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COMMERCIAL FEATURE
Assuring revenue
for South African utilities
By Imraan Mohamed, Marketing Manager, Itron sub-Saharan Africa
U tilities and
electricity providers around
the globe are faced with
pressures on several
fronts, including low
margins and escalation
of non-technical losses
in South Africa. To deal
with these pressures,
most utilities have
established programmes
which could include
a portfolio of cost
optimisation, process
optimisation and
revenue management
efforts. They put these
measures into place to
cover issues like the
top 10 factors affecting
utilities from the Deloitte
Power Solutions Report.
Itron’s professional services director
Dean Villet was recently asked what
surprises him about the industry he
works in and his reply was that so few
utilities in South Africa have taken a
revenue assurance view on the world
and seriously deal with issues at the
highest level. “We find that service
delivery is becoming a serious challenge
for utilities, especially in certain areas
of Africa where utilities are running up
non-technical losses of up to 30%. This
is really putting the sustainability of the
industry at risk.”
As an example, South Africa’s
primary electricity utility, Eskom,
reported a total energy loss of about
14,000 GWh during its 2011/12 financial
year, of which between 25 and 40
per cent could be attributed to theft.
Eskom’s other non-technical losses
include faulty meters, meter tampering,
billing and metering errors, customers
not in the Eskom billing system and
ghost credit dispensing units (stolen
vending machines through which illegal
prepaid electricity are being vended).
To control non-technical losses, Eskom
introduced prepayment meters with
the goal of reducing power theft and
108 increasing revenue collection. However,
the devices are still being tampered with
as they are in the customer’s domain
and are not being overseen by the utility
on a regular basis.
According to Villet, installation
of prepayment meters was a typical
solution in the mid-90s to deal with
utilities’ issues around billing and the
collection of billed revenue. “Today,
smart metering is something that
utilities can use to identify losses and,
with analytics, establish where losses
are happening. Smart metering is a
step in the right direction, but revenue
assurance needs a broader approach
to deal with non-payment for services,”
he says. “To adequately address
revenue assurance and provide a
broader approach to non-technical
losses, utilities cannot focus exclusively
on smart metering and technology
solutions. Other key issues that need
to be considered include staff and
community mobilisation as well as an
awareness of the legal framework and
political climate in which the revenue
assurance activities will take place. In
addition, all sources of information need
to be leveraged and a big-data approach
adopted in order to ensure that problem
areas are clearly identified and spend is
optimised.” Revenue assurance is a key
initiative to ensure the future success
of South African utilities. In a time of
increasing energy costs and demand,
capital constraints, expectant investors
and a diminished ability to simply
recover revenue loss in the rate
case, revenue assurance will grow
in importance. With service delivery
becoming a major challenge, specifically
for African utilities, revenue assurance
is crucial for the sustainability of the
industry. ESI
ABOUT THE AUTHOR:
Imraan Mohamed has
extensive experience
in the electricity supply
utility sector starting
in 1994 when he was
a senior engineer
within Eskom’s
transmission group. In
1999 Mohamed joined
Schlumberger as the
product manager for
various metering portfolios and then progressed
to become the R&D programme manager
at Actaris. In 2008, he took up the reins as
marketing manager of Itron sub-Saharan Africa
where he is currently involved in the growth and
retention of new markets.
ESI AFRICA ISSUE 1 2014