Annual Report 2009

REGULATION & SUPERVISION BUREAU ANNUAL REPORT 2009
FOR THE WATER,WASTEWATER AND ELECTRICITY SECTOR IN THE EMIRATE OF ABU DHABI
SWITCHED ON
We regulate the water, wastewater and electricity industries in the Emirate of Abu Dhabi in the United Arab Emirates. We enforce relevant laws through the licensing of the companies who undertake regulated activities in these industries. Regulated activities include: generation, transmission, distribution and sale of electricity; production, transmission, distribution, sale of water and collection, treatment and disposal of wastewater. Once a licence is issued, we monitor activities, produce and modify regulations where needed and enforce the conditions of the licences. We establish and monitor technical performance, safety and customer standards.We also oversee industry restructuring and have the power to approve mergers and acquisitions.
Annual Report 2009 The Abu Dhabi Regulation & Supervision Bureau 1
CONTENTS
2 3 4 6 8 10 11 12 13 14 16 17 19 23 33
Chairmans introduction Timeline Performance highlights The past decade Customer support and tariffs Drinking water Wastewater Electricity Training and safety Economic controls Sector governance and Board of Directors Licence holders Public Record of Activities and Documents Financial Statements Consultants
2 The Abu Dhabi Regulation & Supervision Bureau Annual Report 2009
CHAIRMANS INTRODUCTION
Of particular importance over the past decade is the introduction of various renewable energy schemes.
All those involved with the water, wastewater and electricity sector will understand what an extremely busy year it has been.The start of 2009 represented the Regulation and Supervision Bureaus first decade in the overseeing and regulation of the sector.
Since the unbundling of the sector in 1999, many changes have taken place including; almost all power and water production now in private sector hands; the electrical connection of the Emirates National Grid and many changes to staffing levels and working practices. Indeed, the Bureau, at the start of its operations, had fewer than ten staff and eight licence holders.Today, we have nearly thirty licence holders and over forty staff. Of particular importance over the past decade is the introduction of various renewable energy schemes. To date, we have issued two licences to the Abu Dhabi Future Energy Company (ADFEC), otherwise known as MASDAR. In addition, we are in the process of agreeing a suitable tariff for their concentrated solar power (CSP) project located at Madinat Zayed.This station seeks to produce 110 MW from solar energy.With this landmark project, we hope to be working with MASDAR and other organisations to further renewable energy (RE) projects over the coming years.
In addition, this year we were involved in the issue of a range of new licences, especially to the wastewater sector which has a need to install and operate temporary wastewater treatment plants for on-site facilities for staff. To this end, we created what are known as Development Licences which are of a finite duration. In addition to development licences, we have also issued a new selfsupply licence to EMAL, the major aluminium smelter plant located at Port Khalifa Industrial Zone (KPIZ).The company is licensed for the production of 2,000 MW of electricity and the export of up to 250 MW to the transmission system, which can be purchased by ADWEC, the single buyer. While we continue to perform a wide range of work streams, one of our most important functions is the control of monopoly expenditure through our well established economic price control mechanisms, in this instance known as Price Control Four (PC4). At the close of 2009, we had produced our Final Proposals for the two distribution companies, the transmission company and the major sewerage services company, all of which are monopoly operators and therefore subject to price controls. Lastly, from an internal operational perspective, we have made many changes, the most notable of which is our relocation to new offices in the Abu Dhabi City.This has proved to be extremely successful and has provided staff and visitors alike with a range of meeting areas and a modern productive working environment. On behalf of all our Board Members and staff at the Regulation and Supervision Bureau, welcome to our 2009 Annual Report.
MOHAMMED AHMED AL BOWARDI
TIMELINE
January Self-supply licence to ADFEC
March Water Supply Regulations 2009 come into force
April Consultation on Wastewater Regulations
ADFEC was issued a licence to build, operate and maintain a 10MW solar photovoltaic power plant, primarily for internal consumption at Masdar City but with the possibility to export power to the ADDC network.
These regulations cover connection arrangements between customers and distribution companies to ensure safe and secure supply connections and prevent wastage and contamination.
Issue of two consultation papers on Trade Effluent Control Regulations and Wastewater Residuals Reuse Regulations. (See p11)
July Amendments to sector laws Water Quality Regulations 2009
September Self-supply licence to EMAL
Law No (12) of 2009, amending Law No (17) of 2005, regarding the reorganisation of ADSSC. (See p16) Law No (9) of 2009, amending Law No (2) of 1998, enabling the Bureau to license a single entity to undertake one or more regulated activities. (See p16)
These regulations ensure the supply of wholesome drinking water to consumers throughout the Emirate. (See p10)
EMAL was granted a selfsupply licence for water desalination and electricity generation at the EMAL Aluminium Smelter Development. Electricity generation in excess of self-supply requirements may be offered for sale to ADWEC.
October Fuel Storage Tank Regulations 2009 come into force
December Launch of the GCC link connection Price Controls 4 final proposals
These regulations aim to prevent spills, ensure early detection of any spill, leak or discharge from fuel storage tank systems and minimise the risk to the environment and public health.
GCC rulers launched the interconnection project that will link the six countries power grids. (See p12)
Final proposals for revised price controls for the monopoly network companies for the 2010-2013 period were issued. (See p14)
PERFORMANCE HIGHLIGHTS
Demand for power during 2009 showed little sign of slowing down and system peak demand was up 16 percent on the previous year. With the continued building of new properties, we expect to see this trend continue.
Annual production Electricity
43,163 GWh includes exports
Installed capacity Electricity
Average unit costs Electricity

fils per kWh
+14.8%
Water (potable)
990,297 Ml (220,066 MG)
10,110 MW 24.9
Water (potable)
683 MGD
Water
AED per 1,000 litres or one cubic metre(34.2 AED per TG)
+4.8%
3,107 Ml/d 7.53
System demand Electricity

Hourly peak 7,680 MW (exports of 1,285 MW at the peak) Hourly peak for the Emirate of Abu Dhabi: 6,395 MW (+11%)
Sector turnover Electricity

AED
Customers Electricity
Water quality Total tests
+16%
Water
(17 August)
7,032 M
Water
AED
+6.7% 347,906
Water
159,184
Transmission peak 2,980 Ml/d (655 MGD) including the supply to Northern Emirates
+6.67%
Wastewater
(5 October)
5,929 M
Wastewater
AED
+5.8% 257,930
Wastewater
(estimated)
634,000 m3/d average, received at wastewater treatment plants (139.5 MGD,); equivalent annual total of 50,910 MG
+8.9%
1,124 M
257,930
Note: the percentage variation is as compared with the previous year MW = megawatt; GWh = gigawatt hour TG = thousand gallons; MG = million gallons (imperial); MGD = million gallons (imperial) per day Ml = million litres; Ml/d = million litres per day; m3/d = cubic metre per day
THE PAST DECADE
Ultimately, the success of the sector is measured by the reliable delivery of water, wastewater and electricity services at an economic price.The graphs below provide an overview of price trends and sector output over the recent past.
Output Electricity and water demand continued to increase during 2009, maintaining growth rates similar to that of the past decade. Operators have progressively increased capacity to ensure that this demand is met in a safe and secure manner. As in previous years, the Emirate of Abu Dhabi maintained its support of the Northern Emirates and Sharjah, supplying up to 1,300 MW of electricity to ensure domestic demand was met. Annual consumption In the Emirate of Abu Dhabi, demand for electricity and water is experiencing continuous and significant growth. Over the period shown, annual consumption of water has almost trebled. In that time, annual electricity consumption has nearly doubled. Unit costs As consumption has continued to grow strongly, operators have been able to reap economies of scale and the unit costs of water and electricity have risen slower than total costs. In real terms since 1999, the unit cost of electricity has reduced more significantly than water. Both of these trends show that the unit costs of water and electricity are under control and falling, which illustrates the success of unbundling, the introduction of private operators and regulation. The diagrams opposite show all costs in real terms expressed in 2009 prices. Sector turnover The significant increase in turnover for both water and electricity reflects the growth of units produced. Therefore, despite reductions in unit costs, sector turnover will reflect an increase in units sold.
WATER PEAK SUPPLY

(MGD, 000) Peak supply Available capacity 655 09 6,395 50 40 30 20 10 04 05 06 07 08 09 0 09 09 1,285
01
279
332
380
422
500
541.1
568
02
03
04
05
06
07
08
ELECTRICITY DEMAND GROWTH

(MW, 000) Actual peak demand Export Available capacity
901
UNIT COSTS
Water (AED/m3) 10 9 8 7 6 5 4 3 2 1 0 01 02 03 Electricity (fils/kWh)
SECTOR TURNOVER
(AED M) 8 7 6 5 4 3 2 1 0 01 01 Water Electricity
3,723
02 02
4,008
0303
4,134
04 04
4,320
05 05
4,455
06 06
4,790
07 07
5,286
08 08
5,756
864
614
The Bureau is on track by ensuring the companies it regulates are providing a range of highlevel service delivery to customers and businesses in the Emirate. The arrival of Formula 1 to Abu Dhabi in 2009 brought with it the highest profile test yet to the electricity, water and wastewater sector and the network companies were required to meet a range of deadlines to ensure the event went off without any problems.
ON TRACK
CUSTOMER SUPPORT AND TARIFFS
An independent audit of the two distribution companies completed in 2009 focused on the companies adherence to published Guaranteed Customer Service Standards.
Service Standards The audit found a range of inadequacies in both companies monitoring and recording procedures. We will continue our collaborative approach with both companies in 2010 to assist them with: strengthening and effectively documenting their internal procedures improving the quality and confidence in the monthly data reported to the Bureau The Code of Practice of Guaranteed Customer Service Standards will also be revised to more accurately reflect international benchmarking of customer service delivery levels, as well as addressing some interpretation problems. Lastly, in this regard we continued our work with the Abu Dhabi Sewerage Services Company to bring their new guaranteed customer service standards and customer complaint handling procedures to their customers. Customer service licence obligations To help the distribution companies draft customer service codes and procedures, the Bureau set up a joint customer services working group in 2009. A customer-friendly Supply Agreement, a Code of Practice on Disconnection for Non-Payment and Customer Complaint Handling Procedures were produced and will be operational, following consultation with customers, in 2010.
Customers options for paying bills In 2009, both distribution companies introduced new payment options using credit cards, online and phone payments.While there is still much work to do in this area, our overall aim is to promote a reduction in the need to maintain many customer service centres as more customers pay their bills by other means.This aim will result in considerable operational savings. Bulk Supply Tariff The Bulk Supply Tariff (BST) is essentially the wholesale tariff whereby customers connected to the transmission grid can purchase bulk supplies of electricity and water by paying a demand charge and a unit charge.The demand charge is part of the Peak Settlement Period which, until 2009, looked at the average of three system peaks that a customers demand covered at the time of the system peaks. For the 2010 BST onwards, the definition of the Peak Settlement Period was changed from the average of three system peaks to the average of the 10 highest peak demands in the year (each separated by three days, as before). The primary reason for implementing such a change was to reduce the risk to the sector of a large user avoiding one of the system peaks and potentially saving a third of their maximum demand charge.While there were just two distribution companies connected to the sector this situation was not possible, but with the connection of more large users then the dynamics are changed considerably.
The Bureau regards the development of cost-reflective tariffs for large users as an important tool in providing incentives for such users to manage their demands away from system peaks.
Large-user tariffs During 2009, we worked with various large users to develop tailored tariffs which are free from any form of Government subsidy and therefore truly cost reflective. Under certain circumstances such tariffs are extremely attractive to end users and are based on the following components: BST demand charge,Transmission Use of System (TUoS) charge and Distribution Use of System (DUoS) charge all levied according to the customer's demand at the time of peak electricity system demand; and BST System Marginal Price (SMP) charges and supply cost component both levied accordingly to the customer's consumption over the year. Such a tariff offers a strong incentive for customers to manage their electricity demand away from peak demand periods, and has the potential for making significant cost savings for customers who are able to do so. Therefore, a customer can benefit in terms of lower bills while the sector benefits in terms of lower customer demands and hence lower future requirements for additional production and transmission capacity than would otherwise be the case.
DRINKING WATER
All drinking water in the Emirate is produced by some form of desalination. Therefore, such a valuable product needs to be protected by the constant updating of regulations.
SECTORS OVERALL COMPLIANCE WITH WATER QUALITY REGULATIONS MEASURES

07 08 09 93% 93% 94%
Water Quality Regulations Revision 3 In July 2009, we completed a two-year consultation process on the Water Quality Regulations and issued revised regulations for implementation on 1 January 2010.These Regulations reflect the new requirements included in the third edition of the World Health Organization (WHO) water quality guidelines. Bottled drinking water We reviewed two laws concerning bottled drinking water: Law No (2) of 1998 concerning the Regulation of the Water and Electricity Sector in the Emirate of Abu Dhabi, and Law No (2) of 2008 in respect of Food within the Emirate of Abu Dhabi. Both laws authorise the Bureau and Abu Dhabi Food and Control Authority (ADFCA) to regulate the quality of water leading to an overlap in regulatory authority. The consultation process concluded with an agreement in principle that ADFCA will act as the lead regulator in the development and issuing of regulations for bottled water.The Bureau will retain a consultative role in the drafting of such regulations. Drinking Water Safety Plans (DWSP) In our effort to minimise the risk of drinking water contamination in water supply systems, in line with the WHO recommendations on best practice, we issued a guide for the development of DWSPs to all affected licence holders.We reviewed their produced submissions over the remainder of the year and are now satisfied that plans appear adequate for the risks involved. Unaccounted-for water We provided transmission and distribution companies with a new water balance methodology, based on the International Water Association (IWA) model. The companies will use these new templates for future Annual Information Submissions to the Bureau.
Unaccounted-for water and physical losses will be reported and audited from 2010 onwards in order to understand and reduce water loss within the transmission and distribution systems. In addition, both major distribution companies have begun installing zonal, district and customer metering in all areas, along with active leakage control systems, to enable the continuous monitoring of leakages.This programme will be intensified when control centres are installed to manage and analyse data. Such measures will enable these companies to identify losses more accurately and drive down water network losses.
Prescribed Concentration Value (PCV)
07 08 09 91%
94% 94%
Sampling Frequency (SF)
33,997
32,940
26,042
Sampled Parameter (SP)
17,264
07 08 09 92%
94% 95%
10,543
08
09
11,421
08 09 APC
08 09 ECPC
16,929
08 09 GTTP
25,954
09
95%
08 09
08 09
31,845
33,706
08
96%
08 09 TAPCO
Sampling Frequency Measure (SFM)
AMPC
SCIPCO SEMBCORP
WATER PEAK SUPPLY

(PEAK IN MGD)
41,835 655 09
07
95%
43,696
46,151
279
01
332
02
380
03
422
04
500
05
541.1
06
568
07
Peak supply
Available capacity
614
08
51,909
WATER PRODUCTION BY COMPANIES (MG)
Annual Report 2009 The The Abu Dhabi Regulation & Supervision Bureau 11 Annual Report 2009 Abu Dhabi Regulation & Supervision Bureau 11
WASTE WATER
We continue to seek to drive up wastewater standards in the Emirate. By 2010, new regulations will be in force to control what enters the system and how wastewater companies deal with their waste products
Wastewater regulations During 2009, we completed a Regulatory Impact Assessment (RIA) that began in 2008 and ran a public consultation concerning draft regulations for managing trade effluent discharges and wastewater residual reuse. The two draft regulations titled Trade Effluent Control Regulations and Wastewater Residuals Reuse Regulations were published in April and a four-week consultation process sought views from a range of stakeholders throughout the Emirate. A significant number of responses were received from government agencies, wastewater service providers and developers. Respondents supported the proposed framework for controlling trade effluent discharges, commented on the scope of regulations for residual wastewater reuse, and raised the need for a clarification of regulatory responsibilities.Working with key stakeholders, we reviewed the comments and began redrafting the regulations.They are to be issued in Q2 2010.The Wastewater Residual Reuse Regulations are to be renamed the Recycled Water and Biosolids Regulations.
Al Ain groundwater study The Wastewater Team completed an investigation of the cause of rising groundwater in the city of Al Ain during 2009.Working with Dornier Consulting, the team concluded that the issue was not exclusively wastewater related, with over-irrigation with desalinated water and groundwater key contributory factors. Recycled wastewater from treatment plants was found to form a small part of the water balance in the city and an extensive sampling programme found no evidence of contamination of groundwater reserves. Further work in conjunction with the Abu Dhabi Environment Agency will be undertaken in 2010.
ELECTRICITY
By 2012, all member nations of the Gulf Co-operative Council will be connected to a high voltage electricity grid.
ABU DHABI DISTRIBUTION COMPANY POWER INTERRUPTIONS

07 07 08 08 09 09 135 130 139 137 174 186
Commissioning of GCC Interconnection Phase one of the high voltage Gulf Cooperation Council (GCC) grid (which links the Kingdom of Saudi Arabia (KSA), Kuwait, Bahrain, and Qatar) was commissioned in February 2009 and was energised on 26 July 2009. On 6 May 2009, the first inter-country power transfer between KSA and Qatar commenced successfully with power transfer of 60MW through a converter station. The general agreement establishing the interconnection was signed on 23 March 2009 and the Power Exchange and Trade Agreement (PETA), which sets out the terms of energy transfer, was signed on 7 July 2009.This 400kV GCC interconnection will improve the security of each countrys transmission system by providing support during emergencies, reduce generation reserve requirements, and enable a common GCC electricity market. The next phase will connect to the UAE via the Emirate of Abu Dhabi, planned for 2012, and lastly to Oman.
YAS Island Formula 1 security review The Bureau carried out a review of the security of electricity, water and wastewater arrangements at Yas Island, in preparation for the Formula 1 event held on 1 November 2009. A report recommending improvement measures was issued to the project developer and the operator of the racetrack facilities.These were successfully implemented prior to race day.
AL AIN DISTRIBUTION COMPANY POWER INTERRUPTIONS

07 07 08 08 09 09 SAIFI interruptions/customer x 100 SAIDI mins lost/customer 261 221 278 173 276 280
ELECTRICITY GENERATION
(MW, 000) 9,183 9,795 10,041
Connections review The procedures and systems used by distribution companies to provide new customer connections to their networks were reviewed in 2009 due to a range of customers experiencing delays in their final connection. The review identified a lack of formalised documents defining ownership boundaries, control of customer connection procedures and responsibilities. Subsequently, an international utility services consultant was appointed to review the connections procedures for ADDC and highlight gaps and bottlenecks.The consultants report was issued at the end of 2009 and their recommendations are expected to be implemented in 2010.
492 752
8,027
6,548
6,269
4,080
3,899
TRANSMISSION SYSTEM UNAVAILABILTY

07 08 09 1.10% 1.54% 1.90%
08 09
AMPC
08 09 APC
08 09 ECPC
08 09 GTTP
08 09
08 09
3,156
4,373
08 09 TAPCO
SCIPCO SEMBCORP
Maintenance
Contruction
Users
ELECTRICITY DEMAND GROWTH

(MW, 000) Actual peak demand Export Available capacity 1,275 09 6,395
Faults
TRANSMISSION SYSTEM INCIDENTS

07 08 09 0 1 2 Energy lost MWh 4 6 3 4 Number of incidents 5 01 02 03 04 05 06 07 08 3,723 4,008 4,134 4,320 4,455 3 901 864
4,790
5,286
5,756
6,123
8,034
TRAINING AND SAFETY
Training and the establishment of our registered engineer programmes are key elements in promoting compliance with safe electrical installations.
Training Electricity Wiring Regulations training A training program for private contractors was designed by the Bureau and delivered regularly by two nominated training companies. It consists of five days of practical tests plus theory and candidates are required to pass an examination to enter the Bureaus Registered Engineer database. Registered engineers During 2009, 75 registered engineers successfully completed the Bureau-designed training course.They are listed on our website.The aim of this course is to improve the skills of electrical contractors in the Emirate and to streamline procedures for approval and testing of new building wiring. Safety audits ADSSC health and safety management and operational review Following a number of serious health and safety incidents during 2006-2009, the Bureau instructed Lloyds Register EMEA (a global best-practice Health, Safety and Environmental consultancy) to conduct a management and operational review of ADSSCs health and safety practices. A detailed final report was presented to ADSSC in September. It included an action plan to be used to drive improvements in performance with regard to health and safety.
Sector safety During 2009, the Bureau compiled and analysed incident data from all network and production companies. The health and safety performance data includes overall trends and statistics such as lost time days per million man hours worked, including contractors. During the period, there were five fatalities and 21 Lost Time Injuries (LTIs), which is an increase on previous years. The majority of these serious incidents related to work carried out by contractors on behalf of the licensed companies. In 2010, the Bureau will develop strategies to improve contractor management procedures. Lloyds Register EMEA We appointed Lloyds Register EMEA to provide health and safety and environmental (HSE) advice on all sector related HSE issues on a fixed time and fee basis. Using the global services of Lloyds, through a permanent Lloyds representative based in our offices, enables a more knowledge-based provision of HSE services given Lloyds international standing, skills and expertise.
ECONOMIC CONTROLS
In terms of turnover, some 40 percent of expenditure rests with monopoly companies so how they manage their costs is important. Price controls are how the Bureau controls such companies financially.
2009 Price Controls Review During 2009, we completed a review of the price controls applicable to each of the sectors four monopoly network companies i.e. AADC, ADDC, ADSSC and TRANSCO.The primary purpose of price controls is to determine the Maximum Allowed Revenue (MAR) that each company may recover each year from its licensed activities. Issued in November 2009, our review proposed revised price controls to apply from 2010 onwards.This period is known as PC4, as it is the fourth price control period since price controls were first introduced in 1999.The price controls are set to allow the companies an efficient level of operating and capital costs. In setting them, the Bureau assesses the efficiency of the licensees operating expenditure.We also set provisional allowances for capital expenditure for the same fouryear period. Our proposals in respect of operating expenditure and provisional capital expenditure are summarised in the charts opposite, alongside the companies own projections.While these price control allowances attempt to constrain the current rate of cost increases, the increasing trend will continue with the growth in demand. The Single Buyer (ADWEC)
1
As renewable energy tends, at present, to be more expensive than conventional generation, the Bureau must ensure that the electricity prices paid to renewable energy producers are appropriate for the given technology. To this end, during the year, we contributed to a study by independent consultants to determine the economic price of electricity for the 110 MW concentrated solar power (CSP) plant to be developed by ADFEC (Masdar) at the city of Madinat Zayed in al Gharbia (western region). Much work has been completed on this project and we expect construction to start in 2010.
PC4 OPEX PROJECTIONS FINAL PROPOSALS

(AED 000m 2010 prices) 4 Actual PC projections Companies forecast Final proposals Draft proposals
The Bureau also commenced a price controls review for ADWEC, the monopoly company responsible for procuring electricity and water produced in the Emirate. We decided on a separate review process for ADWEC, as it has few capital assets and the issues of concern are very different to those of the network companies. During the year, we issued two consultation papers relating to the ADWEC price controls review, and expect to publish our proposals for ADWEC in the first half of 2010. Renewable energy economic price review The Government of Abu Dhabi strongly supports the development of renewable energy technologies as an important component of the strategy for meeting the Emirates future electricity demand.
99
00
01
02
03
04
05
06
07
08
09
10
11
12 13
PROVISIONAL PC4 CAPEX ALLOWANCES

(AED 000m, 2010 prices) 4 Actual Capex Companies forecast Final proposals Draft proposals
99
00
01
02
03
04
05
06
07
08
09
10
11
12 13
ON TARGET
The Bureau is on target with the direction the sector takes regarding regulation. Enabling measures include the issue of regulations and licences to sector participants and the provision of a number of consents.We also consult widely with the sector so as to ensure our decision making is understood and fair. This year we issued a number of new licences including a selfsupply licence to a major industrial metals company.
SECTOR GOVERNANCE AND BOARD OF DIRECTORS

Changes to Law No (2) of 1998 The governing law for the water and electricity sector is Law No (2) of 1998 Concerning the Regulation of the Water and Electricity Sector in the Emirate of Abu Dhabi, and its amendments. In 2009, Law No (2) of 1998 was amended by a new law: Law No (9) of 2009, effective from 31 July 2009, made amendments enabling the Bureau to license a single entity to undertake one or more regulated activities. For example, the Bureau has licensed Abu Dhabi Future Energy Company to undertake the generation of electricity and the treatment and disposal of sewage and wastewater. ADSSC reorganisation The governing law for sewerage and wastewater is Law No (2) of 1998 together with Law No (17) of 20051 Concerning the Establishment of the Abu Dhabi Sewerage Services Company (ADSSC), as amended. In 2009, Law No (17) of 2005 was amended by Law No (12) of 2009, which reorganised ADSSC and gave the former ADWEA group company direct reporting lines to the Executive Council.The shares in ADSSC are now 100 % owned by the Abu Dhabi Government. The Board In mid 2008, the Bureau's Board of Directors was changed to represent more clearly the new reporting structure brought about by a change in Law No (19) of 2007. The Board of Directors for the period 2008-2013 was appointed by His Highness Sheikh Mohamed Bin Zayed on 9 April 2008 as follows: HE Mohamed Ahmed Al Bowardi HE Hamad Al Hurr AL Suwaidi HE Mohamed Abdullah Bin Sahoo Al Suwaidi HE Falah Mohamed Al Ahbabi Mr Ibrahim Mubaydeen
As at the date of preparing this Annual Report (2009)
LICENCE HOLDERS
We grant licences to Persons (undertakings, companies, organisations) to carry out certain activities. Collectively, these Persons are known as licence holders. Licences are structures which confer rights and obligations on a licence holder in order for them to undertake regulated activities. Our primary annual funding is derived from licence holders via the application of fees. Distribution Abu Dhabi Distribution Company (ADDC) distributes and sells water and electricity to around 240,000 customers in the old Municipality area of Abu Dhabi. Al Ain Distribution Company (AADC) distributes and sells water and electricity to around 109,000 customers in the old Municipality area of Al Ain. Generation/ water production Abu Dhabi Future Energy Company (ADFEC) is licensed to produce up to 40 megawatts (MW) of electricity by Embedded Generation Unit(s) using wind turbines located in the Al Gharbia Municipality and connected to a Distribution System. ADFECs first wind turbine, on Sir Bani Yas Island, has a capacity of 850kW. ADFEC is also licensed to produce up to 10 MW of electricity at its solar photovoltaic power plant located at the Masdar City Development. Al Mirfa Power Company (AMPC) operates three power stations at Al Mirfa, Madinat Zayed and Al Ain with a total licensed capacity of 636 MW.Water production of up to 38.7 MGD is at the Al Mirfa station only. Arabian Power Company (APC) is licensed to generate 2,200 MW of electricity and 160 MGD of desalinated water at its Sass Al Nakheel plant. Emirates Aluminium Company Limited PJSC (EMAL) has a self-supply licence for desalination of water and generation of electricity at the EMAL Aluminium Smelter Development. Electricity generation in excess of selfsupply requirements may be offered for sale to ADWEC. Emirates CMS Power Company (ECPC), (T2) is the first IWPP in the Emirate. It is licensed to produce 50 MGD of water and generate 763 MW of electricity at the old Taweelah A2 site. Emirates Sembcorp Water and Power Company (Sembcorp), (F1) is licensed to produce up to 100 MGD of water and 861 MW of electricity at its plant located at Qidfa in Fujairah, one of the Northern Emirates of the UAE. Majority of the water produced is delivered to the Emirate of Abu Dhabi via a transmission pipeline owned and operated by TRANSCO.
Fujairah Asia Power Company (FAPCO), (F2) is the second Fujairah licensed operator, situated at the Qidfa complex.The plant is currently under construction, due for completion by 2010. FAPCO is licensed to produce up to 2,000 MW of electricity and 130 MGD of desalinated water. Gulf Total Tractebel Power Company (GTTPC), (T1) is licensed to produce 84.8 MGD of desalinated water and 1,600 MW of electricity at its Al Taweelah plant. GTTPC was the first IWPP in the Emirate to adopt existing assets. Ruwais Power Company (S2) is licensed to produce up to 100 MGD of water and 1,500 MW of electricity at the Shuweihat site currently under construction. Shuweihat CMS International Power Company (SCIPCO), (S1) is licensed to produce up to 1,500 MW of electricity and 100 MGD of desalinated water at its Shuweihat Plant. Taweelah Asia Power Company (TAPCO), (T3) is licensed to produce 160 MGD of water and 2,000 MW of electricity at the old Taweelah B and B2 plants. Tourism Development and Investment Company PJSC (TDIC) has a licence to extract and desalinate seawater for non-potable and potable purposes on Saadiyat island. Umm Al Nar Power Company (UANPC) owns Baniyas power station with a licensed capacity of 120 MW, currently not in production. Multi-licensed Abu Dhabi Company for Servicing Remote Areas (RASCO) is licensed to generate, desalinate, transmit, distribute and sell electricity and water in remote areas, not connected to either of the distribution networks. Procurement Abu Dhabi Water and Electricity Company (ADWEC) is the single buyer of water and electricity output and capacity from producers under various Power and Water Purchase Agreements and charges the distribution companies for water and electricity, under a Bulk Supply Tariff. Transmission Abu Dhabi Transmission and Despatch Company (TRANSCO) is responsible for all transmission voltages at 400, 220 and 132 kV including despatch of generation units, water balancing and the bulk movement of water throughout the Emirate.
LICENCE HOLDERS CONTINUED
Wastewater Abu Dhabi Sewerage Services Company (ADSSC) is responsible for the collection, treatment and disposal of wastewater throughout the Emirate of Abu Dhabi. ALDAR Properties PJSC is licensed to collect, treat and dispose of 9,000 cubic metres of wastewater per day for a period of five years on the Yas Island Development. Al Etihad Biwater Waste Water Company, (W1) is licensed to treat wastewater at Al Wathba-Abu Dhabi (up to 345,000 cubic metres per day) and at Al Saad-Al Ain (up to 92,000 cubic metres per day). Al Wathba Veolia Besix Waste Water Company, (W2) is licensed to treat wastewater at Al Wathba-Abu Dhabi (up to 300,000 cubic metres per day) and at Alhamah-Al Ain (up to 130,000 cubic metres per day). Archirodon Construction (Overseas) Co. S.A. is licensed to collect, treat and dispose of 1,000 cubic metres of wastewater per day for a period of three years. Higher Corporation for Specialized Economic Zones (ZonesCorp) is licensed to collect, treat and dispose of up to 40,000 cubic metres of wastewater per day on the site of the Industrial City Abu Dhabi (ICAD).
LOCATION OF LARGE SCALE LICENSED GENERATION AND DESALINATION COMPANIES Sembcorp TAPCO ECPC GTTPC APC A RPC SCIPCO AMPC M Al Mirfa Abu Dhabi Al Ain S2 S1 Jebal Dhana T1 T3 F1 FAPCO
T2 Dhaid Dubai F2 Taweelah
Liwa
Plant under construction
Existing plant
PUBLIC RECORD OF ACTIVITIES AND DOCUMENTS
In law we have a duty to maintain a Public Register. This section of our Annual Report is constructed so as to list documents which are part of our Public Register. For the purpose of satisfying the law we maintain our Public Register using our website, where all Public Register documents are available for free view and download. Licensing New licences Aldar Properties PJSC 01 May 2009 ED/L07/003 Sewerage, wastewater treatment and disposal licence Ruwais Power Company 28 Aug 2009 ED/L01/021 Water desalination and electricity generation licence Al Wathba Veolia Besix Waste Water Company 01 Sep 2009 ED/L01/022 Sewerage, wastewater treatment and disposal licence Emirates Aluminium Company Limited PJSC 01 Sep 2009 ED/L08/002 Water desalination and electricity generation self-supply licence Tourism Development and Investment Co PJSC (TDIC) 01 Sep 2009 ED/L07/004 Water desalination development licence Higher Corporation for Specialized Economic Zones 23 Nov 2009 ED/L01/023 Sewerage, wastewater treatment and disposal licence Modifications Modifications to a licence are made subject to agreement by the appropriate licence holder. Al Mirfa Power Company 05 Jan 2009 ED/L01/001 Water desalination and electricity generation licence Aldar Properties PJSC 09 Jun 2009 ED/L07/003 Sewerage, wastewater treatment and disposal licence
Archirodon Construction (Overseas) Co. S.A. 12 Nov 2009 ED/L07/001 Sewerage, wastewater treatment and disposal licence Derogations Derogations are issued by the Bureau to a licensed operator for a period and on terms specified in the derogation, from the performance of particular licence conditions. Abu Dhabi Water and Electricity Company (ADWEC) 16 Feb 2009 ED/L06/006 Maximum Allowed Revenues for 2009 for the Electricity Procurement Business Abu Dhabi Sewerage Services Company (ADSSC) 16 Feb 2009 ED/L06/007 Maximum Allowed Revenues for 2009 for the Sewerage Services Businesses Revocations A revocation is the cancellation of a licence by the Bureau. Bainounah Power Company PJSC (BPC) 20 Feb 2009 ED/L05/001 Revocation of Water Desalination and Electricity Generation Licence ALDAR Laing ORourke Construction LLC 09 Jun 2009 ED/L05/002 Revocation of Sewerage,Wastewater Treatment and Disposal Licence Consents Consents confer rights and obligations on licence holders. Please note revisions or renewal of consents are listed for the sake of completeness. Abu Dhabi Distribution Company (ADDC) 02 Apr 2009 ED/L03/038 Purchase of electricity from embedded generators Arabian Power Company (APC) 16 Apr 2009 ED/L03/032 Sale of demineralised water to Consolidated Contractors International Company
PUBLIC RECORD OF ACTIVITIES AND DOCUMENTS CONTINUED
Consents (continued) Arabian Power Company (APC) 22 Apr 2009 ED/L03/009 Sale of demineralised water to specified customers Taweelah Asia Power Company (TAPCO) 22 Apr 2009 ED/L03/033 Transfer of assets from TAPCO to TRANSCO Abu Dhabi Transmission Company (TRANSCO) 01 Jun 2009 ED/L03/039 Disposal of certain assets Emirates Sembcorp Water and Power Company 14 Jul 2009 ED/L03/040 Sale of potable water to Dolphin Energy Taweelah Asia Power Company (TAPCO) 23 Jul 2009 ED/L03/041 Sale of demineralised and distilled water to EMAL Abu Dhabi Distribution Company (ADDC) 30 Jul 2009 ED/L03/042 Sale of non-potable water to the TDIC Abu Dhabi Transmission Company (TRANSCO) 11 Oct 2009 ED/L03/043 Disposal of certain assets Abu Dhabi Transmission Company (TRANSCO) 11 Oct 2009 ED/L03/044 Extension of consent for the disposal of assets Consents for relaxation of TDS and conductivity limits specified in the Water Quality Regulations: Al Mirfa Power Company (AMPC) 18 Oct 2009 ED/L03/045 Arabian Power Company (APC) 18 Oct 2009 ED/L03/046 Gulf Total Tractebel Power Company (GTTPC) 18 Oct 2009 ED/L03/047
Shuweihat CMS International Power Company 18 Oct 2009 ED/L03/048 Taweelah Asia Power Company (TAPCO) 18 Oct 2009 ED/L03/049 Abu Dhabi Transmission and Despatch Company 18 Oct 2009 ED/L03/050 Emirates CMS Power Company (ECPC) 18 Oct 2009 ED/L03/051 Al Ain Distribution Company (AADC) 18 Oct 2009 ED/L03/052 Abu Dhabi Distribution Company (ADDC) 18 Oct 2009 ED/L03/053 Emirates Sembcorp Water and Power Company 25 Nov 2009 ED/L03/056 Abu Dhabi Transmission Company (TRANSCO) 11 Nov 2009 ED/L03/054 Disposal of certain assets Abu Dhabi Distribution Company (ADDC) 24 Nov 2009 ED/L03/055 The provision of call centre services to third parties Consultation papers Consultation papers are designed to seek views from a range of stakeholders and other interested parties on matters which may have a significant impact on licence holders or customers. Regulations Second Consultation on Water Quality Regulations Revision 3 CD/R01/013 For the provision of wholesome drinking water to consumers by licence holders Wastewater Residual Reuse Regulations 2009 Public Consultation CD/T06/004 Proposals for the safe and economic management of recycled water and biosolids
Trade Effluent Control Regulations 2009 Public Consultation CD/T06/003 Proposals for managing industrial and commercial inputs to the wastewater collection system Price Controls Review Second consultation paper (network companies) CR/E02/033 Second consultation paper (ADWEC) CR/E02/034 Draft proposals (network companies) CR/E02/035 Final proposals (network companies) CR/E02/036 General
Publications Annual work plan 2009 ER/P01/012 Water and electricity sector overview ER/P01/013 Annual report for 2008 Arabic ER/P02/017 Annual report for 2008 English ER/P02/018 Guide for developers and licensed entrants to the water, wastewater and electricity sector in the Emirate of Abu Dhabi 2009 ER/P01/009 Guide to Water Supply Regulations 2009 ER/P04/003 Scale of Charges and Services 2009 ER/E01/003
Proposed Water Quality Performance Indicator for Network Companies CP/T03/004 A number of key parameters for the management and quality of water through the transmission and distribution phases of the water supply process Methodology of Charges for Connection to the Water Distribution System CD/C01/015 Proposals for distribution companies method of charging for new connections to their distribution system Regulations The Water Supply Regulations 2009 ER/P04/003 Cover connection arrangements between customers and distribution companies to ensure safe and secure supply connections and prevent wastage, contamination and over-consumption. The Water Quality Regulations 2009 ER/R04/003 For the provision of wholesome drinking water to consumers by licence holders The Fuel Storage Tank Regulations 2009 ED/R01/015 For the prevention and early detection of any spill, leak or discharge from fuel storage tank systems Policy Statement for Market Share Regarding Desalination and Generation Licence in the Emirate of Abu Dhabi ED/S02/002 Guidance on our overall approach to market share and market dominance
Reports Reports are produced either by Bureau staff or externally appointed consultants.They are not necessarily in the public domain. Audit reports Three audits were completed by our staff to review network performance measures (2005 2007) for: Al Ain Distribution Company (AADC) ER/T03/027 Abu Dhabi Transmission and Despatch Company (TRANSCO) ER/T03/028 Abu Dhabi Distribution Company (ADDC) ER/T03/029 Reviews Review of Power Supply Security for Yas Island (Formula 1 Event) IR/T02/001 Review of Water and Wastewater Services for Yas Island (Formula 1 Event) IR/T02/002 TRANSCO Contract Cost Analysis ER/T03/031 Operational Procedures Review AADC ER/T04/004 Operational Safety Procedures Review ADDC ER/T04/005
ON RECORD
The Bureau is on record in terms of managing its internal affairs and continuously seeking to drive down costs and therefore licence fees. However, given the need to keep up with new sector developments we have been required to increase staff numbers and also moved to a new office. Under these circumstances we have still managed to keep fees increases below the rate of UAE inflation and have continued to meet an ever greater workload.
INDEPENDENT AUDITORS REPORT TO THE BOARD MEMBERS OF THE REGULATION AND SUPERVISION BUREAU
We have audited the accompanying financial statements of Regulation and Supervision Bureau (the Bureau), which comprise the statement of financial position as at 31 December 2009 and the statements of funding and expenditure and accumulated deficit and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards.This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with International Standards on Auditing.Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Bureau as of 31 December 2009 and the results of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
ERNST & YOUNG

30 JUNE 2010 ABU DHABI
STATEMENT OF FINANCIAL POSITION

At 31 December 2009
Balance Sheet
Notes 2009 AED 2008 AED
Assets Non-current assets Furniture and equipment Advance to employee
7,751,921 226,715 7,978,636
2,093,715 306,989 2,400,704
Current assets Prepayments and other receivables Bank balances and cash
4 5
7,210,568 27,016,985 34,227,553
2,924,291 4,067,321 6,991,612 9,392,316
Total assets Surplus and liabilities Accumulated surplus (deficit) Accumulated surplus (deficit) Non-current liability Employees end of service benefits Current liabilities Accounts payable and accruals Total liabilities Total surplus and liabilities
42,206,189
1,754,765
(197,448)
8,516,300
6,468,501
31,935,124 40,451,424 42,206,189
3,121,263 9,589,764 9,392,316
Mohammed Al Bawardi CHAIRMAN
Nick Carter DIRECTOR GENERAL
The attached notes 1 to 11 form part of these financial statements.
STATEMENTS OF FUNDING AND EXPENDITURE AND ACCUMULATED SURPLUS

Year ended 31 December 2009
Notes
2009 AED
2008 AED
Statement of funding and expenditure Funding License fees Other income Interest income
44,162,951 401,115 376,600 44,940,666
32,236,825 450,000 92,245 32,779,070
Expenditure Salaries and staff related costs Depreciation Rent expense Publicity Recruitment Professional fee Others
36,898,704 1,454,044 1,156,899 517,038 139,320 475,569 2,346,879 42,988,453
28,431,050 290,445 1,101,907 326,924 402,123 382,837 1,677,853 32,613,139 165,931
Surplus for the year Statement of accumulated surplus Balance at 1 January Surplus for the year Balance at 31 December The attached notes 1 to 11 form part of these financial statements.
1,952,213
(197,448) 1,952,213 1,754,765
(363,379) 165,931 (197,448)
STATEMENT OF CASH FLOWS

Year ended 31 December 2009
Notes
2009 AED
2008 AED
Operating activities Surplus for the year Adjustments for: Provision for employees end of service benefits Interest income Furniture and fixtures written off Depreciation
1,952,213 7 2,047,799 (376,600) 25,106 1,454,044 5,102,562
165,931 2,928,204 (92,245) 290,445 3,292,335
Working capital adjustments: Prepayments and other receivables Accounts payable and accruals Cash from (used in) operations Employees end of service benefits paid Net cash from (used in) operating activities Investing activities Purchase of furniture and equipment Proceeds from the disposal of furniture and equipments Interest received Advance to employees Net cash from (used in) investing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December The attached notes 1 to 11 form part of these financial statements. 5
(4,286,277) 28,813,861 29,630,146 29,630,146
75,886 1,652,290 5,020,511 (106,121) 4,914,390
(7,138,165) 809 376,600 80,274 (6,680,482) 22,949,664 4,067,321 27,016,985
(1,877,280) 92,245 (221,997) (2,007,032) 2,907,358 1,159,963 4,067,321
NOTES TO THE FINANCIAL STATEMENTS

At 31 December 2009
1 Activities Regulation and Supervision Bureau (the Bureau) was established under Law no. (2) of 1998 to regulate the water and electricity sector in the Emirate of Abu Dhabi. The Bureau is funded by the payment of licence fees by those entities awarded licences and is a not for profit organisation. The Bureaus registered office is at P O Box 32800, Abu Dhabi, United Arab Emirates. The financial statements of the Bureau for the year ended 31 December 2009 were authorised for issue by the management on 30 June 2010. 2.1 Basis of preparation The financial statements are prepared under the historical cost convention as modified for the measurement at fair value of derivative financial instruments and available for sale investments. The financial statements have been presented in United Arab Emirates Dirhams (AED), which is the functional currency of the Bureau. Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). 2.2 Changes in accounting policies and disclosures The accounting policies adopted are consistent with those of the previous financial year except as follows: The Bureau has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2009: IFRS 2 Share-based Payment:Vesting Conditions and Cancellations effective 1 January 2009 IFRS 7 Financial Instruments: Disclosures effective 1 January 2009 IFRS 8 Operating Segments effective 1 January 2009 IAS 1 Presentation of Financial Statements effective 1 January 2009 IAS 23 Borrowing Costs (Revised) effective 1 January 2009 IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations arising on Liquidation effective 1 January 2009 IFRIC 13 Customer Loyalty Programmes effective 1 July 2008 IFRIC 16 Hedges of a Net Investment in a Foreign Operation effective 1 October 2008 Improvements to IFRSs (May 2008)
The adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Bureau. However, the adoption of certain standards and interpretations resulted in certain disclosures in the financial statements as described below: IAS 1 Presentation of Financial Statements The revised standard separates owner and non-owner changes in equity.The statement of changes in equity includes only details of transactions with owners, with non-owner changes in equity presented in a reconciliation of each component of equity. In addition, the standard introduces the statement of comprehensive income: it presents all items of recognised income and expense, either in one single statement, or in two linked statements.The Bureau has elected to present one statements. IFRS 7 Financial Instruments: Disclosures The amended standard requires additional disclosure about fair value measurement and liquidity risk. Fair value measurements are to be disclosed by source of inputs using a three level hierarchy for each class of financial instrument. In addition, reconciliation between the beginning and ending balance for Level 3 fair value measurements is now required, as well as significant transfers between levels in the fair value hierarchy.The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management.The fair value measurement disclosures are presented in note 10. The liquidity risk disclosures are not significantly impacted by the amendments and are presented in note 11. IAS 23 Borrowing Costs The standard has been revised to require capitalisation of borrowing costs on qualifying assets.The adoption of this amendment did not have any impact on the financial position or performance of the Bureau. Improvements to IFRSs In May 2008 and April 2009 the IASB issued omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording.There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Bureau.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED

At 31 December 2009
2.3 Significant accounting judgement, estimates and assumptions The preparation of the Bureaus financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosures of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods. Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Useful lives of property, plant and equipment The Bureaus management determines the estimated useful lives of its property, plant and equipment for calculating depreciation.This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and the future depreciation charge would be adjusted where management believes that the useful lives differ from previous estimates. 2.4 Summary of significant accounting policies Funding Licence fees funding from the licensees in respect of the current year are accounted for in the statement of funding and expenditure based on the amount of the cash expenditure incurred during the year. Any funding received in excess of the cash expenditure is refunded back to licensee in every two years. Short funding is recovered from licensee in every two years. Interest income Interest revenue is recognised as the interest accrues using the effective interest method, under which the rate used exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Capital work in progress Capital work in progress is recorded at cost and represents costs based on contractual payments for the design, development, procurement, construction and commissioning of the plant and overhead expenses and those incurred during the development stage directly attributable to the construction of the plant.The capital work in progress is transferred to the appropriate asset category and depreciated in accordance with the Authoritys policies when construction of the asset is completed and commissioned
Furniture and equipment Furniture and equipment are stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight line basis over the estimated useful lives of the assets as follows: Computer equipment over 3 years Office equipment and furniture over 5 years Motor vehicle over 3 years The carrying values of furniture and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use. Expenditure incurred to replace a component of an item of furniture and equipment that is accounted for separately is capitalised and the carrying amount of the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of the related item of property, plant and equipment. All other expenditure is recognised in the statement of funding and expenditure as the expense is incurred. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of funding and expenditure in the year the asset is derecognised. Accounts payable and accruals Liabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.
Impairment and uncollectibility of financial assets An assessment is made at each statement of financial position date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, any impairment loss is recognised in the statement of funding and expenditure. Impairment is determined as the difference between the present value of future cash flows discounted at the current market rate of return for a similar financial asset. Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents consist of cash in hand, bank balances, and short-term deposits with an original maturity of three months or less, net of outstanding bank overdrafts. Accounts receivable Accounts receivable are stated at original invoice amount less a provision for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery. Employees end of service benefits The Bureau provides end of service benefits to its expatriate employees.The entitlement to these benefits is usually based upon the employees length of service and completion of a minimum service period.The expected costs of these benefits are accrued over the period of employment. With respect to its national employees, the Bureau makes contributions to Abu Dhabi Retirement Pension and Benefit Fund calculated as a percentage of the employees salaries.The Bureaus obligations are limited to these contributions, which are expensed when due. Financial instruments Financial instruments include receivables, bank balances and cash, bank overdrafts, payables and certain other assets and liabilities. Fair values of financial instruments are based on estimated fair values using such methods as net present values of future cash flows.
2.5 Future changes in accounting policies standards issued but not yet effective Standards issued but not yet effective up to the date of issuance of the Bureaus financial statements are listed below IFRIC 17 Distributions of Non-cash Assets to Owners IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRS 2 Share based payments: Group cash-settled share based payment transactions IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) IFRS 9 Financial Instruments IAS 24 Related Party Disclosures IAS 39 Financial Instruments: Recognition and Measurement Eligible Hedge items Improvements to IFRS (April 2009) In the opinion of management, the adoption of the above standards and interpretations will have no impact on the financial position or performance of the Bureau.

At 31 December 2009
3 Furniture and equipment

Work in progress AED Motor vehicle AED Office equipment and furniture AED
Total AED
2009 Cost: At 1 January 2009 Additions Transferred from work in progress Disposals during the year At 31 December 2009 Depreciation: At 1 January 2009 Depreciation charge for the year Relating to disposals At 31 December 2009 Net carrying amount: At 31 December 2009 2008 Cost: At 1 January 2008 Additions At 31 December 2008 Depreciation: At 1 January 2008 Depreciation charge for the year At 31 December 2008 Net carrying amount: At 31 December 2008
1,473,725 3,504,669 (4,978,394)
74,000 168,000 242,000
1,441,865 3,465,496 4,978,394 (40,684) 9,845,071
2,989,590 7,138,165 (40,684) 10,087,071
9,732 76,677 86,409
886,143 1,377,367 (14,769) 2,248,741
895,875 1,454,044 (14,769) 2,335,150
155,591
7,596,330
7,751,921
1,473,725 1,473,725
74,000 74,000
1,112,310 329,555 1,441,865
1,112,310 1,877,280 2,989,590
9,732 9,732
605,430 280,713 886,143
605,430 290,445 895,875
1,473,725
64,268
555,722
2,093,715
Total construction commitment of the Company at 31 December 2009 is nil (2008: AED 3,021 thousands). 4 Prepayments and other receivables
2009 AED 2008 AED
Prepaid staff rent Other prepayments Amounts due from related parties (note 8) Other receivables
2,130,310 896,700 3,959,824 223,734 7,210,568
1,663,198 1,179,071 82,022 2,924,291
5 Bank balances and cash Included in bank balances and cash of AED 27,016,985 (2008: AED 4,067,321) are bank deposits of AED 25,586,240 (2008: AED 1,687,476) with a commercial bank in Abu Dhabi.These are denominated in UAE Dirhams, short term in nature, with effective interest rate of 2.07% (2008: 2.2%). 6 Accounts payable and accruals
2009 AED 2008 AED
Accounts payable Accrued expenses Licence fees received in advance from ADWEA Amounts due to related parties (note 8)
2,054,368 1,359,736 28,521,020 31,935,124
1,822,401 426,689 125,000 747,173 3,121,263
7 Employees end of service benefits Movements in the provision recognised in the statement of financial position are as follows:
2009 AED 2008 AED
Balance at 1 January Provided during the year Employees end of service benefits paid Balance at 31 December 8 Related party transactions
6,468,501 2,047,799 8,516,300
3,646,418 2,928,204 (106,121) 6,468,501
Related parties represent associated companies, shareholder, directors and key management personnel of the Bureau. Pricing policies and terms of these transactions are approved by the Bureaus management. Amounts due from and due to related parties are disclosed in notes 4 and 6, respectively. Compensation of key management personnel The remuneration of the members of key management during the year was as follows:
2009 AED 2008 AED
Salaries Accommodation allowance Other benefits Related to employees end of service benefits 9 Licence fees
5,246,200 1,475,812 661,458 845,657
5,439,768 1,556,123 700,478 1,385,068
2009 AED
2008 AED
Licence fees received during the year, net Licence fees received in advance, net of receivable fees: Beginning balance Ending balance
72,558,971 125,000 (28,521,020) 44,162,951
32,361,825 (125,000) 32,236,825

At 31 December 2009
10 Fair values of financial instruments Financial instruments comprise of financial assets and financial liabilities. Financial assets consist of cash and bank balances and financial liabilities consist of payables. The fair values of financial instruments are not materially different from their carrying values. 11 Risk management Interest rate risk The Bureau is exposed to interest rate risk on its interest bearing bank deposits. Interest rate risk table The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Bureaus deficit (through the impact on floating rate deposits). Assumed change in interest rates Impact on deficit from increase in interest rates: 2009 (AED) 2008 (AED) Impact on deficit from decrease in interest rates: 2009 (AED) 2008 (AED) Credit risk The Bureau collects licence fees from its related parties. Licence fees are collected based on an annually forecast budget. The Bureau limits its credit risk with regard to bank deposits by only dealing with reputable banks. Credit risk is limited to the carrying values of financial assets in the statement of financial position. Liquidity risk The Bureau limits its liquidity risk by monitoring its current financial position in conjunction with its cash flow forecasts and close communication with ADWEA on a regular basis to ensure funds are available to meet its commitments for liabilities as they fall due. Accounts payable are normally settled within 30 days of the date of purchase.The contractual payment terms of all financial liabilities of the Bureau as at 31 December 2009 were less than three months. 0.50%
127,931 8,437
(127,931) (8,437)
CONSULTANTS
Given an ever increasing workload, we employed both local and international consultants to undertake a range of work streams. The consultants listed below were employed in 2009. Alpha Data IT infrastructure Review GHD Global Pty Ltd. Regulatory Impact Assessment (RIA) for Introduction of Wastewater Regulations Dornier Consulting Al Ain Groundwater Study International Centre for Training and Development Training and examination on the Wiring Regulations 2007 in Al Ain Lloyds Register EMEA ADSSC Health and Safety Management Review Middle East Management and Economical Development Training and examination on the Wiring Regulations 2007 in Abu Dhabi WS Atkins & Partners Oversees Chlorination System Evaluation Project Technical evaluation of existing chlorination systems at production and network companies chlorination dosing sites: project duration 6 months
The Regulation & Supervision Bureau Tel +971 2 4439333 Fax +971 2 4439334 PO Box 32800 Abu Dhabi United Arab Emirates Email bureau@rsb.gov.ae www.rsb.gov.ae
(ER/P02/020)

Annual Report 2009

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REGULATION & SUPERVISION BUREAU ANNUAL REPORT 2009

MOHAMMED AHMED AL BOWARDI

January Self-supply licence to ADFEC

March Water Supply Regulations 2009 come into force

April Consultation on Wastewater Regulations

July Amendments to sector laws Water Quality Regulations 2009

September Self-supply licence to EMAL

October Fuel Storage Tank Regulations 2009 come into force

Installed capacity Electricity

Average unit costs Electricity

3,107 Ml/d 7.53

System demand Electricity

Sector turnover Electricity

Water quality Total tests

THE PAST DECADE

WATER PEAK SUPPLY

ELECTRICITY DEMAND GROWTH

CUSTOMER SUPPORT AND TARIFFS

SECTORS OVERALL COMPLIANCE WITH WATER QUALITY REGULATIONS MEASURES

Prescribed Concentration Value (PCV)

Sampling Frequency (SF)

Sampled Parameter (SP)

Sampling Frequency Measure (SFM)

WATER PEAK SUPPLY

WATER PRODUCTION BY COMPANIES (MG)

ABU DHABI DISTRIBUTION COMPANY POWER INTERRUPTIONS

AL AIN DISTRIBUTION COMPANY POWER INTERRUPTIONS

TRANSMISSION SYSTEM UNAVAILABILTY

ELECTRICITY DEMAND GROWTH

TRANSMISSION SYSTEM INCIDENTS

TRAINING AND SAFETY

PC4 OPEX PROJECTIONS FINAL PROPOSALS

PROVISIONAL PC4 CAPEX ALLOWANCES

SECTOR GOVERNANCE AND BOARD OF DIRECTORS

As at the date of preparing this Annual Report (2009)

LICENCE HOLDERS CONTINUED

T2 Dhaid Dubai F2 Taweelah

Plant under construction

PUBLIC RECORD OF ACTIVITIES AND DOCUMENTS

PUBLIC RECORD OF ACTIVITIES AND DOCUMENTS CONTINUED

ERNST & YOUNG

STATEMENT OF FINANCIAL POSITION

Assets Non-current assets Furniture and equipment Advance to employee

7,751,921 226,715 7,978,636

2,093,715 306,989 2,400,704

7,210,568 27,016,985 34,227,553

2,924,291 4,067,321 6,991,612 9,392,316

31,935,124 40,451,424 42,206,189

3,121,263 9,589,764 9,392,316

Mohammed Al Bawardi CHAIRMAN

Nick Carter DIRECTOR GENERAL

The attached notes 1 to 11 form part of these financial statements.

STATEMENTS OF FUNDING AND EXPENDITURE AND ACCUMULATED SURPLUS

44,162,951 401,115 376,600 44,940,666

32,236,825 450,000 92,245 32,779,070

36,898,704 1,454,044 1,156,899 517,038 139,320 475,569 2,346,879 42,988,453

28,431,050 290,445 1,101,907 326,924 402,123 382,837 1,677,853 32,613,139 165,931

(197,448) 1,952,213 1,754,765

(363,379) 165,931 (197,448)

STATEMENT OF CASH FLOWS

1,952,213 7 2,047,799 (376,600) 25,106 1,454,044 5,102,562

165,931 2,928,204 (92,245) 290,445 3,292,335

(4,286,277) 28,813,861 29,630,146 29,630,146