Western Cape Municipalities: Energy Infrastructure Plans for 2023/24; Emergency Energy Funds Grant Allocation

Meeting report

The Chairperson sought consent from the Committee to allow Ms Barnard to deliver the presentation on behalf of the Head of Department (HOD), Mr Paulse, who had submitted an apology for his absence.

Western Cape Department of Local Government (DLG) Presentation  
Ms Eda Barnard, Chief Director: Municipal Performance Monitoring and Support, WCDLG, presented the background for the support that the Department was providing to municipalities. She furthermore provided responses to the questions that the Committee had raised in terms of the following issues: the funding allocated to the Central Karoo District Municipality and its local municipalities; the total allocation of funds awarded to each municipality, and the extent of consultations with each municipality in terms of the allocation required; a list of requests from municipalities for rollovers of grants for the 2022/23 allocation for Emergency Energy Funds Grant, the reason for the request for rollover and the status of these requests; the formula of allocation and the basis for each allocation to each municipality to address the energy crisis, including any financial or market studies done on the costs for generators and any other provisions related to municipalities energy needs.

In response to the need for municipal services in a changing reality of climate change and Eskom becoming less reliable as an energy provider, the Provincial Government developed a strategy to mitigate the impact of load shedding on municipalities and the extended province. The goal is for the Western Cape to become an independent power producer. In consultation with Municipal Managers and Technical Directors, the DLG undertook operational and technical assessments at all municipalities to identify the most strategic and critical potable water supply and domestic wastewater disposal installations. Municipalities identified and registered their specific needs, with associated funding, to procure generators to augment energy supply. As at 31 August 2023, the total grant expenditure was approximately R49.2 million (55%).  Twelve municipalities have spent 100% of their allocation to procure the required generators while nine municipalities have awarded tenders, awaiting delivery, and were in various stages of implementation. Eight municipalities were still in the supply chain management process.

(See Presentation)

Garden Route District Municipality (GRDM) Presentation 
Mr Lusanda Menze, Executive Manager: Planning and Economic Development, GRDM, stated that the municipality had submitted an application to the DMRE to retrofit some of the products such as energy-saving bulbs and air conditioners which were consuming most of the energy and had received R15 million over a period of three years from the Department. More than 1 000 bulbs had been retrofitted. Occupancy sensors were installed which automatically switch off if no movement in the office is detected. The inverter-linked air conditioner units reduce energy consumption, thereby contributing to the low carbon footprint of all municipal buildings in the district. Part of the agreement with the DMRE is that for every R1m million spent, a job must be created. A number of young people, with electrical qualifications had been employed on a contractual basis. With the funding received from the DLG, the municipality purchased five 100 kVA generators, one was received, delivery of two more is expected by 29 September 2023 and the remaining two are expected to be delivered by 6 October 2023.

The Municipal Manager, Monde Stratu, was grateful for the assistance received. But he brought it to the attention of the Committee that the new equipment came with additional costs in terms of maintenance and diesel to operate the generators.

(See Presentation)

Kannaland Municipality Presentation 
The Acting Director of Infrastructure Services stated that he had commenced in this role earlier this month. The DLG identified certain projects for emergency energy relief to assist municipalities with the purchase of backup supplies including generators, batteries, and all ancillary costs associated with the installation of the new infrastructure and equipment. The initial scope of work was approved for five generators but after the bidding process, the municipality was able to purchase only three generators, i.e. a 50 kVA generator at the Calitzdorp sewage pump station, 100 kVA generator at the Calitzdorp wastewater treatment works, and an 80 kVA at the Zoar sewage pump station. The municipality had received R1 075 000 and was able to spend 93% of the funds to purchase the generators. An application was submitted for the rollover of the remaining funds. His colleague had engagements with the Department of the Premier about the Energy Resilience Programme to assist indigent communities. The discussions were still in the early stages and would be continuing.

(See Presentation)

Hessequa Municipality (HM) Presentation 
Mr Albert de Klerk, Municipal Manager, HM, reported that the municipality had spent R5.2 million of its own funds to procure six generators at critical sites. A further nine generators were purchased with the R5.8 million that the municipality had received from the Emergency Municipal Loadshedding Relief Grant.  In the 2023/24 financial year, the DMRE provided funding of R4 million to assist the municipality with Energy Efficiency and Demand Side Load Management projects. Further Energy Efficiency and Demand Side Load Management project initiatives include more solar PV systems on municipal land and buildings, replacement of water heater elements with heat pumps, and battery energy storage for peak shaving. The municipality was piloting 80 Hot Water Control Systems for Demand Response. Additional funding is required to roll out the project on a broader level.

(See Presentation)

Discussion
Mr A Van der Westhuizen (DA) asked for an explanation about the setup of the heat pumps. He wanted to understand if it was merely a transfer mechanism for water into the cylinder or if hot water was available during load shedding. He asked if it smart meters for residential use had been introduced for big power consumers due to the costs thereof. He asked if the municipality was considering using ripple switches for Demand Side Load Management by activating a signal to switch off consumer items such as geysers during peak hours.

The Chairperson questioned the installation of the pilot project in the private residence of the Municipal Manager and asked if it had been agreed to by the Council.

Mr De Klerk said it was decided to use his residence as a guinea pig and a good case study on how the system works and to allay fears before it is rolled out. The installation was for a limited period and would be followed up with a study by the University of Cape Town (UCT).  He replied to Mr Van der Westhuizen that a large number of residential properties have been found to bypass the ripple technology by installing alternative equipment. A new system was needed to monitor consumption and augment the ripple relay. It was uncertain whether the new system would deliver the required efficiencies. He confirmed that the smart meters are expensive and that big customers had the biggest impact on maximum demand.

Mr Chikane, Electrical Engineer, HM, acknowledged the shortcomings of hot water retention of the heat pumps. The shortcoming is augmented by using smart controllers which have been sufficient to get through higher stages of load shedding.

Ms C Murray (DA) acknowledged that the pilot project was a fantastic idea but she was concerned about using the residence of the Municipal Manager for testing. She asked if a declaration process was followed to ensure that the project was not at risk.

Mr De Klerk assured the Committee that there was no conflict of interest. The residence of the Municipal Manager was used to guarantee the credibility of the project. The pilot was not a cost to the municipality hence a declaration process was not required. The pilot was mainly for the supplier to assess the workability of the system for scalability at a broader level hence the involvement of UCT to validate the information.

George Municipality (GM) Presentation 
Dr Michele Gratz, Municipal Manager, GM, stated that the municipality had spent R32 million on generators from its own funds and was grateful for the R14 million in emergency funding from the DLG for backup energy supply. The municipality has an existing three-year generator supply tender in place which only makes provision for generators up to a maximum of 300 kVA for water treatment and wastewater treatment works at Haarlem, Uniondale, and Kleinkrantz. A separate tender process was required for a 650 kVA and a 1 000 kVA unit for the Outeniqua wastewater treatment works which would delay the implementation thereof. The long lead time due to limited stock availability and shipping of imported components was posing a challenge for the implementation of the infrastructure.

(See Presentation)

Discussion
Mr Van der Westhuizen asked how the tariff that the municipality was willing to pay to consumers with surplus capacity was determined. He enquired about the justification for paying a higher price than the Eskom tariff. People should be encouraged to install smart meters. The municipality should be open to reimburse private service providers at a higher rate than the Eskom tariff.

Dr Gratz said the possibility of cheaper meters is being considered to mitigate the huge capital outlay of purchasing a bidirectional electricity meter which costs about R11 000. She was unsure how NERSA would react to a rate higher than Eskom costs being paid and stated that 90% was a good incentive. The municipality had applied for an exemption.

Mr Leon van Wyk, Executive Mayor, GM, said the revenue expense model had changed drastically. The municipality suffered a 22% reduction in electricity revenue due to load shedding. It was becoming important to consider the costs of maintaining the network when dealing with fixed costs as opposed to separate energy costs from Eskom. Before the 2022/23 financial period, municipalities could use surplus electricity and property rates as a block of money to cover other service delivery expenses. This model had changed in 2022/23 and would impact the budgeting for 2023/24. Only after ensuring future revenue differential, would it be possible to determine how much the municipality was able to pay for buying from the private sector.

Oudtshoorn Municipality Presentation 
Mr Chris Swart, Senior Manager: Water and Sanitation, was grateful for the assistance of the Western Cape Government both with the drought situation and the energy power challenges. Oudtshoorn is supplied by the Raubenheimer catchment area under gravity and is therefore not affected by load shedding. The town does not have water treatment works and only disinfects water from the Raubenheimer Dam. The disinfection is being managed by small generators. De Rust is supplied from the Huis River under gravity and is similarly not affected by load shedding. The problem is with Dysselsdorp and Blomnek which are supplied from the Klein Karoo Rural Water Supply wellfields and water treatment works that require electricity. R10 million is required for emergency power for the installation of boreholes and booster pumps to secure a sustainable water supply. R8.4 million is required for emergency power for sanitation.

(See Presentation)

Discussion
Mr D America (DA) asked if funding for the projects to achieve sustainable water supply had been secured or if the municipality would be self-funding the projects. He enquired about the funding plan and timelines to achieve the sustainable outcomes that the municipality had envisaged.

Mr Swart replied that the budget situation of the municipality did not allow for self-funding. A large part of the funds were used for boreholes. The biggest challenge was to replace the old asbestos pipe network which has a major impact on water supply in drought situations. The municipality was putting its hopes on this meeting for funding from the Western Cape Government.

Bitou Municipality Presentation 
Mr Mbulelo Memane, Municipal Manager, reported that the municipality had utilised the full amount of R5.6 million that was allocated by the DLG. The generators, ranging from 150 to 650 kVA were installed at key sites identified, to mitigate the impact of prolonged loadshedding on municipal water and sanitation services.

Mr Dave Swart, Executive Mayor, said the water supply to all areas was the key focus for the municipality. The next focus was the supply of diesel for the backup generators.

(See Presentation)

Discussion
Mr America enquired about the impact of increased security around installations on security costs. He asked the Mr Memane to elaborate on the security measures that had been implemented. He asked if the municipality had watching briefs for the prosecution of people arrested for vandalising the installations. He asked if the functioning of the equipment had been disrupted as a result of vandalism.

Mr Memane explained that physical guards had to be appointed to safeguard the installations. Cameras were installed at some of the high-value infrastructure sites. Mechanisms had been installed to trigger pepper spray when a person touched the door or gate. Prosecutions appear to be challenging because the arrested persons are out on bail within one or two days. A proposal was made to SALGA for a joint approach with the Department of Justice. The matter should be escalated as a priority crime offence because large areas have been without electricity for more than a week. All municipalities have been struggling with lead time to replace the vandalised equipment.

Mr America enquired about the impact of the generators during loadshedding.

Mr Memane said the generators allow the installations to continue operating during load shedding. There is no impact on the pumps, water, and sanitation. The municipality was grateful for the assistance of the Provincial Government.

Mr Swart said Mr Memane was being modest in his comments. 108 cameras had been installed at 32 sites and were being monitored in a 24-hour control room. At least one camera per site has voice activation which acts as a deterrent for vandals. The solution to protect the infrastructure is to control the manner in which illegal scrap yards are buying stolen cables from the public or syndicates.

Mr America was encouraged by the plans and initiatives of the municipality and for the initiative to engage SALGA which should play a more meaningful role in assisting municipalities. It will go a long way if SALGA takes the initiative.

Knysna Municipality 
The Procedural Officer informed the Committee that Knysna Municipality was unable to send a delegation to the meeting.

The Chairperson prematurely thanked all participants for the presentations but was interrupted by Mr Naidoo who advised him that he is yet to deliver the presentation on behalf of the Mossel Bay Municipality.

Mossel Bay Municipality Presentation 
Mr Dick Naidoo, Director: Infrastructure Services, said the Municipality had received R5 million in funding from the Provincial Government to procure three emergency standby diesel generators for critical water pump stations. The two larger units of 650 and 500 kVA had been delivered to Mossel Bay but site preparation for installation was still in progress. Future long-term project plans include a 30 MVA Independent Power Producer project. If successful, it would be a flagship project. A request for proposal was advertised and 19 proposals were received at the closing date on 28 July 2023. The Mossdustria area was identified as a solar farm. The Environmental Impact Assessment (EIA) approval is expected by the end of March 2024. The MOU between the municipality and PetroSA, to investigate renewable energy projects, has been concluded. A further project is the replacement of existing meters with smart meters as funds become available.

(See Presentation)

Discussion
Mr America said Mossel Bay is being regarded as a magnet for semigration and new development. He asked if the impact of the load growth had been factored into the planning to secure future demand. Certain sections in Mossel Bay, including households along the coast, had been exempted from load shedding. He asked how the exemption was affecting the capacity of the municipality to meet both current and future demand.

Mr Naidoo said the municipality had completed a 20-year Master Plan with projections for future demand including the upgrading of infrastructure and capacity at substations. At the time of reporting, two major projects were in progress, i.e. the construction of a 66 kV line and an additional 10 MVA capacity increase at a substation to unlock potential for renewable energy generators. As part of building regulations, all new buildings since 2012 are required to have a 50% load from alternative energy sources. As a result, the load growth had not been significant. He confirmed that a significant part of Mossel Bay has benefitted from being embedded in the PetroSA network. The telemetric system allows the municipality to switch off more areas. The municipality was instructed by Eskom to review the areas that are not being loadshedded and over the last six months, the telemetric system had been significantly upgraded to remotely switch off some of the substations. Only a small section outside the PetroSA substation is being exempted at this stage. A significant drop from 30% to 10% in the exempted areas occurred after the upgrade of the telemetric system. Further discussions with Eskom are ongoing to deal with the remaining exempted areas where the big customers, such as Nestle, are still exempted.

Actions and resolutions
Mr America was suspicious that Knysna Municipality had opted not to participate. He asked if a session with Knysna would be rescheduled or if the matter would not be followed up.

The Chairperson replied that he was informed that Knysna Municipality had a Finance and Governance meeting that coincided with this meeting. The Procedural Officer will be requested to reschedule the presentation for a later date. He had three items to share with the Committee:

The resolution on the NERSA tariff matter should be deferred until concluded in the court. The City of Cape Town was not inclined to brief the Committee while the legal process was ongoing. NERSA had not responded to the request for a briefing but indicated their willingness to share information.

He proposed that Ms Cloete, the Procedural Officer, start compiling a draft report of the work completed and table the report for further engagement. The Programming Committee is yet to provide a date to deal with all outstanding matters and follow-up meetings.

The Minister of Electricity is scheduled to brief the Committee on 3 November 2023 on the state of the power grid. He was looking forward to the Minister’s report.

He thanked the sign language interpreters for their services to the Committee.

The meeting was adjourned.