CHIEF DIRECTORATE:
ECONOMIC AND SOCIAL REGULATION
PRESENTATION TITLE
Presented by:
Name Surname
Directorate
ESR PROPOSED
STRATEGY
“Protecting the interest’s of water consumers throughout the water value chain and ensure the sustainability of
Date
water sector institutions”
REGULATION IMBIZO
Name Surname:
Designation
Directorate: Economic and Social Regulation
Date: 13-14 May 2015
PRESENTATION OUTLINE

ESR Domains

Why ESR

Interrelated Drivers

Regulation reality

Regulation Dilemma

Draft strategy

Five year roadmap

ESR long term wish
ESR DOMAINS
3
WHY ESR
Uncertainty of actual costs;
under-recovery; major grant
funding;
Inadequate investment in
O&M refurbishment,
development; poor service
management; unaffordable
services; poor billing and
revenue collection; value for
money
Poor service quality; high
costs to government
Impacts on human rights, well
being, economic development;
achievement of national
development objectives;
Financial
requirements
Service delivery
Taxes
Tariffs
Transfers
Asset development
and maintenance
Service quality
Quantity
Quality
Reliability
Water users (raw water
and potable water)
4
INTERRELATED DRIVERS
Availability
Affordability
Sustainability
5
REGULATION REALITY
Ability to pay
Willingness to
pay
6
REGULATION DILEMMA
Safe water is the first step in breaking the poverty cycle. Consider the following
scenario:
 The walk for water that used to take three hours, now takes 15 minutes – this
means:
o water is now safe to drink.
o the extra time and new water source can be used to start a vegetable
garden to feed the family.
o they can sell extra food at the market.
o children spend more time in school instead of walking to fetch water.
o once educated, children can become pilots, medical doctors and business
executives.
 The reverse of water access could mean amongst others, a different story
altogether?
o Ballooning poverty gap
o No schooling
o Health hazard and death fatalities
7
DRAFT STRATEGY
VISION
To be an independent, credible and transparent
regulator who ensures that water-related goods and
services, throughout the water value chain, are provided
equitably, efficiently and sustainably, within the
context of national socio economic policies.
8
DRAFT STRATEGY
MISSION
To regulate institutions, including competition
regulation, as well as to regulate water pricing and
tariffs, financial sustainability, service quality, social
obligations and consumer protection by :
 setting rules and putting service standards into
place,
 implementing regulations and enforcing compliance
to ensure transparency and predictability in the
water sector.
9
DRAFT STRATEGY
MOTTO
“Protecting the interest’s of water consumers
throughout the water value chain and ensure
the sustainability of water sector institutions”
10
DRAFT STRATEGY
Mandate:
• Ensure sustainable, affordable and safe water in the
country
• Make sure the rights of the consumers are protected
• Prevent monopoly, wherever possible
• Ensure a functional environment in terms of
legislation and policies
• Empower the SA Citizens (Improving the lives of the
ordinary citizens
11
STRATEGIC OBJECTIVES/ PILLARS
12
STRATEGIC OBJECTIVES ORIENTATED TASKS
•
Analyse and monitor WB bulk water tariff determination process
•
Analyse and monitor the intermediaries' bulk water tariff determination process
•
Review of WSA/WB bulk water supply contracts
•
Analyse and monitor the retail water tariff determination process
•
Analyse and monitor waste water tariff determination process at retail level
•
Monitor compliance of WSAs to the regulatory requirements in water services.
•
Business process for raw water tariff approval
•
Regulatory model for review of all tariffs and policies (incl. impact studies on Bio-energy, Fracking
Water & Quality and IPP)
•
Finalize dispute resolution framework and manage consumer disputes by conducting technical
investigations into disputes
•
Monitor service quality standards by ensuring quality services are provided to and experienced by
consumers
•
Developing consumer voice and national surveys
•
Evaluate pro-poor tariff implementation as set by WSA’s
13
STRATEGIC OBJECTIVES
Financial
Strategic Theme 1:
Set regulations for water tariffs and charges, perform financial assessments of
WSIs, and enforce equitable and sustainable water tariffs and charges to
ensure financial sustainability of WSIs
1. Conclude review of
Pricing Strategy
• Gazette Public Comment
• Conclude Public Consultation process
Regulation of pricing and financial
sustainability
• Revised and consolidated inputs
• Promulgation of Pricing Strategy
2. Conclude review of
Norms and Standard for
• Gazette Notice for Public Comment
• Conclude Public Consultation process
Regulation of pricing and financial
sustainability
tariffs
• Revised and consolidated inputs
• Promulgation of Norms & Standards
14
STRATEGIC OBJECTIVES
Strategic Theme 1….
3. Develop a business processes
for raw water consultation and
approval
Enforcing adherence to raw water pricing
regulation through:
Analysis of tariff inputs cost factors :
-Development of water use
charges determination
standards
-Assessment of water use
charges determination process
-
Review the funding model for raw
water infrastructure
-
Charges for different water use
categories
Raw Water Tariff Assessment
Framework finalized
Raw water tariff assessment report
submitted to Minister
4. Analyze and monitor bulk WSP
water tariff determination
process
-
Report on pre-tariff consultations
with Bulk WSPs with nine WBs
consulted
-
Assessment of WBs tariff
proposals
-
Tariff recommendations submitted
to the Minister for approval and
tabling to Parliament
Bulk Water Services Tariff
Assessment Model developed and
implemented
15
STRATEGIC OBJECTIVES
Strategic Theme 1…
5. Draft bulk WSP intermediary pricing
regulation strategy
Study the trends and the mandate
-Analyze and monitor the
intermediaries' bulk water tariff
determination process
6. Analyze and monitor the retail water
tariff determination process
Clarify definition, legal position and
mandate of intermediaries, verify if
Water Services Act and Norms and
Standards for Bulk WSPs provide
for intermediaries
Understanding the budgeting
Norms and Standards for WSAs
processes with special focus on tariff (water supply) -y provides a
determination
framework and compulsory returns
for retail tariff determination
Gap analysis report on actual
process
municipal budget processes
7. Investigate status of sanitation pricing Report on the pricing of sanitation
both local and international
in the country
Refer to Norms & Standards for
WSAs (sanitation) for guidelines
on aspects to investigate
16
STRATEGIC OBJECTIVES
Customer
Strategic Theme 2:
Define, monitor and publish service quality standards, and enforce these standards to ensure that
water supply and sanitation services are reliable and that water and wastewater quality is
acceptable
1.
Monitor service quality
standards, by ensuring that the
quality of services provided to
and experienced by consumers
Draft Service quality standards for
Water Services within the Water
Sector in place:
Technical Options available to
the Consumer
-
Regulation of service quality
Standards for different Levels of
Service
Stakeholder involvement and
participation
2. Regulatory model for review of all
tariffs and policies on Bio-energy,
Fracking, Water & quality and IPP
Carry out studies impacting on the
Align with government priorities
strategy / emerging sectors, e.g.
on economic development and job
Biofuel, Fracking, IPP, impact of water creation
quality on raw water prices
17
STRATEGIC OBJECTIVES
Customer
Strategic Theme 3
We will ensure service providers are accessible to consumers and that consumers are adequately
protected by enforcing consumer protection decisions, dispute resolutions and interventions
1. Implementation of water services
Consumer Charter by WSAs
Compile guidelines for a Consumer
Charter
Regulation of Social Obligations
and Consumer Protection
Ensure service delivery and
administrative standards are
addressed, including FBW
Ensure Consumer Charter is
approved by WSAs
2. Conduct National consumer survey
Service quality standards documents Regulation of Social Obligations
finalized
and Consumer Protection
3. Implement debt management and
model by-laws
Inform WSAs (or WSPs) of debt
management processes
Regulation of Social Obligations
and Consumer Protection
Ensure Conditions of Supply are in
place
Ensure FBW and Indigent Policy
implemented
18
STRATEGIC OBJECTIVES
Customer
Strategic Theme 4:
We will set rules for water sector competition regulation, implement and enforce equitable water
use licensing, review contractual arrangements and facilitate contract dispute resolution
1. Review and issue WULs
Number of WUL applications
Number of WUL issued and backlogs
Competition Regulation and
Regulation of Water Institutions
% compliance with WUL conditions
2. Review of WSA/Bulk WSP (Water
Board) bulk water supply contracts
Number of bulk water supply contracts Competition Regulation and
between WB and WSA reviewed
Regulation of Water Institutions
(target – 10 contracts in Year 1)
3. Manage consumer disputes by
conducting technical investigations into
disputes
Debt Management Desk
Implementation Plan describes proactive and reactive processes to
manage disputes
Competition Regulation and
Regulation of Water Institutions
19
STRATEGIC OBJECTIVES
Internal business process
Strategic Theme 6:
We will develop and revise regulations and guidelines, as well as develop Economic Regulation
systems and interfaces to establish the regulatory institution
1. Monitor compliance of WSAs to the
regulatory requirements in water
services
Performance assessment of 152
WSAs conducted and annual report
published
Building the institution and the
capacity of the Regulator
Annual RPMS report published
2. Establish an economic regulatory
expert panel
Expert panel advertised and
appointed
Building the institution and the
capacity of the Regulator
Effective RPMS with reliable outcome Building the institution and the
3. Cost effective way of gathering
capacity of the Regulator
information and maintain the reliability of on the status of the WSAs in the
delivery of water
RPMS
20
5 YEAR ROAD MAP
•
•
•
•
•
Short term (1-2 years)
Developing pricing
policies, regulation and
guidelines
Developing database
and baseline
information for WSAs
Developing the
economic regulatory
systems and processes
Review raw water tariffs
Develop the frameworks
for dealing with water
disputes
Medium term (2-5 years)
• Amend Legislation
• Draft ESR act
• Regulating water board
tariffs
• Developing the
economic regulatory
systems and processes
• Develop framework for
benchmarking water
boards
• Undertake socioeconomic studies to
understand the impact
of tariffs
• Regulate raw water
pricing
• Consumer surveys
• Assessment of
consumer charters
• Contract regulation
Long term (5 years and
beyond)
• Regulating water board
tariffs
• Review and approve
water board corporate
plans
• Undertake socioeconomic studies to
understand the impact
of tariffs
• Regulate raw water
pricing
• Regulate retail water
tariffs
• Regulate sanitation
tariffs
• Develop the framework
for incentive based
regulation
21
ESR LONG TERM GOAL
Reflect a sophisticated
understanding of customer
needs
Convey a deep understanding
of Sector economic changes
Indicate detailed knowledge of
competitors
• What they value, how to build loyalty,
and how to build switching costs
• Drivers of operational efficiency /
value add
• The core of their business models
and economics
• Differences across customer types and
how they should be segmented based
on needs
• Economic drivers of value creation
• Strengths, weaknesses relative to
you
• Relative position in the market and in
the customers’ eyes
• Impact of our offer on their value chain
• Actual and predicted behaviour and
how they could respond to a
changing environment
Are described in
terms of clear and
measurable
operational outcomes
Build on past
successful strategies
and exploit your
competitive
advantages
Are executable by the
organisation
• Practical implementation
paths
• Understand why success
was achieved in the past
• Skill mix, resources and
information
• Create value for
customers
• Explicit performance
measurement
• Knowing what attributes
are better than the
competitors
• Processes, systems and
culture
• Improvement in value
creation for shareholders
Result in increased
profitability,
sustainability and
growth with the
sector
22
• “Protecting the interest’s of water consumers
throughout the water value chain and ensure
the sustainability of water sector institutions”
23