South Africa's Massive Electricity Losses Need Attention

South Africa’s technical and non-technical losses are climbing. Experts suggest a more holistic approach in combating these losses.
Published: Wed 24 Jul 2013

During the 2011/12 financial year, Eskom reported a total energy loss of about 14 000 GWh within its distribution networks. Of that, between 25% and 40% can be attributed to theft. Other non-technical losses include faulty meters, meter tampering, billing and metering errors, customers not on the Eskom billing system and ghost credit dispensing units (CDU).  The balance of this loss (between 60% and 75%) was attributed to technical losses.

South Africa’s Eskom Energy Losses Management Program (ELP) was established in 2006 in response to a loss of R2.40bn in revenue due to energy losses-both technical and non-technical. To control non-technical losses, Eskom introduced the pre-payment meter in the hope of reducing power theft and increasing revenue collection. However, the device is still tampered with as it is in the customer’s domain and is not being overseen by the utility on a regular basis. Surprisingly, 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.

Revenue Assurance Service

At an exclusive interview at the recent African Utility Week, Villet explained that on-going losses are likely to put the sustainability of the industry at risk. He explains: “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 addressed at the highest level on the board.” According to Villet, service delivery is becoming 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, un-metered and mis-metered energy) losses today amount to an estimated 2% to 5 % of a utility’s total revenue.

The Broader Approach

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.

In South Africa, customer behavior must change. There are those few who believe that electricity is a right and not a privilege. This normally leads to theft. While it is imperative that this attitude be dealt with, it is paramount that this behavior be dealt with. Some consumers are passive by nature and either have a disregard for the greater good or fail to understand that turning a blind eye to theft worsens the energy loss problem. There is also a general lack of understanding of where their actions fit into the bigger picture of ensuring sustainable, affordable energy for South Africa in the long term.

Eskom hopes that severe punishment of perpetrators will see theft decline. In addition to this, ELP national project sponsor, Maboe Maphaka, hopes that energy efficiency programs will assist with bringing consumers’ bills down, thereby eliminating the need to steal electricity.

He explains: “Eskom, through its demand management programs is more than willing to assist customers in becoming more energy efficient to reduce their electricity bills, while contributing positively to the environment. If Eskom and municipalities continue to lose revenue in this manner, the rest of the paying customers will be burdened even more, which is why South Africans must all unite against electricity theft in whatever form it occurs.”

Engerati Analysis 

It is clear that a broader approach is necessary in dealing with South Africa’s power losses, both technical and non-technical. Programs like the RAS offer utilities the ability to pinpoint problem areas efficiently so that these can be dealt with in an effective and swift manner.    

Sources                                      

Engerati Expert Interviews

Engineering News-Businesses responsible for bulk of electricity theft-Eskom

Itron-Discovering Unaccounted-for Energy with the Revenue Assurance Service [pdf]

Operation Khanyisa-Are You A Legal Power User?