1. 1 NERSA Strategic Plan (2012/13 – 2016/17) and Annual Performance Plan (2013/14 – 2015/16) 23 April 2013

2. 2 CONTENT (1) A.Introduction B.Framework for Strategic Plans and Annual Performance Plans C.Planning Concepts D.Vision, Mission, Values and Regulatory Principles E.Mandate F.Achievements (2012/13) I.Electricity Industry Regulation II.Piped-Gas Industry Regulation III.Petroleum Pipelines Industry Regulation

3. 3 CONTENT (2) G.Strategic Plan (2012/13 – 2016/17) I.Strategic Outcome Oriented Goals II.Contribution to Service delivery through the link to Twelve Government Outcomes III.Compliance with other Government Strategies IV.Strategic Objectives V.Programmes VI.Programme Strategic Objectives H.Challenges, NERSA’s Response and Link to Programmes I.Electricity Industry Regulation II.Piped-Gas Industry Regulation III.Petroleum Pipelines Industry Regulation IV.Cross-Cutting Regulatory V.Organisational

4. 4 CONTENT (3) I.Annual Performance Plan (2013/14 – 2015/16) I.Electricity Industry Regulation II.Piped-Gas Industry Regulation III.Petroleum Pipelines Industry Regulation IV.Cross-Cutting Regulation V.Organisational J.Budget and Funding (2013/14) I.Ring-fencing Methodology II.Budget and Funding (2013/14) III.Programme Budgets (2013/14) K.Conclusion

5. 5 A. INTRODUCTION

6. 6 INTRODUCTION The National Energy Regulator (NERSA), a Schedule 3A Public Finance Management Act, 1999 (Act No. 1 of 1999) Public Entity was established on 1 October 2005 in terms of the National Energy Regulator Act, 2004 (Act No. 40 of 2004) to regulate: o Electricity industry (Electricity Regulation Act, 2006 (Act No. 4 of 2006)) o Piped-Gas industry (Gas Act, 2001 (Act No. 48 of 2001)) o Petroleum Pipelines industry (Petroleum Pipelines Act, 2003 (Act No. 60 of 2003)) In executing its mandate NERSA endeavours to balance the interest of both licensed entities and end users/consumers

7. 7 B. FRAMEWORK FOR STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS

8. 8 FRAMEWORK FOR STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS (1) Published by National Treasury in August 2010 Applicable to all national and provincial departments, constitutional institutions and public entities in the development of their strategic plans Applicable from 2012/13 for Schedule 3A Public Entities NERSA is required to: o Produce and table a Strategic Plan with a five-year planning horizon; o Produce and table an Annual Performance Plan including forward projections for a further two years, with annual and performance targets, where appropriate; and o Identify a core set of indicators needed to monitor institutional performance.

9. 9 FRAMEWORK FOR STRATEGIC PLANS AND ANNUAL PERFORMANCE PLANS (2) In line with the Framework NERSA published a Strategic Plan (2012/13 – 2016/17) According to the Framework a “Strategic Plan may be changed during the five-year period that it covers. However, such changes should be limited to revisions related to significant policy shifts or changes in the service-delivery environment” Upon revision it was found: o There were no significant policy shifts or changes; and o There were no significant gaps in the approved Strategic Plan. Strategic Plan was not amended.

10. 10 C. PLANNING CONCEPTS

11. PLANNING CONCEPTS 11

12. 12 D. MISSION, VISION, VALUES AND REGULATORY PRINCIPLES

13. 13 VISION “To be a world-class leader in energy regulation” MISSION “To regulate the energy industry in accordance with government laws and policies, standards and international best practices in support of sustainable development”

14. 14 VALUES Passion Spirit of Partnership Excellence Innovation Integrity Responsibility Professionalism

15. 15 REGULATORY PRINCIPLES Underpinned by NERSA’s legal mandate Transparency Neutrality Consistency and Predictability Independence Accountability Integrity Efficiency

16. 16 E. MANDATE

17. 17 MANDATE (1) NERSA’s Mandate is anchored in: 4 Primary Acts: o National Energy Regulator Act, 2004 (Act No. 40 of 2004) o Electricity Regulation Act, 2006 (Act No. 4 of 2006) o Gas Act, 2001 (Act No. 48 of 2001) o Petroleum Pipelines Act, 2003 (Act No. 60 of 2003) 3 Levies Acts: o Gas Regulator Levies Act, 2002 (Act No. 75 of 2002) o Petroleum Pipelines Levies Act, 2004 (Act No. 28 of 2004) o Section 5B of the Electricity Act, 1987 (Act No. 41 of 1987)

18. 18 MANDATE (2) 3 Facilitating Acts: o Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) o Promotion of Access to Information Act, 2000 (Act No. 2 of 2000) (PAIA) o Promotion of Administrative Justice Act, 2000 (Act No. 3 of 2000) (PAJA)

19. 19 F. ACHIEVEMENTS (2012/13)

20. 20 I. ELECTRICITY INDUSTRY REGULATION Tariffs o Approved an average annual increase of 8% in the revenue requirements for Eskom for the next five years; and o Received 183 out of 186 (98%) municipal and private distributor tariffs applications for 2012/13 and approved all for implementation. Generation o Approved 47 Renewable Energy Generation licences (within 90 days from application instead of the 120 days legislated timeframe); and o Approved 7 licences under the Short Term Power Purchase Programme (STPPP) as part of the short term mitigation programme during maintenance of Eskom generation fleet. Distribution o 9 distribution licences were issued for connection facilities between the Eskom delivery point and IPP generation facilities. Other o Assessed and concurred with three determinations of the Minister of Energy in terms of Section 34 of the Electricity Regulation Act, 2006 (Act No. 40 of 2006).

21. 21 II. PIPED-GAS INDUSTRY REGULATION Pricing and Tariffs o Approved the maximum prices of piped-gas for Sasol Gas in terms of section 21(1)(p) of the Gas Act, (Act No. 48 of 2001), for the period 26 March 2014 to 30 June 2017 for various customer categories / classes; o Approved the transmission tariffs for Sasol Gas in terms of section 4(h) of Gas Act, (Act No. 48 of 2001), for the period 26 March 2014 to 30 June 2015; and o Approved preliminary tariff assessment for Transnet Pipelines’ gas multi-year tariff determination for the Lilly Pipeline for the periods 2013/14, 2014/15 and 2015/16. Licensing o Granting of 5 licences for the construction of gas distribution facilities, 2 licences for trading in gas and 1 licence for the operation of a gas facility; and o Amending 5 gas trading licences and 5 licences for the operation of gas facilities.

22. 22 III. PETROLEUM PIPELINES INDUSTRY REGULATION Tariffs o Approved an increase of 8.53% in allowable revenue for Transnet Petroleum Pipelines for the period 2013/14; and o Made decisions on 60 storage and loading facilities. Licensing o Approved 8 construction licences and 3 operation licences; o Amended 7 construction and storage licences; and o Revoked 13 storage licences. Other o Investigated 67 suspected unlicensed activities – only 4 of these do not require a licence. All the others indicated that they will apply for a licence

23. 23 G. STRATEGIC PLAN (2012/13 – 2016/17)

24. 24 I. STRATEGIC OUTCOME ORIENTED GOALS (1) The strategic outcome oriented goals of NERSA are cascaded from the mandate and reflect the 12 National outcomes as well as those of the Department of Energy. These goals attest to NERSA’s role in facilitating the achievement of the national socio-economic and socio- political development agenda. The strategic outcome oriented goals are: 1.To facilitate Security of Supply in order to support sustainable socio- economic development in South Africa; 2.To facilitate investment in infrastructure in the energy industry to support sustainable socio-economic development in South Africa;

25. 25 I. STRATEGIC OUTCOME ORIENTED GOALS (2) 3.To promote competitive and efficient functioning of the energy industry in order to sustain socio-economic development in South Africa; 4.To facilitate affordability of and accessibility to the energy industry to balance economic interests of all stakeholders in support of socio- economic development of South Africa and a better life for all; and 5.To position and establish NERSA as a credible and reliable regulator in order to create regulatory certainty.

26. 26 II. CONTRIBUTION TO SERVICE DELIVERY THROUGH THE LINK TO THE TWELVE NATIONAL OUTCOMES The strategic outcome oriented goals of NERSA are linked to the following 12 National outcomes: 2.A long and healthy life for all South Africans; 4.Decent employment through inclusive economic growth; 6.An efficient, competitive and responsive economic infrastructure network; 8.Sustainable human settlements and improved quality of household life; 10.Environmental assets and natural resources that are well protected and continually enhanced; and 12.An efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship.

27. 27 OUTCOME 2: A LONG AND HEALTHY LIFE FOR ALL SOUTH AFRICANS NERSA contributes through: o Offering advice/comment with regards to cleaner fuels; o Driving renewable energy programmes and promoting the introduction of renewables and gas into the energy mix; o In determining electricity pricing, NERSA has set aside 3.2c/kWh in the second Multi-Year Price Determination (MYPD2) for the Electrification Cross-subsidy; o Taking affordability into consideration when setting and/or approving tariffs and prices; o Implementing inclining block tariffs to protect the low income electricity consumers; and o Regulating in a manner which facilitates security of supply.

28. 28 OUTCOME 4: DECENT EMPLOYMENT THROUGH INCLUSIVE ECONOMIC GROWTH NERSA contributes through: o Licensing and the setting and/or approving of tariffs and prices. In this manner NERSA creates pre-conditions towards the achievement of this outcome; o Approving renewable energy licensees to ensure that the socio- economic development commitments specified in the DoE bidding process are met; and o Promoting companies that are owned and controlled by Historically Disadvantaged Individuals (HDIs) to become competitive.

29. 29 OUTCOME 6: AN EFFICIENT, COMPETITIVE AND RESPONSIVE ECONOMIC INFRASTRUCTURE NETWORK NERSA contributes through: o Regulating in a manner which facilitates security of supply; o Setting rules and frameworks that facilitate the building of new infrastructure; o Setting and/or approving cost reflective tariffs and prices that encourage investment; o Facilitating 3 rd party access to facilities; and o Monitoring compliance and undertaking technical audits leading to regulatory efficiency.

30. 30 OUTCOME 8: SUSTAINABLE HUMAN SETTLEMENTS AND IMPROVED QUALITY OF HOUSEHOLD LIFE NERSA contributes through: o Facilitating access to electricity / energy services; o Facilitating reliability of supply; o Monitoring maintenance of infrastructure; o Compliance monitoring to licence conditions; and o Dispute resolution, including mediation, arbitration and handling of complaints.

31. 31 OUTCOME 10: ENVIRONMENTAL ASSETS AND NATURAL RESOURCES THAT ARE WELL PROTECTED AND CONTINUALLY ENHANCED NERSA contributes through: o Incorporating compliance with the National Environmental Management Act, 1998 (Act No. 107 of 1998) into licence conditions; o Promoting energy efficiency in licencees and in the NERSA building; o Saving of electricity (MYPD1 and MYPD2); o We have concurred with determinations made by the Minister of Energy in line with section 34 of the Electricity Regulation Act, 2006 (Act No. 4 of 2006) regarding Open Cycle Gas Turbines in order to give effect to the Integrated Resource Plan (IRP); o Monitoring the implementation of the IRP; and o Facilitating the transition to a low carbon economy.

32. 32 OUTCOME 12: AN EFFICIENT, EFFECTIVE AND DEVELOPMENT ORIENTED PUBLIC SERVICE AND AN EMPOWERED, FAIR AND INCLUSIVE CITIZENSHIP NERSA contributes through: o Transparent Processes; o All Decisions and Reasons thereof are made public through being published on the web site; o The Public is invited to make comments prior to decisions being made (written or in public hearing); o Customer education; o Training and development of staff and stakeholders; o Clean Energy Education and Empowerment; and o Corporate Social Investment – Luvuyo House, Techno Girl.

33. 33 III. COMPLIANCE WITH OTHER GOVERNMENT STRATEGIES NERSA’s Strategic Plan was not revised in 2013/14 (no amendment in legislation); Other Government Strategies such as National Development Plan (NDP), Industrial Plan and Action Programme (IPAP) and the Strategic Infrastructure Programme (SIP) were not completed at the time of finalisation of the Strategic Plan (2012/13 – 2016/17); and All of these will be taken into consideration in the new planning cycle starting in June 2013.

34. 34 IV. STRATEGIC OBJECTIVES The strategic objectives of NERSA, expressed as the desired end state of the energy industry are stated as: o A Regulatory environment that facilitates investment in energy infrastructure; o Ensuring energy supply that is certain and secure for current and future user needs; o Ensure that fair competition exists within the energy industry; o Ensure that regulatory certainty exists within the energy industry; o Ensure that energy is accessible and affordable for all citizens; and o Ensure that NERSA is established and positioned as a credible and reliable regulator.

35. 35 V. PROGRAMMES In order to achieve its outcome oriented goals NERSA will deliver on its strategic objectives through the following structured programmes: 1.Setting and/or approving tariffs and prices; 2.Licensing and registration; 3.Compliance monitoring and enforcement; 4.Dispute resolution including mediation, arbitration and the handling of complaints; 5.Setting of rules, guidelines and codes for the regulation of the three industries; and 6.Establishing NERSA as an efficient and effective regulator.

36. 36 VI. PROGRAMME STRATEGIC OBJECTIVES ProgrammeProgramme Strategic Objective Setting and/or approval of tariffs and prices To set and approve tariffs and/or prices that facilitate affordability and accessibility whilst balancing the economic interests of all stakeholders Licensing and registrationTo control entry and ensure orderly development of the industry Compliance monitoring and enforcement To monitor and enforce compliance to legislation and licence conditions in order to ensure the efficient operation of licensed activities within the legislative framework Dispute resolution including mediation, arbitration and handling of complaints To create a fair balance between the needs of all stakeholders Setting of rules, guidelines and codes for regulation To ensure the setting of appropriate rules, guidelines and codes of best practices in the quest to promote uniformity and standardise practices in the regulation of the three energy industries Establishing NERSA as an efficient and effective regulator To facilitate the effectiveness and efficiency of NERSA as a regulator in the energy industry

37. 37 H. CHALLENGES, NERSA’s RESPONSE AND LINKS TO PROGRAMMES

38. 38 I. Electricity Industry Regulation

39. 39 Challenge (1)NERSA’s ResponseProgramme Demand and Supply Streamlining IPP licensing process Licensing and Registration Energy Efficiency and Demand Side Management Setting of rules, guidelines and codes Energy Conservation Scheme for emergency conditions Create space for maintenance of the generation fleet Licensing and Registration Transport and reliabilityAssessment and evaluation of projects in Eskom’s approved Transmission Development Plan Setting of rules, guidelines and codes

40. 40 Challenge (2)NERSA’s ResponseProgramme Distribution and reticulation Compliance framework implementation and monitoring Compliance monitoring and enforcement Cost of supply studies for electricity distributors Setting of rules, guidelines and codes Access, affordability and investments Customisation of the IBTs Setting and/or approval of prices and tariffs Monitoring the implementation of MYPD3 Municipal tariff approvals Establishment of consumer forums Establishing NERSA as an efficient and effective regulator

41. 41 II. Piped-Gas Industry Regulation

42. 42 Challenge (1)NERSA’s ResponseProgramme Lack of credible gas anchor customers Development of a gas market o Monitor trends in alternative sources of supply o Continue the dialogues on impediments to gas infrastructure investment Establishing NERSA as an efficient and effective regulator Ensure that prices are equitable and competitive for all categories / classes of customers Sending correct price signals o Implement maximum pricing methodology o Market value pricing investigations o Enforce pricing provisions of the Agreement Setting and/or approval of prices and tariffs Compliance monitoring and enforcement

43. 43 Challenge (2)NERSA’s ResponseProgramme Entry to and competition within the gas market Promote entry and competition o Licence construction applications o Compliance framework implementation and monitoring o Third Part Access enforcement and advocacy Licensing and Registration Compliance monitoring and enforcement Loss of credibility and regulatory reputation can deter development of the gas market Create regulatory certaintyEstablishing NERSA as an efficient and effective regulator

44. 44 III. Petroleum Pipelines Industry Regulation

45. 45 Challenge (1)NERSA’s ResponseProgramme Construction delays have resulted in increased capital costs which will attract higher tariffs o Determining “prudently incurred” costs in the increased capital costs due to infrastructure construction delays o Monitor impact on Transnet’s financial state Setting and/or approval of prices and tariffs Tariff increases may incentivise other modes of transport (road and rail) when pipelines need higher volumes Setting of appropriate tariffs in line with the published methodology Setting and/or approval of prices and tariffs Security of supply of petroleum to the inland areas Monitoring security of inland supply Establishing NERSA as an efficient and effective regulator

46. 46 Challenge (2)NERSA’s ResponseProgramme Applicants for storage construction licences need to find areas of low/no competition to remain competitive Evaluation of storage construction licence applications Licensing and registration Monitoring and inspection of licences issued Compliance Monitoring and Enforcement Identification of and appropriate action against unlicensed facilities Promotion of 3 rd party access Common carriage and 3 rd party access: monitoring facilitation and enforcement Compliance Monitoring and Enforcement

47. 47 IV. Cross-Cutting Regulatory

48. 48 Challenge (1)NERSA’s ResponseProgramme Information Asymmetry Implementation of the Regulatory Reporting Manuals (Financial and Non-Financial) Establishing NERSA as an efficient and effective regulator Advise policy makers of NERSA views, policy gaps and NERSA’s mandate Regulator communication with Policy Maker Establishing NERSA as an efficient and effective regulator Coordinate NERSA activities with other regulators with concurrent jurisdiction Memoranda of Understanding Establishing NERSA as an efficient and effective regulator Consumer Advocacy o Consumer Education o Improve access of customers to public hearing notices Establishing NERSA as an efficient and effective regulator

49. 49 Challenge (2)NERSA’s ResponseProgramme Assess NERSA’s processes and methodologies against best in world practices through regulatory analysis, research, benchmarking and auditing o Regulatory Impact Analysis / Assessment o Benchmarking of regulatory decisions o Harmonisation of regulatory processes Establishing NERSA as an efficient and effective regulator

50. 50 V. Organisational

51. 51 Challenge (1)NERSA’s ResponseProgramme Legislative amendment o National Energy Regulator Amendment Bill o Electricity Regulation Amendment Bill o Independent System and Market Operator Bill Possible change in institutional character Institutional and Organisational Review Establishing NERSA as an efficient and effective regulator Attraction and retention of requisite skills o Improved Human Resource Policies, Procedures and Systems o Culture recalibration o Conditions of Service Establishing NERSA as an efficient and effective regulator

52. 52 Challenge (2)NERSA’s ResponseProgramme Enabling technology o Business Process Analysis o Improvement of IT systems and processes o Knowledge Management Establishing NERSA as an efficient and effective regulator Conducive working environment o Organisational culture development o Refurbishment of the NESRA building Establishing NERSA as an efficient and effective regulator Image of NERSA Stakeholder perception surveyEstablishing NERSA as an efficient and effective regulator

53. 53 I. ANNUAL PERFORMANCE PLAN (2013/14 – 2015/16)

54. 54 I. ELECTRICITY INDUSTRY REGULATION

55. 55 NUMBER OF KPI’S PER PROGRAMME

56. 56 Programme 1: Setting and/or approval of tariffs and prices Municipal tariff approvals; Implementation of inclining block tariffs; Free Basic Electricity; Monitoring the implementation of MYPD3; and Structural adjustment approvals.

57. 57 Programme 1: Setting and/or approval of tariffs and prices (1) Programme KPITarget for 2013/14 % of tariff applications of all licensed distributors approved 100% Annually published Guidelines for Municipal tariff increases and Benchmarks Published Guidelines for Municipal tariff increases and Benchmarks for 2014/15 Number of metros’ Regulatory Reporting Manual (RRM) implementation plans approved 6 % of licensed distributors for residential customers with Approved Inclining Block Tariffs (IBTs) 80% Annually approved Free Basic Electricity Rate for Eskom Free Basic Electricity Rate for 2013/14 approved and communicated

58. 58 Programme 1: Setting and/or approval of tariffs and prices (2) Programme KPITarget for 2013/14 Annual approved report on Eskom’s actual revenue recovery Annual report on Eskom’s actual revenue recovery Annually approved Regulatory Financial Reports of Eskom Approved Eskom’s Regulatory Financial Reports for 2012/13 Annually approved retail tariffs (ERTSA) of Eskom Approved Eskom’s retail tariffs (ERTSA) for 2014/15

59. 59 Programme 2: Licensing and Registration Processing of licence applications

60. 60 Programme 2: Licensing and Registration Programme KPITarget for 2013/14 % of licence applications processed within statutory time frames 80% of licence applications processed within 120 days from application

61. 61 Programme 3: Compliance Monitoring and Enforcement Conducting of compliance audits; and Monitoring implementation of action plans arising from compliance audits.

62. 62 Programme 3: Compliance monitoring and enforcement Programme KPITarget for 2013/14 Number of licencees audited per annum to determine their level of compliance with licence conditions 10 Number of audit reports on the state on compliance of licencees with licence conditions 10 Number of corrective action plans received from non-complying licencees monitored 5 Annual report on state of compliance in the electricity industry published

63. 63 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Resolution of complaints

64. 64 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Programme KPITarget for 2013/14 % of complaints processed within statutory timelines 75% of complaints processed within 120 days from receipt Annual report on the trends regarding to and status of complaints in the electricity industry published

65. 65 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry Grid Code administration; Audits of Transmission development plans; Audits on EEDSM and compliance with the MYPD; and Reports on performance and progress of Renewable Energy.

66. 66 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry (1) Programme KPITarget for 2013/14 % of applications from the ESI relating to fair and equitable access to electricity infrastructure requiring exemptions to the South African distribution and transmission grid code, considered in line with legal requirements 80% % of applications from the ESI relating to fair and equitable access to electricity infrastructure requiring amendment to the South African distribution and transmission grid code, considered in line with legal requirements 80% Updated grid codeAnnually published updated Grid Code

67. 67 Programme 5: Setting of rules, guidelines and codes for the regulation of the electricity industry (2) Programme KPITarget for 2013/14 Number of approved audit reports that details the assessment and evaluation of projects in Eskom’s approved Transmission Development Plan for compliance with the South African Grid Code 1 Number of approved audit reports for the review of EEDSM and compliance with the MYPD 1 Number of action plans for the annual EEDSM audits 1 Number of reports on the performance and progress of Renewable Energy 4

68. 68 Programme 6: Establishing NERSA as an efficient and effective regulator Establishment of end-user forums

69. 69 Programme 6: Establishing NERSA as an efficient and effective regulator Programme KPITarget for 2013/14 Number of end-user forums established5

70. 70 II. PIPED-GAS INDUSTRY REGULATION

71. 71 NUMBER OF KPI’S PER PROGRAMME

72. 72 Programme 1: Setting and/or approval of tariffs and prices Approval of maximum prices; Approval of transmission and storage tariffs; Report on Sasol Gas compliance with all pricing provisions in terms of Schedule One to the Agreement; and Calculation of aggregate prices.

73. 73 Programme 1: Setting and/or approval of tariffs and prices (1) Programme KPITarget for 2013/14 Finalised number of maximum prices applications approved within 120 days from the date of publishing the (final) price application Finalise maximum price applications for all licensees other than Sasol Gas within 120 days from the date of publishing the (final) price application Finalised number of transmission and storage tariffs applications within 120 days from the date of publication of the tariff application Decision on Transnet transmission tariff and all storage licensee tariff applications within 120 days of the date of publication of the (final) tariff application Draft/consultation (Gauteng) gas transmission pipeline tariffs for Sasol Gas Number of days for providing a report on Sasol Gas compliance with all pricing provisions in terms of Schedule One to the Agreement Report on Sasol Gas compliance with all pricing provisions contained in Schedule One to the Agreement to be completed within 110 days after receipt of the relevant information

74. 74 Programme 1: Setting and/or approval of tariffs and prices (2) Programme KPITarget for 2013/14 Number of days for completing the calculation of aggregate prices of gas for each province in line with legal requirements Approval of aggregate prices of gas for 2012 in each province within 120 days after receipt of the relevant information

75. 75 Programme 2: Licensing and Registration Processing of licence and registration applications and implementation of decisions; Investigation of industry investigated to identify unregistered import and production activities; and Reporting on the implementation of the gas to power component of IRP2010.

76. 76 Programme 2: Licensing and Registration Programme KPITarget for 2013/14 % of all licence applications finalized according to licensing procedures 50% Number of days taken to finalise registration applications 100% of registration applications are processed within 60 days and approved within 90 days. Annual reports on the implementation of gas to power in IRP Draft implementation framework developed and communicated

77. 77 Programme 3: Compliance Monitoring and Enforcement Assessment of volume balance reports; Conducting of audits on ROMPCO pipeline; Conducting investigations / inspections; and Reports on uncommitted capacity.

78. 78 Programme 3: Compliance Monitoring and Enforcement Programme KPITarget for 2013/14 Number of monthly volume balance reports assessed and discrepancies investigated 12 Number of audits on the ROMPCO pipeline conducted 2 Number of investigations / inspections conducted 4 Quarterly monitoring reports on RRM Compliance Full year financial reports submitted by 50% of licensees included in the pilot project Evaluation reports on uncommitted capacity in transmission pipelines ROMPCO + 1

79. 79 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Resolution of received complaints; and Finalisation of investigations.

80. 80 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Programme KPITarget for 2013/14 % of complaint investigations completed within 9 months and non-compliance notices issued (where applicable) 50% % of initiated investigations completed within 9 months and non-compliance notices issued (where applicable) 50%

81. 81 Programme 5: Setting of rules, guidelines and codes for the regulation of the piped- gas industry Developed, approved and implemented HDI scorecard.

82. 82 Programme 5: Setting of rules, guidelines and codes for the regulation of the piped-gas industry Programme KPITarget for 2013/14 Developed, approved and implemented HDI scorecard Approved HDI scorecard implementation framework

83. 83 Programme 6: Establishing NERSA as an efficient and effective regulator Proposed amendments to legislation and other engagements with policy maker; and Stakeholder workshops.

84. 84 Programme 6: Establishing NERSA as an efficient and effective regulator Programme KPITarget for 2013/14 Ongoing engagements with policy makers Continued engagement policy makers and comment on legislative amendments where applicable Number of stakeholder workshops and media engagements 4

85. 85 III. PETROLEUM PIPELINES INDUSTRY REGULATION

86. 86 NUMBER OF KPI’S PER PROGRAMME

87. 87 Programme 1: Setting and/or approval of tariffs and prices Setting of pipeline tariffs (Transnet and others); Approval of storage and loading facility tariffs.

88. 88 Programme 1: Setting and/or approval of tariffs and prices Programme KPITarget for 2013/14 Number of pipelines tariffs applications approved Approved Transnet pipeline tariffs for 2014/15 Approved tariffs for Chevron % of licensed storage and loading facilities’ tariffs approved 40% Updated published storage tariffPublished storage tariffs Annual Report on benchmarking of storage tariffs Conduct a benchmark study on storage tariffs Updated published financial and information Financial and tariff information published on NERSA website

89. 89 Programme 2: Licensing and Registration Processing of licence applications; and Investigation of suspected unlicensed activities.

90. 90 Programme 2: Licensing and Registration Programme KPITarget for 2013/14 % of licences approved within statutory deadlines 100% Number of suspected unlicensed facilities investigated 5

91. 91 Programme 3: Compliance Monitoring and Enforcement Infrastructure utilisation reports; Completion of assessment reports; HDSA reporting; Storage allocation reporting; and Reporting on specified licensees’ implementation of the pipelines and loading facilities access principles.

92. 92 Programme 3: Compliance Monitoring and Enforcement Programme KPITarget for 2013/14 Number of infrastructure utilisation reports 2 % of reports analysed and ready for noting within 60 days 90% Published status report on HDSA indicators based on a % of licensees 70% Published storage allocation mechanisms based on a % of licensees 70% Number of reports on the analysis of specified licensees’ implementation of the pipelines and loading facilities access principles 2

93. 93 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Resolution of complaints

94. 94 Programme 4: Dispute resolution, including mediation, arbitration and handling of complaints Programme KPITarget for 2013/14 % of complaints received investigated and concluded in line with legal requirements 100% of complaints received investigated and reported on within 60 days.

95. 95 Programme 5: Setting of rules, guidelines and codes for the regulation of the petroleum pipelines industry Publish licensing guidelines; Publish tariff guidelines for storage facilities; Review and publish Frequently Asked Questions document on tariff applications; Publish guidelines for calculation of Starting Regulatory Asset Base; Publish Minimum Information Requirements for Tariff Applications; and Reporting on contributions towards alignment between different Acts and government policies and regulations.

96. 96 Programme 5: Setting of rules, guidelines and codes for the regulation of the petroleum pipelines industry (1) Programme KPITarget for 2013/14 Approved licensing guidelines published Updated licensing guidelines published on NERSA website Approved tariff guidelines for storage facilities published Updated annual tariff guidelines for storage facilities published on NERSA website Approved annually reviewed FAQ published Approved reviewed FAQ published on NERSA website Approved guidelines to determine the SRAB of storage facilities published Guidelines to determine the SRAB of storage facilities published Approved Minimum Information Requirements for Tariff Applications (MIRTA) published Approved updated MIRTA published on NERSA website

97. 97 Programme 5: Setting of rules, guidelines and codes for the regulation of the petroleum pipelines industry (2) Programme KPITarget for 2013/14 Number of reports on contributions towards alignment between Petroleum Pipelines Act and Petroleum Pipelines Levies Act and government policies and regulations Quarterly

98. 98 Programme 6: Establishing NERSA as an efficient and effective regulator Approved implementation plan for the findings and recommendations in the Report on investigated infrastructure and bottlenecks in the petroleum pipelines infrastructure in Durban; and Report on the inland supply forecast.

99. 99 Programme 6: Establishing NERSA as an efficient and effective regulator Programme KPITarget for 2013/14 Approved implementation plan for the findings and recommendations in the Report on investigated infrastructure and bottlenecks in the petroleum pipelines infrastructure in Durban Implementation plan for the findings and recommendations in the Report on investigated infrastructure and bottlenecks in the petroleum pipelines infrastructure in Durban Number of reports on the inland supply forecast Biannual Approved RRM for non-financial information (NFI) Volume 7 Finalised RRM for NFI

100. 100 IV. CROSS-CUTTING REGULATION

101. 101 NUMBER OF KPI’S PER PROGRAMME

102. 102 Programme 6: Establishing NERSA as an efficient and effective regulator Benchmark report on regulatory decisions by category; Impact of regulatory decisions; Research on new sources of energy; Stakeholder engagement and education; and Approved proposals / comments on policy changes.

103. 103 Programme 6: Establishing NERSA as an efficient and effective regulator (1) Programme KPITarget for 2013/14 Benchmark report on regulatory decisions by category Report on the impact of regulatory decisions Approved framework for conducting impact assessment Research reports on new sources of energy Research reports Published quarterly newslettersQuarterly newsletters published Number of stakeholder engagement and education programmes conducted 25

104. 104 Programme 6: Establishing NERSA as an efficient and effective regulator (2) Programme KPITarget for 2013/14 Approved proposals / comments on policy changes Approved proposals / comments on policy changes (if and when necessary)

105. 105 V. ORGANISATIONAL

106. 106 NUMBER OF KPI’S PER PROGRAMME

107. 107 Programme 6: Setting of rules, guidelines and codes for the regulation of the electricity industry Implementation of Annual Performance Plan; Organisational structure filled; Training and Development; Customer satisfaction; Unqualified audit; and Payment of creditors.

108. 108 Programme 6: Establishing NERSA as an efficient and effective regulator (1) Programme KPITarget for 2013/14 % of targets in the Annual Performance Plan met Baseline to be determined in 2012/13 % of organisational structure filled95% % of staff undergoing training and development 80% Level of (%) customer satisfaction68% Result of annual auditUnqualified % of creditors paid within 30 days after all relevant documentation have been received 100%

109. 109 J. BUDGET AND FUNDING (2013/14)

110. 110 RING-FENCING METHODOLOGY According to Section 13 of the National Energy Regulator Act, all accounts for the three regulated industries have to be ring-fenced o all direct costs attributable to an industry are allocated to that industry o the ratio of the staff compliment attributed to the industry-specific functions is used to allocate the remaining (common) costs to the respective industries o the common costs allocation ratio for electricity, piped-gas and petroleum pipelines industries is 58%:21%:21%

111. 111 BUDGET AND FUNDING FOR 2013/14 *Over recovery from previous years from regulated industries – approved by National Treasury ExpenditureIncomeLevies ElectricityR159 225 099R137 043 9360.05468 c/kWh Piped-GasR56 942 531R48 808 06730.166 c/GJ Petroleum Pipelines R59 739 715R50 933 7400.28777 c/l OtherR39 121 602* TotalR275 907 345

112. 112 NATIONAL ENERGY REGULATOR OF SOUTH AFRICA Budget per programme 2013/14 Programme Electricity Piped-Gas Petroleum Pipelines Total per Programme PROG 1 - Setting and/or approval of tariffs and prices 51 820 027 12 358 916 26 623 264 90 802 206 PROG 2 - Licensing and Registration 23 216 712 7 867 285 11 974 737 43 058 734 PROG 3 - Compliance monitoring and enforcement 15 477 808 7 867 285 8 708 092 32 053 185 PROG 4 - Dispute resolution including mediation, arbitration and the resolution of complaints 10 318 539 1 866 190 3 110 072 15 294 801 PROG 5 - Setting of rules, guides and codes for regulation 40 070 485 10 697 091 3 776 296 54 543 872 PROG 6 - Establishing NERSA as an efficient and effective organisation 18 321 528 16 285 764 5 547 255 40 154 547 Total per Industry 159 225 099 56 942 531 59 739 715 275 907 345

113. 113 K. CONCLUSION

114. 114 CONCLUSION NERSA would like to thank the Portfolio Committee for the opportunity to present its Strategic Plan and Annual Performance Plan; Ongoing refinement of processes is taking place; NERSA is conscious of the regulatory burden it imposes; NERSA is striving for regulatory certainty to create a conducive environment for attracting and ensuring orderly investment; Filling legislative gaps is a priority; and Regulatory challenge - balance the interests of suppliers and customers.

115. 115 THANK YOU visit us at www.nersa.org.za