	INTEGRATED RESULTS PRESENTATION
	KING III APPLICATION

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Distribution

Mandate

Distribution’s mandate is to operate its network assets and provide reliable electricity by building, operating and maintaining distribution assets, while also acting in the national interest by actively partnering with the wider industry in resolving distribution industry issues and enhancing stakeholder relations.

Eskom’s distribution network is a critical conduit that delivers energy from the high-voltage transmission network to Eskom’s customers via the Distribution network infrastructure. Distribution’s network infrastructure consists of 46 093km of distribution lines, 276 027km of reticulation lines and 7 293km of underground cables. Distribution’s footprint spans the whole of South Africa, making it one of the largest power line systems on the African continent.

Since 1991, Eskom has connected over 4.5 million electrification households to the distribution network.

Operating highlights

•	A significant improvement in the SAIFI and SAIDI interruption performance in 2013/14 compared to 2012/13
•	Eskom achieved 201 788 electrification connections during 2013/14, the highest achieved since 2002.
•	A reduction in the lost-time incidence rate (LTIR) from 0.58 in 2012/13 to 0.39 for 2013/14
•	Seven independent power producers (IPPs) have been connected to the Distribution network

Operating challenges

•	Managing the risk of increased exposure of employees and contractors to crime-related assault incidents
•	Achieving Eskom’s aspiration of zero harm with particular emphasis on employee and contractor safety
•	Reducing the incidence of equipment theft, vandalism and energy theft (illegal connections)
•	Addressing the backlogs in maintenance, refurbishment and reliability with particular focus on preventative maintenance for electrification (low-voltage) networks
•	Regrettably seven fatalities were recorded during the year. Of these, three were Eskom contractors and four were Eskom employees

Future focus areas

•	Continue to reinforce safety practices to achieve zero harm for employees and contractors
•	Ongoing focus on energy protection initiatives to minimise energy losses
•	Continued focus on business sustainability through prioritised interventions towards refurbishment, reliability improvements and addressing maintenance backlogs
•	Improving business productivity
•	Delivering electrification connections on the accelerated DoE universal access programme
•	Skills development within the business

Benchmarking

Distribution participated in a 2012 benchmarking study which was facilitated by an independent international consulting group that used North American utilities for comparative benchmarking. Distribution’s network interruption performance is historically impacted by its long radial overhead lines for rural electrification customers, with limited ring feeds in the event of supply interruptions, which limits the opportunity to build redundancy into the networks. In South Africa urban areas are largely supplied by municipalities, who are in turn supplied in bulk by Eskom.

The Distribution system average interruption duration index (SAIDI) and system average interruption frequency index (SAIFI) were categorised as fourth quartile performance (quartile one being the higher performing utilities). Since the 2012 benchmark exercise Distribution has improved its SAIDI performance by 22% and SAIFI performance by 17%.

Distribution is currently preparing for a new benchmarking cycle, comparing technical and operational performance with international utilities.

Performance

Key financial statistics for the year ended 31 March 2014

R million	Actual 2013/14	Actual 2012/13	Actual 2011/12
Grants received for electrification	1 878	1 649	1 784
Maintenance	4 297	4 006	3 851
Capital expenditure (excluding capitalised borrowing costs)	7 540	8 317	7 941
Total property, plant and equipment¹	62 186	54 019	47 842

1.	Balances for property, plant and equipment represent the net book value.

Technical performance for the year ended 31 March 2014

Indicator and unit	Target 2013/14	Actual 2013/14	Actual 2012/13	Actual 2011/12
System average interruption frequency index (SAIFI), index¹	20.0	20.2	22.2	23.7
System average interruption duration index (SAIDI), index²	45.0	37.0	41.9	45.8

1.	SAIFI is a reliability of supply index – how often on average (frequency) the customer connected would experience a sustained interruption per annum (number of times per annum).
2.	SAIDI is an availability of supply index – the average duration (hours) of a sustained interruption the customer would experience per annum (number of hours per annum).

Routine line maintenance is performed in Cosmos, Johannesburg

The improvement in SAIFI and SAIDI performance in 2013/14 compared to 2012/13 is attributed to:

•	The establishment of additional customer network centres to increase the operational footprint and enable a quicker response to network interruptions
•	Reduced network down time by maximising live-line work for planned maintenance
•	The implementation of a revised network reliability planning standard to improve the reliability of the network, in line with the regulatory requirements of the Distribution grid code
•	Increased network visibility, to enable remote monitoring and switching of network equipment to reduce the outage time
•	Improving reliability-centred maintenance to reduce the risk of equipment failure
•	Focused management attention that ensures disciplined execution of all initiatives

The challenge going forward is to sustain this level of performance in a resource-constrained environment, in particular the financial pressures of the business productivity programme.

Electrification

The government of South Africa through the Department of Energy (DoE) continues to fund the electrification of previously disadvantaged households and farm workers’ households in its licensed areas of supply. While the DoE funds the new connections and infrastructure development, Eskom carries the ongoing operating costs for these connections, and receives the revenue for electricity sold.

Refer to the “Transformation – electrification” section (page 149) in the integrated report for more information.

Safety performance

The Distribution LTIR at 31 March 2014 was 0.39 (against the target of 0.36), a significant improvement from the 0.58 at 31 March 2013.

Regrettably seven fatalities were recorded during the year. Of these, three were Eskom contractors and four were Eskom employees. Of these, one was due to an electrical contact incident, three due to motor vehicle accidents, two as a result of criminal assaults and one from handling heavy equipment.

Distribution continues to strive for a zero harm safety culture. The results of these interventions are reflected in the LTIR improvement. Management controls are well entrenched but there are still challenges in terms of individual accountability for safety.

Distribution safety interventions are based on the following aspects:

•	Leadership
•	Policy
•	People
•	Physical world of work
•	Pre- and post- incident management
•	Contractor management

Environmental performance

Four legal contraventions were recorded in the year to March 2014, matching the number for the year to March 2013. These are detailed below:

•	An oil spill at Firgrove substation outside Somerset West in the Western Cape, in terms of section 19 of the National Water Act
•	Marula trees were cut without a permit in the North West, in terms of section 16 of the National Forest Act
•	Bush-clearing contractors did not adhere to the full requirements of a permit whilst conducting bush clearing in KwaZulu-Natal
•	The Ruigtevalley-Dreunberg 132kV line in the Eastern Cape was built on the incorrect servitude option that was not approved in the environmental authorisation

Zero harm to the environment is an important Eskom value. To this extent, Distribution has rolled out educational training and awareness initiatives to employees and contractors as a preventative strategy to improve environmental performance. For every violation of the environment, Distribution has adopted a practice of planting and donating trees within the provinces where the violation has occurred.