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The term integrated electricity vending solutions refers to an integrated energy management system primarily for pre-payment solutions. There are, however, a number of vending solutions that also accommodate other settlement models outside of pre payment.

This article first appeared in ESI Africa Edition 2, 2018. You can read the full digital magazine here or subscribe here to receive a print copy.

The initial pre-paid meters on which the Nigerian case is built were originally introduced in South Africa during the 1990s to help utility companies solve a huge financial and security risk problem. In 2004/2005 the defunct Power Holding Company of Nigeria followed suit. This heralded the pre-settlement model for electricity purchases by consumers and the
creation of the first set of electricity vending systems within the Ikeja Electric network, covering two residential estates. Since then, various patches of deployment have taken place, with future installations yet to be announced.

This system of energy management by utility companies in the country has evolved over the years from proprietary on-site standalone vending systems, to a fully integrated web/cloud based smart energy solution.

The advent of technology, the ever increasing demand for proper energy management, unrelenting revenue assurance and data management issues necessitated Ikeja Electric’s choice for a fully automated, integrated energy management solution. This is an end-to-end system that covers customer metering, a meter data management system and a revenue management system.

“[Introducing an integrated electricity
vending solution] is definitely one of
the best business decisions yet
at Ikeja Electric.”

Rich in data management

Aside from the advanced metering component, which brings its own benefits,
other key features of this integrated vending system are:
• Customer information management, which serves as a repository for customer information;
• Tariff management, which enables effective management of multi-tariff customer structure;
• Meter operations management, which takes care of the meter-to-system integration and energy tokens;
• Retail management that enables extended vending functionality to other payment service providers to aid cash collection; and
• A credit management system, which defines the settlement framework for the retail management system.

Robust solution

Using an integrated energy management solution has yielded dividends to Ikeja
Electric in the areas of:
• Improved cash collection from the metered customers
• Establishment of a robust customer data management system
• Reduction in commercial and collection losses
• Cost reduction in associated overheads
• Ease of monitoring customer energy activities and payment patterns
• Quality real time reporting and robust business intelligence data
• Reduction in financial risks and debt burden of the metered customers

Despite the huge benefits of deploying such a robust solution it was accompanied by challenges, which the disco overcame during the course of the project and on a continual basis in some respects. The project cost had major financial impact on the business especially due to high cost of funds and limitations on allowable yearly Capex injection by discos. To date there are costs and complexities associated with post integration maintenance and upgrades, which can be cumbersome due to constantly evolving business dynamics and institutional limitations.

The system’s integration posed challenges and complexities, as connecting one tool to another requires flexible solutions. It’s about enabling new business processes or automating existing ones, which are particularly tasking considering the extent of changes to existing business processes and creation of new ones to reflect the new system dynamics.

Challenges were encountered with data migration especially as it supports existing legacy
systems. Another challenge was trying to transfer same data requirements to a completely new and different system – in terms of data quality and a lot of new information that previously did not exist, which had to be sourced for successful systems integration and quality reporting.

Also limited was the required knowledge and skills to operate the newly acquired technology. Expertise was either built from the existing workforce or had to be sourced at a premium to the company. All things considered, it is definitely one of the best business decisions yet at Ikeja Electric.

About the author

Olurotimi Famoroti’s position at Ikeja Electric involves a cross functional responsibility for driving strategic initiatives for the disco’s commercial loss reduction, metering and payment channels expansion for the business. Famoroti holds a Master’s degree in Business Administration and International Business from Lagos State University.