Paying the Bills

Electrifying rural south Africa is one of its government`s key goals but managing the collection of payment will be important to the ultimate success of this goal.

Many municipalities and local councils in southern Africa are responsible for electricity distribution, but face huge problems, such as lack of infrastructure, skills and resources, especially when handling millions of low-income subscribers. An example of this situation is in Blaauwberg, a popular residential municipality on the edge of Table Bay, some 10 km from Cape Town. The local authority had the foresight to recognise that it did not have the expertise to install an electricity distribution system and in 1995 contracted Schlumberger RMS to handle the task. Over the past three years 10 000 consumers in Blaauwberg have had their premises equipped with pre-payment electricity meters, and the authority is now widely acknowledged to operate a very successful revenue collection system.

By far the most developed electricity industry in southern Africa — for industrial and residential sectors — is in South Africa. The bulk of the power generated in the region goes to industrial users, with just 20 per cent serving the residential sector. Indeed the residential electricity market in southern Africa is best described as emergent; as only some 20 per cent of the region`s 175 million population currently has access to electricity in their homes.

Accordingly like many energy utilities, South African utility, Eskom, is looking at demand-side management to help distributors with the difficult task of efficient electricity distribution and revenue collection.

Schlumberger RMS is actively involved with Eskom and its distributors in the residential sector. In October 1998, it signed a showcase agreement with two local government authorities in the central South African province of Free State, to manage a large-scale pre-payment electricity scheme. Under the terms of the above agreement, Schlumberger will operate, manage and maintain pre-payment electricity dispensing and credit metering equipment in the area served by the Phuthaditjhaba Transitional Local Council and the Qwa Qwa Transitional Rural Council.

More than 850 000 people live in the area served by these two councils, and the current installed base of electricity meters comprises some 25 000 pre-payment units and 1000 conventional credit units. The agreement – which runs for five years and is worth approximately US $7 million – calls for the supply and installation of a further 15 000 pre-payment meters. In addition to creating a database of end-users for revenue management, Schlumberger will handle the maintenance of all metering equipment, covering fault diagnosis, replacement, workshop repairs and low- or no-sale audits. In addition, the company will perform energy balance and reconciliation of the electricity supplied, and it is also instigating an active training programme for the local community.

Pre-payment schemes are becoming more widespread in the region. Schlumberger RMS is also currently involved in a number of other prestigious contracts for electricity pre-payment schemes in southern Africa. These include a 4000 point installation in Mozambique, a 7700 point system for Electrogaz in Rwanda — which comprises two point-of sale terminals and a master system in addition to the meters — and a similar scheme for the Volta River Authority (VRA) in Ghana, involving the installation of some 5000 pre-payment points for the first phase of the project. The VRA project is particularly interesting in that it is a multi-tier client-server system employing specially-developed software. The project has been managed by personnel based at the headquarters of Schlumberger RMS in Montrouge (near Paris, France), while the systems are being installed and supported by the company`s facility in Cape Town.

To date, most of these electricity pre- payment systems have been installed for single-product utilities seeking a secure means of handling revenue collection in the residential sector, and have involved one-way data communication. Consumers purchase electricity either by charging some form of token (typically a keypad or magnetic card) with credit or by obtaining a unique access code at a vending point operated by the utility, and then transfer this to a meter attachment at their premises.

Future developments

However, this one-way approach may soon be about to change. A key strength of Schlumberger RMS is that it spans all resource industries — water, gas, electricity and heat. The company recently introduced a new customer management system known as TaleXus Vendor. Designed specifically for multi-product utilities with pre-pay customer accounts, the system is believed to be the first in the world with the ability to handle revenue collection, account analysis and meter management tasks for electricity, gas or water.

TaleXus Vendor also facilitates two-way data transfer between the utility`s central management system — via distributed point-of-sale terminals — and the electricity meters at the customers` premises, using smartcard tokens held by the customers. The data on the card includes the amount of credit, consumption information obtained from the meter, and applicable tariffs — including block tariffs — but it also enables utilities to reprogramme the meter remotely. This ability for utilities to commission and decommission meters from their customer base, and to monitor fraud and detect meter failure — all without visiting the customer`s premises — helps them to significantly reduce operational costs, particularly when customers are spread over a relatively wide geographic area.

Technology like this will be important as the electricity market in southern Africa develops. At the moment the region`s electricity market contrasts significantly with that found in the US and most European countries, where the principal utilities already have established generation and distribution infrastructures. However, massive changes are taking place due to privatisation and deregulation. The regulation of power utilities in most southern African countries is under constant review, mainly because the World Bank — which helps to finance many electrification programmes — actively encourages competition.

Whilst it is unlikely that utilities in southern African countries will undergo wholesale privatisation in the near future, they face similar business pressures to their counterparts in other parts of the world, in terms of increased commercialisation. Energy management and bill collecting mechansims will be important if utilities are to succeed in this new market.

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Figure 1. Principal energy flows between the major players in South Africa`s electricity supply industry

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Countries within the Southern African Power Pool

Large-scale electrification

Despite the need for rural electrification, many of southern Africa`s large national and regional monopolies — which currently dominate the market — have been actively pursuing large-scale electrification schemes since 1995.

The Southern African Power Pool (SAPP) group, which comprises Botswana, the Democratic Republic of Congo, Mozambique, Namibia, South Africa, Zambia and Zimbabwe, is committed to trade expansion. Up until the year 2005, the emphasis is likely to be mainly confined to the installation of high voltage transmission lines for interconnecting different countries within the region to facilitate electricity trade and, to a slightly lesser extent, towards improving local distribution.

South Africa is by far the most developed electricity industry in southern Africa primarily because it has always enjoyed massive coal reserves. As such, South African utility Eskom is a major player in many of these electrification schemes. The total generation capacity in South Africa is just over 43 000 MW at present, of which Eskom provides nearly 40 000 MW from a mixture of coal, gas turbine, hydro, pumped storage and nuclear sources. Municipal generators account for the bulk of the remaining 3000 MW, with private utilities producing just 759 MW. Eskom, is therefore responsible for generating and transmitting virtually all of the country`s electricity.

However, other countries in the region are now embarking on ambitious electrification schemes, many of which involve hydro-electric generation. The Zambezi river in Mozambique, the Kafue river in Zambia, and Souna Gorge (at the confluence of the Nairi and Konilou rivers) and the Koulou river in the Congo all feature large hydro-electric schemes.