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Managing energy losses in South Africa

1 August 2013 – Eskom’s Energy Losses Management Program (ELP) was established in 2006 in response to a loss of R2.40 billion in revenue due to energy losses-both technical and non-technical. Eskom introduced pre-payment meters in the hope of reducing power theft and increasing revenue collection. However, these devices are not immune to tampering as they reside within customers’ domains and are not overseen by the utility on a regular basis.

Non-payment occurs quite often in the more affluent areas and commercial sector, according to Dean Villet, professional services director at Itron. Meter audits show that it is a misconception that the bulk of electricity theft occurs in residential areas, predominantly townships and informal settlements.

In an interview with Engerati, at African Utility Week, 2013 Villet explained that on-going losses are likely to put the sustainability of the industry at risk. “What surprises me about the industry is how few utilities take a revenue assurance review. They don’t seem to be taking non-technical losses all that seriously. Issues are not being dealt with at the highest level on the board.”

According to Villet, service delivery is a major challenge for African utilities with areas losing up to 30% power due to non-technical losses. Villet recommends the Revenue Assurance Service (RAS) which uncovers unaccounted –for energy. RAS identifies administrative and commercial revenue leakage across a utility’s entire residential, commercial and industrial customer base. The service offers a holistic approach to revenue recovery. It also combines expert analytical resources, industry-leading data analysis software, existing utility customer and asset data, and external data sources to support revenue recovery programs across a utility’s entire residential, commercial and industrial customer base. RAS is designed to provide a continuous improvement approach to finding incremental revenue recovery opportunities as offenders are acted upon and utilities account for anomalies by identifying and remedying problem business practices and equipment.

Itron estimates that administrative (improper billing and bad debt) and commercial revenue (tampering, unmetered and mis-metered energy) losses today amount to an estimated 2% to 5% of a utility’s total revenue.

Although a smart meter would help to locate losses, the revenue assurance tool requires a broader approach, like dealing with the social stigma around non-payment of bills. Consumers’ participation is of crucial importance.