THE EVOLUTION OF PREPAYMENT SOLUTIONS TO SUPPORT LOSS MANAGEMENT INITIATIVES. Imraan Mohamed Marketing Manager Itron South Africa

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1 THE EVOLUTION OF PREPAYMENT SOLUTIONS TO SUPPORT LOSS MANAGEMENT INITIATIVES Imraan Mohamed Marketing Manager Itron South Africa

2 Challenges in Revenue Management & Electricity Theft In Sub Saharan Africa (SSA), on average, only 50% of electricity generated is paid for. * Source: World Bank Report In SSA on average, Non technical losses estimated at 30%

3 Real World Challenges So why doesn t everyone have a Revenue Assurance program? Nobody, short of the CFO, has overall responsibility for the combined losses number. The process cuts a wide path though the organization, which requires mature coordination. Companies do not devote / do not have the necessary resources to minimize losses. Technology constraints in the field: network equipment, communications infrastructure, interoperability, enclosures space, etc. Data quality in the operational systems hampers progress Requires accurate data between technical, CMS, billing and prepayment A holistic view requires integration between multiple systems Overcoming an entrenched culture of non-payment for services Not understanding the role of staff and community awareness / Social Marketing

4 The Birth of Prepayment Initial Driver/Benefit for AMR Consume kwh-> Meter Read -> Process -> Bill -> Receive Payment $ Disconnection/Reconnection Revenue Management Electricity Theft Receive Payment $ -> Consume kwh Self Managed disconnection/reconnection

5 Where Do the Losses Occur? BACKOFFICE & POINT OF SALE Software & IT: Lack of Controls Poor Business Processors: Vendor policy, Cash Management. Unsecure H/W in the field (Vending Security Modules, PC s passwords) TECHNICAL LOSSES (TL) NETWORK + METERS (NTL) Illegal Network Connections Installation Bypass Meter Fraud.

6 Revenue Management Improvements Move to On-line Vending (STS) Remove Security Modules from the field Improved data quality due to centralised data management Increased Revenue with lower cost base, + better customer service! Upfront Payment by Vendors Reduced working capital due to upfront funds Improved revenue protection due to improved data availability and better cash & vendor management NO Prepayment Predominantly OFF-Line ON-LINE Prepayment Vending (>300K Consumer base)

7 ELECTRICITY THEFT MITIGATIONS INSTALLATION BYPASS Split Metering METER FRAUD Secure Meter Kiosks Move to Split Metering Migrate to AMR More anti tamper Data Mining/Analysis features ILLEGAL CONNECTIONS Energy Balancing Data Mining/Analysis STRONG BY-LAWS AND PROSECUTION FOR THEFT

8 SPLIT METERING MOVE FROM IN HOME METERS TO SPLIT METERING Consumer has unrestricted access to the meter: potential for fraud Utility does not have free access to meter (Tamper only lights circuit connected through meter) Consumer has no direct access to the meter: lower potential for fraud. Utility has unrestricted access to meter. MCU (meters) can be secured in vandal proof enclosure Multiple MCU s can be secured in a single enclosure

9 Split Meter Technologies Wired Split Meter Meter to CIU communication via dedicated pilot wires Low risk of interference, dedicated point to point Ideal for new installations Meter to CIU communication via mains cable No additional cabling required for meter installation save on cost of cable and labour time Overall cost of meter and installation significantly reduced Ideal for retrofit installations PLC Split Meter

10 SECURE THE METER ENCLOSURE 4/8/12 way Pole Top Box Pavement Kiosk Secure the Meter enclosure/room. Security Controlled and/or Remote Access Control. Alarms sent when unauthorised access detected.

11 MAKING WHAT YOU HAVE SMARTER Provide an add-on AMR capability for your STS prepayment meters. Enables advanced Revenue Assurance for Utilities. Multiple meters connected via serial bus to a centralised communicating device. Add-on remote communication for split meter to extend functionality. Affordable alternative to full blown AMI/Smart metering Solution. Make Space Provision in your Meters boxes/kiosks NOW for communication equipment that may be installed later.

12 CENTRALISED METERING SYSTEM (CMS) CMS can provides direct feedback of individual meter consumption, token acceptance and alarms. Compliments high end smart meter initiatives to get a full view of losses on your meter installed base. Compliment Statistical Metering and Network loss management Initiatives Used with Business Intelligence solutions to enhance knowledge of field conditions and where losses are occurring Data Warehouse BILLING SYSTEM VENDING AMI/AMR DB

13 KNOWLEDGE APPLICATION Financial view of technical and non technical losses. Technical view of technical and non technical losses. Identification and possible meter tampering Identification of partial bypasses Identification of ghost vending Trigger of Targeted inspections Spatial view and drill down capability

14 BENEFITS Why its worth it. In a typical utility, revenue assurance programs have the potential to: Reduce overall consumption while at the same time increase revenue to the top line Case studies show up to 15% decrease in consumption with positive revenue growth Revenue added is much higher margin than incremental sales Increased revenue combined with lower supplier bills implies more available cash for re-investment, and improved service delivery Improved network performance due to reduced load Decreased energy demand on generating capacity Sustainability of our planets water and energy resources

15 Key Take-Aways Losses (Financial and Technical) are significant challenges to African utilities NTL + TLs $Mill invested in Basic STS keypad based prepayment in Africa We can leverage on this. Smart Metering has its place but not all your customer segments qualify for and require a complex smart meter. Upgrading basic prepayment to split metering and allowing a migration path now to upgrade to an AMR type solution can assist with identifying & curbing losses. Solutions exists today and technology is an enabler to solve these problems. The solution is NOT in the meters or the technology, it lies in the approach and the end to end solution. There is no substitute for sound management and good business processors.

16 THANK YOU