidise other municipal services.

    In addition, many LAs/RCs sold electricity at prices which were higher than the cost of supply. This resulted in the creation of surpluses,

    which in turn was used to pay for non-electricity services. The surplus contributed some N$213 million per year to the revenues of local

    government and was a significant source of income to the LAs/RCs.

    The Local Authority Surcharge was created to financially support LAs/RCs after they handed over the electricity supply function to the newly formed REDs. The initial charge was based on the actual difference between revenue and costs as reflected in the ring-fenced electricity accounts. This is consistent with Government policy that LAs and RCs should not be adversely affected when they joined a

    RED.

    As agreed to with relevant ESI stakeholders, the LA Surcharge is a fixed dollar amount per year, and has remained so over the past 7 years. Currently, the LA Surcharge is added to the electricity tariffs and collected by the REDs on behalf of the relevant LA/RC.

    Transformation of the Single Buyer to Modified Single Buyer Market Model

    The Modified Single Buyer Model (Figure 3) is aimed at securing energy supply security and private sector participation in the electricity generation sector. During the period under review, NamPower remained Namibias Single Buyer, and is the only utility licensed to

    import, export and trade electricity. This also implies that NamPower is the only off taker of electricity sourced from any Independent

    Power Producer (IPP) that would like to sell electricity. The Modified Single Buyer Model will allow IPPs to sell electricity to large power users, such as, REDs, Local Authorities and Mines.

    The process of finalising and implementing the so-called Modified Single Buyer Model is on-going. During the period under review, little progress was made in implementing this new market model. This was mainly due to the structural changes that are still required

    to transform the ECB into a multi-sectoral energy regulator. It is envisaged that the market model will be defined as part of the new regulatory legislation, which will also make it easier to implement.

  • 25 25

    Figure 3: Proposed Modified Single Buyer Market Model

    Economic Regulation Projects

    In the year under review, the following projects as identified in the ECBs current Strategic Plan were implemented:

    Generation and Transmission Tariff Review Model and Rule BookThe generation and transmission tariff review model which is used to determine NamPowers bulk tariffs was updated. In addition, a

    tariff rule book was developed, which is part of the model. Both were approved by the Board, and are ready for implementation and

    use in the review of the 2013 tariffs.

    Utilities Financial Viability Model The model is used to assess the financial viability of utilities. It relies on utility-specific data and information, which is now collected and will be an input to the model. Reports from this model are expected to be published during the next financial period.

    National Connection Charge PolicyA national connection charge policy was developed during the period under review. Two stakeholder workshops were conducted during

    the last quarter of 2012. Internal consultations are on-going. Once finalised, the policy will be presented to the Minister of Mines and Energy for promulgation, which is expected to take place before the end of 2013.

    Development of Net Metering RulesOne of the recommendations of the Renewable Energy Procurement Mechanism study completed in 2011 was that net metering

    was to be implemented in Namibia. For this to happen, net metering and interconnection rules are required, to allow small solar

    photovoltaic (solar PV) and micro-wind generators to be connected to the local distribution grids.

    A project funded by the Renewable Energy and Energy Efficiency Partnership (REEEP) through the Renewable Energy and Energy Efficiency Institute (REEEI) at the Polytechnic of Namibia together with the ECB was initiated to devise the required net metering rules, and a consultant was hired.

  • 26

    Stakeholder workshops and consultations were conducted at the beginning of the year 2013. The ECB will conduct an economic impact

    assessment before the rules are promulgated, which is expected to take place at the end of 2013.

    Renewable Energy Feed-In Tariffs (REFIT)In implementing the recommendations of the renewable energy procurement mechanism study completed in 2011, the ECB embarked

    on a project to develop renewable energy feed-in tariffs (REFIT) for all renewable energy technologies from 500kW to 5MW capacity.

    With the financial assistance of USAID, a consultant was appointed to develop and draft REFIT levels and associated rules. Stakeholder workshops and consultations are expected to be held during the next financial period. The ECB will conduct an economic impact assessment before the promulgation of the rules, which is expected to take place at the beginning of 2014.

    Study on a National Electricity Support MechanismThis project aims to devise a mechanism to make electricity more affordable for low-income consumers. The project will identify and

    assess regional and international options used to shield low income households against rising electricity prices.

    The analysis will include a review of the relevant legal, regulatory, technical, financial and economic constraints and implications of introducing electricity support tariffs, and develop scenarios on how such mechanisms can be funded. The study will also quantify the

    impact that the introduction of an electricity support mechanism has on the countrys economy, the electricity sector as a whole, and

    low income end-users.

    The project is expected to be completed in December 2013, during which period consultations and workshops will be held with

    stakeholders.

    Update of the Namibian Network Asset Register (NENA)This project will update the Namibian Network Asset Register (NENA), which is used to determine the asset values owned by distribution

    licensees. NENA is updated bi-annually, and reflects the current replacement cost of all electricity network assets used by utilities.

    The project is expected to be completed in May 2013, in time for distribution tariff review to be undertaken in the financial year 2013/2014.

    Update of the ESI General Computable Equilibrium (GCE) Model The ESI general computable equilibrium model is used to assess the impact that electricity tariffs have on the economy. The model is

    currently updated, which includes the following activities:

    a) Review and calibrate the model to take Namibias current and forecast economic climate into account;

    b) Update the operating manual describing the models functions;

    c) Assist the ECB in modelling the impact of NamPowers generation and transmission tariff on the Namibian economy; and

    d) Align the model with the demand forecast from the National Integrated Resource Plan (NIRP).

    The updated model will be used for the tariff review in the financial year 2013/2014, and is expected to be completed in May 2013.

  • 27

  • 28

    Technical RegulationQuality of Supply Profile for the Namibian ESI

    The ECBs annual report of 2011/2012 reported on the Namibian ESI quality of supply profile, focusing mainly on data from the REDs and large power users. In the period under review, Local Authorities became involved in the Quality of Supply project. This broadened

    the scope of the original project, and necessitated additional capacity building in order to generate Quality of Supply reports.

    Quality of Supply reports are important to understand and manage supply risks, and enhance the visibility and appreciation of aspects

    relating to power quality management. The following comparative analysis illustrates the Quality of Supply reports for Okahandja and

    Rehoboth for the month of February 2013, and emphasises the importance of power quality management in Local Authorities.

    Quality of Supply for Local Authorities the Case of Okahandja and RehobothThe Quality of Supply reports focus on the assessment of four power quality parameters, namely

    a) dip and swell;

    b) supply reliability;

    c) voltage magnitude; and

    d) voltage unbalance.

    Okahandjas power quality was assessed at the towns NamPower 11 kV intake, while NamPowers 11kV Dr Lemmer intake was where

    the Rehoboth Town Councils power quality was recorded. Both assessments were undertaken in February 2013.

    Applicable StandardsThe standards used for the assessment are the South African National Rationalised Standards (NRS) 048 and the International Electro-

    technical Commission (IEC) 61000 standard.

    Dip and Swell AssessmentA voltage dip is a sudden reduction in root mean square (rms) voltage supply as defined in the above standards. The following events in Table 4 were recorded:

    Table 4

    Supply Reliability AssessmentSupply reliability is expressed in terms of supply interruptions and customer load reductions. The NRS standard defines an interruption as a disconnection of one or more phases of a supply to a customer for a period exceeding 3 seconds. For a given voltage level,

    interruptions are classified as either momentary (if lasting for less than 5 min) or sustained (if lasting for more than 5 minutes). The following (Table 5) interruptions were recorded:

    Event Category No of events for Okahandja No of events for Rehoboth

    Dip Type S 1 0

    Dip Type T 0 2

    Dip Type X1 4 1

    Dip Type X2 1 1

    Dip Type Y 18 9

    Voltage Swell 0 1

  • 29 29

    Table 5

    Voltage MagnitudeThe magnitude of supply voltage is expressed as a percentage of the ideal, declared root-mean-square voltage as defined in the above standards. The following (Table 6) values were recorded:

    Table 6

    Voltage UnbalanceVoltage unbalance quantifies the contribution of negative sequence voltages as a percentage of positive sequence voltages as per the above standards. Both sites were found to be 100% compliant during the assessment period.

    Quality of Service StandardsMonitoring and enforcing compliance with the Quality of Service Standards was mainly done by addressing customer complaints. The

    main concerns expressed were power outages due to network faults, quotations, connection charges and accounts / billing. Details on

    complaints handling issues are covered under the section describing Regulatory Support Services.

    Customer ComplaintsThe statistical analysis of customer complaints in the period under review reveals that some 80% of all concerns were related to non-

    compliance with the Quality of Service Standards.

    Table 7 itemises the various categories of complaints that were received, specifying the relevant performance indicator, associated

    activities and minimum standards that must be met at all times.

    Interruption Type Events in Okahandja Duration in Okahandja Events in Rehoboth Duration in Rehoboth

    Sustained interruption 0 0 3 5 020 s

    Momentary interruption 3 271 s 7 75 s

    Compatibility

    Criterion

    Compliance

    level

    Okahandja

    Worst

    assessment

    Okahandja

    Non-

    compliance

    Okahandja

    Compliance

    level Rehoboth

    Worst

    assessment

    Non-

    compliance

    Rehoboth

    Max 30 min

    weekly value

    110.0% 103.2% 0.0% 110.0% 110.2% 3.6%

  • 30

    Performance Indicator Activities Guaranteed Standards

    Processing Requests for Supply feasibility studies; applications; quotations/estimates; acceptance of quotation and payment; design; construction (including certificate of compliance); commissioning and decommissioning; supply contract between licensee and customer;

    Quotation time Time to provide supply

    Credit Metering meter reading (frequency) billing (format, information provided and methods); account queries; payment method; payment venues (queuing times, operating hours); special meter readings; check-meter readings; disconnections; reconnections; penalties for non-payment and theft; meter auditing for accuracy;

    Frequency of meter readings Bill completion Delivery

    Network Faults availability and location of fault reporting centres; hours during which faults may be reported; fault reporting procedures; telephone answering response time; response times; time to restore supply; number and duration of interruptions; and notification of planned interruptions.

    Supply restoration time after planned / forced

    interruptions

    Number & duration of planned Interruptions

    Customer Complaints, Enquiries

    and Requests

    Availability and location of service centres; telephone services; response times; and time

    taken to resolve problems

    Time to resolve a customer complaint

    Queries Enquiries Claims etc.

    Table 7: Assessment of Customer Complaints Received

    Wiremens Licensing in the Namibian ESIIn 2009, industry stakeholders raised concerns in regard to the process of licensing wiremen. The ECB then commissioned a study

    culminating in a Status Report. It confirmed that the Namibian ESI has a fragmented licensing system for wiremen, and that wiring licenses issued by one licensee are not necessarily recognised and accepted by other licensees.

    In mid-2012, industry representatives renewed their call to address the wiremens licensing issue, and the industry faced an increase in the

    number of disputes related to the matter. Following deliberations with national stakeholders, a Stakeholder Working Committee (SWC)

    was established in August 2012. Chaired by the ECB, the SWC was mandated to assess the situation and formulate recommendations

    on how to address the situation in the short term, medium term as well as the long term.

  • 31 31

    Between August 2012 and June 2013, the SWC conducted several stakeholder consultations locally as well as in South Africa, focusing

    on institutional capacity building, localisation and the harmonisation of the wiremens licensing process.

    A strategic planning workshop was scheduled for 6-7 May 2013 to map out the direction for the SWC, define the Committees Terms of Reference, and identify a road map for an interim and a longer term solution.

    Technical Audit of the ESI Technical auditing entails a process to identify potential performance risks and how to effectively manage them using available

    regulatory tools. The ECB intends to enhance the regulatory process to promote the ESIs economic and technical efficiency. This is to be achieved through the

    a) implementation of incentive-based regulation;

    b) use of performance benchmarks;

    c) use of the enforcement of industry-wide standards and regulations;

    d) improvement of the supply quality and reliability;

    e) promotion of the security of supply; and

    f) increased access to electricity services.

    It was found necessary to develop an electricity audit manual and inspection guidelines in order to implement technical audits in a

    structured and coherent manner.

    Assessment of Power Supply Status to Essential Service Facilities Following media-reported allegations surrounding the non-availability of life support systems as a result of power supply failures, the

    ECB commissioned a project to assess the availability and reliability of power supplies to Namibian hospitals and other critical facilities.

    Inspections conducted as part of the project focused mainly on the:

    a) security, availability and reliability of power supplies from the distribution grid as well as from uninterruptible power supplies

    (UPS) and standby generation;

    b) responsiveness and functionality of UPS systems and standby generation systems;

    c) availability and implementability of structured maintenance processes and associated operational capacities;

    d) causes of reported and unreported incidents and accidents;

    e) measures to enhance the safety, reliability and uninterrupted availability of essential services depending on power supply quality;

    and

    f) an assessment of the state of compliance of safety, regulatory, statutory and best practice maintenance and operational procedures.

    During the period under review, the ECBs technical team visited three regions, namely Hardap, Karas and Erongo, where critical service

    facilities were inspected. Out of a total of 13 regions, 11 were fully covered. Outstanding inspections of the Khomas and Kunene regions

    are scheduled for completion before December 2013.

    Demand Side Management (DSM) Initiatives

    In 2006, a Demand Side Management (DSM) Study was conducted and identified DSM options for implementation in Namibia. The ECB established a DSM Steering Committee in 2007, to facilitate the implementation of the recommendations of the study. In 2012, a

    DSM specialist from the team undertaking the National Integrated Resource Plan visited the ECB, to investigate ways to achieve DSM

    measures in Namibia.

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    The following DSM activities were identified:a) the need to conduct a Monitoring and Verification exercise; and

    For the residential sector:

    b) An awareness creation programme;

    c) Efficient lighting by way of a CFL and/or LED programme;d) Dissemination of solar water heaters to reduce household electricity consumption and that of Government buildings; and

    e) the use of efficient cooking appliances using biomass;

    For the Government sector:

    f) revising building codes and related standards and regulations; and

    g) Enforcing the Cabinet Resolution on the use of solar water heaters in Government buildings;

    For the commercial sector:

    h) An awareness creation programme;

    i) Implementing efficient lighting, refrigeration and air-conditioning systems; andj) Mandatory energy audit programmes for commercial facilities;

    For municipalities:

    k) The measurement of energy shavings during ripple control periods;

    l) The use of efficient street lighting; andm) The introduction of energy audit programmes;

    For the industrial sector:

    n) Awareness creation on load control measures through time of use tariffs;

    o) Power factor correction improvements; and

    p) The use of efficient air conditioners.

    Renewable Energy and Energy Efficiency

    Namibia is endowed with abundant renewable energy resources. These need to be better integrated and used as part of the countrys

    energy mix.

    The ECB promotes the use of renewable energy technologies by supporting commercial private sector participation in the ESI. During

    the review period, numerous potential investors seeking licenses or opportunities to invest in renewable energy projects approached

    the ECB for support.

    The ECB has also networked at national, regional and international levels in the field of renewable energy and energy efficiency. For example, the ECB continues to support a project to revise outdated national building codes initiated by the Ministry of Mines and Energy

    thorough the Renewable Energy and Energy Efficiency Institute. Another project that the ECB has actively participated in during the period under review is the implementation of the pre-feasibility study on Concentrated Solar Power which is driven by the Ministry of

    Mines and Energy.

  • 33 33

    Renewable Energy Procurement Mechanism

    In 2009, the ECB commissioned a study to develop a framework and tariff methodology to ensure the greater use of the countrys

    renewable energy resources. The study was conducted by the Renewable Energy and Energy Efficiency Institute. The studys findings and recommendations were subsequently approved by the ECB Board, and presented to the Minister of Mines and Energy for endorsement

    and approval.

    In the period under review, the RE procurement mechanism Project Steering Committee (PSC) and the Project Management Unit (PMU)

    were established and tasked to oversee and facilitate the implementation such mechanisms in Namibia. Of particular focus was the

    procurement of 30MW of solar PV by way of a competitive bidding process. In addition, the ECB also commissioned projects on the

    establishment of renewable energy feed-in tariffs and net metering, as found elsewhere in this report.

    Addressing the Security of Supply through the NIRP Development

    The White Paper on Energy Policy has defined specific national demand and energy targets for 2010. In particular, these targets included the greater use of local resources, that Namibia should be able to meet 100% of the system peak demand using local generation

    sources, and that 75% of the countrys annual energy demand was to be covered from own resources.

    In addition to the set targets, the policy clearly stipulates that:

    a) Supply should be based on a balance of economically efficient and sustainable sources;b) Energy sector activities should promote and support private investments;

    c) High-voltage interconnectors should be established to connect to neighbouring countries to increase the regional trade in electricity;

    d) Environmental and socio-economic sustainability should be promoted in all activities taking place in the sector; and

    e) Electricity prices should be based on sound economic principles and reflect the long run marginal cost of supply.

    Recognising that neither the 2010 demand nor energy targets were met, the Government resolved to enhance the security of supply

    by developing a National Integrated Resource Plan (NIRP). The development of the NIRP commenced on 1 July 2011, and scheduled

    to be completed by 30 April 2013.

    Overview of the NIRP Process

    The Terms of Reference for the NIRP project saw the project execution in five phases: Phase 1: Development of Economic and Cost Assumptions Phase 2: Development of Demand Forecast Phase 3: Definition and Evaluation of Generation Options, Import Sources and Demand Side Management Options Phase 4: Development and Analysis of Policy Implementation Scenarios Phase 5: Conclusions and Documentation of the Outcomes and Results

    Planning Parameters and Criteria

    The following main parameters and model criteria were used:

    Planning horizon, 2012 2031 Cost and present worth base: January 2012 No escalation for economic analysis

  • 34

    Currency: Namibian Dollar (N$) 1 US$ = 7.5 N$ Base discount rate: 10%; alternative cases, 8% and 12% Cost of unserved energy: N$20/kWh Duties and taxes are not included in economic study Reliability criteria: Loss of Load Probability (LOLP) (5 days/year from 2012 to 2020, 2 days/year for the remaining years) Emissions offset allowance N$40/ton

    The NIRP Reference Demand ForecastThe NIRP reference forecast for peak demand and energy are shown in the graph (Figure 4) below. Between 2012 and 2031, peak

    demand is projected to rise from 550 MW to 1100 MW, while the demand for energy is expected to rise from some 3 500 GWh to 7

    500 GWh.

    Figure 4

    Technical Regulatory ToolsTechnical Rules

    Technical rules are to ensure that a conducive operating environment can be maintained. They include the relevant governance,

    technical, safety and commercial obligations and responsibilities of all key stakeholders.

    In the period under review, various submissions and presentations were made to the Executive Committee, the ECB Board, the Minister

    of Mines and Energy as well as the Legal Drafters.

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    Grid Code

    In 2012, the Transmission Grid Code was presented for review by stakeholders. Regular review is necessary as new developments

    continuously shape the sector; in recent times the integration of renewable energy technologies became more important, which was

    addressed in the last review.

    In its updated form, the updated Transmission Grid Code now comprises the following seven components:

    a) Preamble

    b) Governance code

    c) Network code

    d) Information exchange code

    e) System Operation code

    f) Metering code

    g) Renewable Energy integration code

    Safety Code

    The Namibia Electricity Safety Code (NESC) was first gazetted in 2010, and re-gazetted in 2011. Since the target implementation date of 31 October 2012 it is with licensees for implementation. The ECB will monitor the effectiveness of the implementation process through

    various stakeholder engagement activities.

    Optimised Maintenance Guidelines

    The Electricity Supply Industry (ESI) relies on sound infrastructure installations and consistent maintenance. Consequently, the ECB

    commissioned a project to develop guidelines on best maintenance practices for the distribution sector. In December 2012, the ECB

    Board approved the optimised maintenance practices document. Currently, preparations for the submission and presentation to the

    Minister of Mines and Energy are under way.

    Distribution Infrastructure Standards

    The harmonisation of distribution infrastructure standards was identified as one of the important aspects ensuring reliable service delivery. In the past, a variety of distribution standards were in use by licensees, and many used their own standards when adding to

    existing infrastructure. In order to correct this shortcoming, the ECB embarked on a project to develop and harmonise the distribution

    infrastructure standards applied by licensees. In December 2012, the ECB Board approved the new distribution infrastructure standard.

    Currently, preparations for the submission and presentation to the Minister of Mines and Energy are under way.

    Audit Manual

    The ECB recognises the value of promoting economic and technical efficiency through the implementation of incentive-based regulation, the use of performance benchmarks and improved enforcement of relevant standards and regulations. Here, a particular focus is to be

    placed on the improvement of supply quality and reliability, promotion of security of supply and increased access to electricity services.

    In line with these objectives, the ECB developed an Audit Manual and Inspection Guidelines, to guide technical audits that are carried

    out to ensure the compliance of licensed entities with current standards and guidelines. The Audit