National Energy Regulator of South Africa

NERSA Distribution forms completion guideJuly 2010

NATIONAL ENERGY REGULATOR OF SOUTH AFRICA

NERSA DISTRIBUTION FORMS

COMPLETION GUIDE

Date:July 2010

Introduction

Municipalities are required to submit distribution forms (D-forms) to NERSA annually for two reasons:

Tariff increase reviews and
Statistical purposes for the electricity industry.

The analysis of municipal financial and technical performance is done based on the information contained in the D-Forms and tariff applications. It is therefore critical that Municipalities submit duly completed and accurate information in their D-forms.

D-forms are sent to municipalities at the end of July for completion. They are also available on the NERSA website, Licensees are required to submit accurate and completed D-forms to NERSA by 31October each year.

All information requested in the D-forms relates to a RING-FENCED ELECTRICITY DISTRIBUTION ACTIVITY, or Electricity Department within a Municipality. RING-FENCED means that separate accounts are kept for the electricity distribution activity. This should ensure that the revenues, costs, assets, liabilities, reserves and provisions are separately identifiable from those of any other business in the books of account of the licensee. Unfortunately, this is not always the case in a Municipality.

This guide tries to give guidance on where to get the correct information for the purpose of completing these D-forms.

A set of D-Forms comprise of the following forms which should be submitted to NERSA as per the prescribed deadlines:

Distribution Forms to be completed / Submission deadline to NERSA
D1 Form: Financial information / 31 October 2010
D2 Form: Market information / 31 October 2010
D3 Form: Human resources information / 31 October 2010
D4 Form: Technical information / 31 October 2010
D5 Form: Connection information / 31 October 2010
D6 Form: Tariff information / 31 October 2010
D7 Form: Application for a tariff increase / tariff structure change / 31 March 2011
D8 Form: Quality of service / 31 October 2010

The above electricity distribution forms are available in Excel and as Word documents on the NERSA website (

Completed forms may be returned to NERSA through any of the following addresses:

Email:

Fax:(012) 401-4700

Post:PO Box 40343, Arcadia, 0007

For further enquiries please do not hesitate to contact Ms Thandeka Jamba (Senior Statistician) at:

Tel:(012) 401-4665

Cell:(082) 538-7180

E-mail:

D1 - Form: Financial Information

D1 FORM (SECTION 1): GENERAL INFORMATION, DEFINITIONS AND INSTRUCTIONS

Financial information is to be stated in R’000 (For ex. R1 234 567,00 should be stated as 1 235).

ALL amounts exclude Value Added Tax (VAT).

The format of all the financial statements shall comply with the Published Annual Financial Statements for Local Authorities Second Edition (January 1996). A copy of the Published Annual Financial Statements for Local Authorities Second Edition (January 1996) is obtainable from:

Postal address: Or Street address:

The Secretary 201 Progress House

IMFO Corner of Bordeaux and Rider streets

P O Box 3322Randburg

RandburgTelephone:(011) 789-7443

2125Facsimile:(011) 789-8830

Or visit the web site of the Institute of Municipal Finance Officers (IMFO) at

It is important to note that the Town Treasurer’s Report, Accounting policies, and Notes to the Financial Statements as they relate to the electricity activity are as mandatory as the financial statements.

In addition to completing this form, the following financial statements are mandatory and must be included together with this form.

Ring-fenced financial accounts: Financial information for a RING-FENCED ELECTRICITY ACTIVITY in respect of the actual figures for the financial year ending 30 June each year and the budget figures for the financial year ending 30 June the following year in the form of:

An Income Statement

A Balance Sheet and

A Cash Flow Statement

Full financial statements: A copy of the latest full audited financial statements (un-audited if not audited by 31 October each year).

D1 FORM (SECTION 2): BALANCE SHEET

NOTE:

Please remember that this information is for a ring-fenced Electricity Distribution Account.
Fixed assets, building and other fixed assets include all administrative assets specifically associated with electricity distribution.
Fixed assets, electricity distribution network and equipment include all assets related to electricity distribution.

WHERE to get the information:

The information can be obtained from the Municipal Financial Statements. Another source of information is the report on: “The ring fencing of Municipalities Electricity Departments and Eskom Distribution activities into Regional Electricity Distributors (REDS) follow the 1998 White Paper on Energy Policy whose main objective was to synergize the electricity distribution to customers towards a more effective, efficient and less fragmented industry”.

EXAMPLE:

BALANCE SHEET AT 30 JUNE 2010

Note / 2009/2010 / 2008/2009
R / R
CAPITAL EMPLOYED
FUNDS AND RESERVES / 1 233 413 / 1 044 737
Statutory funds / 1 / 1 117 384 / 912 318
Reserves / 2 / 116 029 / 132 419
(ACCUMULATED DEFICIT) RETAINED SURPLUS / 18 / (1 994) / 44 179
1 231 419 / 1 088 916
TRUST FUNDS / 3 / 42 060 / 37 020
LONG-TERM LIABILITIES / 4 / 911 988 / 444 365
CONSUMER DEPOSITS / 5 / 62 459 / 52 468
2 247 926 / 1 622 769
EMPLOYMENT OF CAPITAL
FIXED ASSETS / 6 / 1 879 679 / 1 583 177
INVESTMENTS / 7 / 128 094 / 44 176
LONG-TERM DEBTORS / 8 / 140 500 / 120 300
DEFERRED CHARGES / 11 / 27 136 / 2 407
2 175 409 / 1 750 060
NET CURRENT ASSETS/(LIABILITIES) / 72 517 / (127 291)
CURRENT ASSETS / 532 374 / 454 656
Inventory / 9 / 61 433 / 59 313
Debtors / 10 / 454 792 / 382 841
Cash / 11 772 / 9 169
Short-term investments / - / -
Short-term portion of long-term debtors / 8 / 4 377 / 3 341
CURRENT LIABILITIES / 459 857 / 581 947
Provisions / 12 / - / -
Creditors / 13 / 422 480 / 351 529
Short-term portion of long-term liabilities / 4 / 37 377 / 230 418
Bank overdraft / - / -
2 247 926 / 1 622 769

D1 FORM (SECTION 3): CAPITAL EXPENDITURE

NOTE:

Please remember that this information is for a ring-fenced Electricity Distribution Account.

WHERE to get the information:

D1 FORM (SECTION 4): INCOME STATEMENT

NOTE:

Please remember that this information is for a ring-fenced Electricity Distribution Account.
All amounts should exclude value added tax (VAT).

WHERE to get the information:

IMPORTANT:

It is important that the totals of theRevenue from sales of electricity section are the same as the amounts on the NERSA D2-form, section4

EXAMPLE:

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2010

2009/2010 / 2010/2011
ACTUAL / BUDGET
REVENUE FROM SALES TO CONSUMERS (All sales from tariffs) / XXX / XXX
REVENUE FROM SALE FOR REDISTRIBUTION / XXX / XXX
REVENUE FROM SALES FOR OWN USE / XXX / XXX
1. Revenue from Sales for Street Lighting / XX / XX
2. Revenue from Sales to Other departments / XX / XX
TOTAL REVENUE FROM SALES / XXXX / XXXX
OTHER REVENUE / XXX / XXX
1. Reconnections Fees / XX / XX
2. New Connections / XX / XX
3. Electricity Service Charges / XX / XX
4. Other / XX / XX
TOTAL REVENUE / XXXXX / XXXXX

D1 FORM (SECTION 5): EXPENDITURE STATEMENT

NOTE:

Please remember that this information is for a ring-fenced Electricity Distribution Account.
All amounts should exclude value added tax (VAT).

WHERE to get the information:

IMPORTANT:

It is important that the totals of the Purchases section are the same as the amounts on the NERSA D2-form (section 2) Totals: Cost of electricity purchases

The General expenses section includes expenses not classified elsewhere, i.e. purchases, salaries and maintenance, capital charges, contribution to capital, contribution to funds, charges allocated to and from other departments.

EXAMPLE:

EXPENDITURE

2009/2010 / 2010/2011
ACTUAL / BUDGET
Purchases / XXXX / XXXX
Eskom / XXX / XXX
Self generation / XXX / XXX
Other (please specify: ………………………………..) / XXX / XXX
Salaries and Maintenance / XXXX / XXXX
Salaries, Wages and allowances (own staff) / XXX / XXX
Payments to consultants (operational work) / XXX / XXX
Payments to consultants (capital work) / XXX / XXX
Repairs and Maintenance (excluding salaries and allowances) / XXX / XXX
Capital Charges / XXXX / XXXX
Redemption (External Loans) / XXX / XXX
Redemption (Internal Loans) / XXX / XXX
Interest (External Loans) / XXX / XXX
Interest (Internal Loans) / XXX / XXX
Contribution to Capital / XXX / XXX
Contribution to Funds / XXXX / XXXX
Capital Development Fund / XXX / XXX
Tariff Equalisation Fund / XXX / XXX
Renewal Fund / XXX / XXX
Bad Debt Reserve / XXX / XXX
Maintenance provision / XXX / XXX
Other (please specify: ………………………………..) / XXX / XXX
Charges allocated from other Municipal Departments(Admin. Charges) / XXX / XXX
Charges allocated to other Municipal Departments / (XXX) / (XXX)
General Expenses / XXX / XXX
Total Expenditure: / XXXXX / XXXXX
Surplus/Deficit / XXXX / XXXX

D1 FORM (SECTION 6): NON-PAYMENT AND BAD DEBT

NOTE:

Please remember that this information is for a ring-fenced Electricity Distribution Account.
All amounts should exclude value added tax (VAT).

WHERE to get the information:

IMPORTANT:

Some of the totals written off can also be obtained from the previous year’s NERSA D1 form.

D1 FORM (SECTION 7): ALLOCATION OF THE SURPLUS AS CALCULATED IN SECTION 4

NOTE:

Please do not complete this section in the case of a deficit.
Please remember that this information is for a ring-fenced Electricity Distribution Account.
All amounts should exclude value added tax (VAT).

WHERE to get the information:

EXAMPLE:

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2010

Note / 2009/2010 / 2010/2011
R / R
CASH RETAINED FROM OPERATING ACTIVITIES / 263 759 / 258 467
Cash generated by operations / 19 / 333 628 / 337 590
Investment Income / 17 / 14 295 / 10 488
(Increase)/Decrease in working capital / 20 / (14 150) / (58 131)
333 773 / 289 947
Less: External interest paid / 17 / (83 309) / (50 244)
Cash available from operations / 250 464 / 239 703
Cash contributions from the public and State / - / -
Net proceeds on disposal of fixed assets / 13 295 / 18 764
CASH UTILISED IN INVESTING ACTIVITIES
Investment in Fixed Assets / (451 812) / (370 416)
NET CASH FLOW / (188 053) / (111 949)
CASH EFFECTS OF FINANCING ACTIVITIES
Increase/(decrease) in long-term loans / 21 / 374 582 / 56 169
Increase/(decrease) in short-term loans / 22 / (100 000) / -
(Increase)/decrease in cash investments / 23 / (83 918) / 53 113
(Increase)/decrease in cash / 24 / (2 611) / 2 657
Net cash (generated)/utilised) / 188 053 / 111 949

D2 - Form: Market Information

D2 FORM (SECTION 1): GENERAL INFORMATION DEFINITIONS AND INSTRUCTIONS

All information requested relates to aRING-FENCED ELECTRICITY DISTRIBUTION ACTIVITY.
RING-FENCED means that separate accounts are kept for the electricity distribution activity. This should ensure that the revenues, costs, assets, liabilities, reserves and provisions are separately identifiable from those of any other business in the books of account of the licensee.
Financial information is to be stated in R’000 (For example. R1 234 567.00 should be stated as 1 235).
Sales information is to be stated in MWh (NOT GWh or kWh).
In sections 2, 3 and 4 the information in the actual column is in respect of the actual figures for the financial year ending on 30 June 2010 and the information in the budget column is in respect of the budget figures for the financial year ending on 30 June 2011

Consumer definitions

A consumer is a person or legal entity who:

receives a supply of electricity in terms of a legal supply agreement entered into with a Supplier of electricity and
is legally responsible for payment to the Supplier for electricity and/or related services used.

A distinction is made between two types of Consumers:

End-use consumer:

The end-use consumer actually uses the electricity purchased to produce light, heat, processes and other forms of energy. A typical example of an end-useconsumer is the domestic consumer who has an account with a supplier. In this example there is a supply agreement between the supplier and the end-useconsumer. The consumer is thus also the customer.

Bulk Consumer:

The bulk consumer distributes electricity to groups of end-use consumers. A supplier meters the consumption for each bulk consumer (which is the total consumption of a group of end-use consumers) and bills the consumer (please see diagram overleaf). The bulk consumer may or may not meter the individual consumption of end-use consumers, but end-use Consumers have agreements with their bulk consumer regarding the payment for consumption. A typical example of a bulk consumer is in the case of blocks of flats where the bulk consumers distribute to the occupants. The licensee should provide information as metered for the bulk consumer.

Supplier and the Supply Agreement

A supplier is the licensed distributor of electricity.

The supply agreement is the legal agreement between a supplier of electricity and a consumer setting out the general conditions under which the electricity product and related services are provided, and the obligations of a supplier and the consumer towards each other. Separate agreements may be entered into for certain aspects of the same supply - e.g. networks or wheeling charges and energy charges. For each account of the consumer specific detailed information such as fixed charges, instalment payment, applicable tariffs, etc. are maintained.

Point of connection

The point of connection is the point at which the electricity installation on any premises is connected to the distribution system of a supplier.This is also referred to as the point of supply. End-use consumers may or may not have meters at the connection point where they take supply from the bulk consumer.

Consumer Classification

In order to evaluate important parameters within the major components of the end-user electricity market, the NERSA requires end-use and bulk consumers to be classified according to the Standard Industrial Classification (SIC) Categories defined in the fifth edition of the Standard Industrial Classification of all Economic Activities by Statistics South Africa. The SIC Categories are groupings of economic activities across diverse industries.

Licensees are required to complete the market information by utilizing the SIC categories provided in this form. Classifying according to the SIC categories provides a standardised framework for the collection, tabulation, analysis and presentation of statistical data according to kind of economic activity.

It is understood that adequate records may not be readily available in the required format as tariffs do not necessarily coincide with the SIC Categories. It is thus recommended that the larger non-domestic Consumers of all licensed Distributors be classified according to the Major Divisions of the SIC within the information systems of Licensees.

Diagram of typical supply agreements

Supplier / Supplier
Consumer supply agreement / / Consumer supply agreement /
Tariff 1
Accnt 1 / Meter* / Tariff 2
Accnt 2 / Meter* / Tariff 3
Accnt 3 / Meter*
End-use Consumer / End-use
Consumer / Bulk Consumer
Tariff 4
Accnt 4 / Meter* / Tariff 5
Accnt 5 / Meter*
End-useConsumer / End-use Consumer
* Point of connection

D2 FORM (SECTION 2): PURCHASES OF ELECTRICITY

NOTE:

In the “Name of supplier” column, ALL electricity purchased from outside suppliers, self-generated or co-generatedshould be included.

WHERE to get the information:

The example on the Excel sheet, NERSA STATS.xls can also be used to compile the information. The completed sheet can also be e-mailed to the address in this document.

EXAMPLE:

The following table is an example. The information refers to cells in the example in the Excel sheet, NERSA STATS.xls. If the correct account information was completed in the sheet, the required information will be calculated by the sheet and given in the referred cell. The same sheets can be duplicated for different accounts (and suppliers, like “self generation” or “other”) and given in exactly the same way.

Supplier / Peak monthly maximum demand / Total energy
purchased / Average Demand charge
(MVA) / (MWh) / (R/kVA/month)
Actual / Budget / Actual / Budget / Actual
2009/10 / 20010/11 / 2009/10 / 20010/11 / 2009/10
Eskom / NightSave sheet, cell G19
+
MegaFlex sheet, cell I19 / NightSave sheet, cell E18
+
MegaFlex sheet, cell F18 / NightSave sheet, cell AK19
+
MegaFlex sheet, cell AP19
Self generation
Other, specify:
………………
Totals

The Budget figures can be supplied from the existing year’s tariff budget.

D2 FORM (SECTION 3): ELECTRICITY SALES, NUMBER OF CONSUMERS AND SYSTEM DETAILS

WHERE to get the information: