ecb annual report 2013
DESCRIPTION
Namibia power scenarioTRANSCRIPT
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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
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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
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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
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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
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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.
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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
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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.
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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).
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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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.
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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
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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
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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.
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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.
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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.
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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
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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%
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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.
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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.
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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
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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