Rogeema KennySenior Energy Trading Engineer

Eskom Holdings SOC LimitedSouth Africa

Determining feasibility of split metering installations for prepaid (PPU) meters in Eskom Western Region

What is Split Metering?

� Meter is split between the energy dispensing unit & the customer interface unit:

� Customer interface unit is situated inside customer’s house

� Meter is situated outside the customer’s premises. e.g. pavement kiosk or pole-top enclosure

Benefits of Split Metering

� Meter situated outside customer’s premises

� Field Staff > Access to Meter

� Customer < Access to Meter

� Proven to reduce meter tampering & fraud

� Can reduce revenue losses

� Remote monitoring is possible

System Components

Mini-Sub

System Components

Mini-Sub

BulkSP

(Pole-Top, Kiosk, etc.)

Picture sourced from: Dx Metering Technologies (Edison Makwarela)

400V Network

System Components

400V Network

Customer Carrier(Airdac, PLC, etc.)

BulkSP

(Pole -Top, Kiosk, etc.)

Mini-Sub

Split Metering System

Mini-SubBulkSP

(Pole -Top, Kiosk, etc.)

Carrier (Airdac, PLC, etc.)

400V Network

Background

A strategic decision was taken within Eskom to test the concept of installing split meters on PPU installations

What effect will this have on the Western Region?

Presentation Content

1. Is it financially feasible to retrofit split meters on all PPU installations across WR?

2. What effect will universal retrofitting have on regional losses figures?

3. If not financially feasible, is there a losses % at which it becomes feasible?

4. Would it be financially feasible to retrofit split meters on smaller areas in the region with higher losses?

Success Elsewhere

� Pilot project in Gauteng OU reduced revenue losses in high loss areas:

� After installing split meters & vandal-proof enclosures:

Figures sourced from: Gauteng OU Losses Management Project presentation

CHIAWELO (Soweto)

Meters Mixed PPU & Conventional

Customers 3’788

Revenue Losses 82%

Revenue Losses 14%

Energy Delivered Reduced by up to 50%

Western Region Scenario

� Lower Losses� Regional energy losses of 3%� PPU revenue losses of 10%

� Smaller Townships

� Large Geographical Area

� Isolated areas with higher losses� Worcester, Grabouw, Marchand

Feasibility Calculations

Payback period =

�Future Value of capital roll-out cost over 2 years applied at start of project

�Present Value of future recoveries of existing cust omers applied

�Tariff increase of 6% pa applied

�Revenue recoveries on future Electrification instal lations ignored

Calculation Inputs Used

Loss in Sales pa – R 56,443,951

2011/12 PPU Volume 802.9 GWh

Losses Volume 80.3 GWh

Number Customers 277,639

Selling Rate 70c/kWh

(increased by 6%pa)

Max. Losses Decrease % 75%

Cost per Connection R4,000

-1,400

-900

-400

100

600

1,100

1 6 11 16 21 26 31 36 41

Cas

hflo

w (R

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Years

Payback period of regional split meter retrofitting

Cash Flow

NPV Cumulative CF

Results

26 yrs

Cost per Connection at R4,000

-1,100

-600

-100

400

900

1,400

1 6 11 16 21 26 31 36 41

Cas

hflo

w (R

'm)

Years

Payback period of regional split meter retrofitting

Cash Flow

NPV Cumulative CF

Results

20.4 Yrs.

Cost per Connection reduced to R3,000

Feasibility Conclusion

� In terms of ROI, split metering is not viable as a blanket solution for retrofitting across WR

� Payback period exceeds operational life of the technology

� It is, however, effective for reducing regional losses

� A 50% reduction in PPU losses will take overall regional losses from 3.0% � 2.85%

When Does It Become Feasible?

� The payback period for split metering is under 10 years for a regional PPU losses percentage of at least 23.78%

� Therefore, areas of high PPU losses, customer tampering and/or bypass could benefit from implementation

Other Considerations

� Focus on revenue recovery as opposed to ROI

� Revenue protection

� Losses reduction

� Reduction in meter fraud and tampering

� Electrification

� Company strategy

Recommendation

� Conduct a pilot project in Grabouw� Energy delivered – 13,036 MWh for 2011/12� Sales – 7,465 MWh for 2011/12� R3,1m pa in Sales unrecovered� Consistently high revenue losses (33% 12MMA)� Entire customer base is PPU� Reasonably sized (3339 customers )� Comparable to similar-sized, successful pilot

Expected Results (pilot)

� Capital outlay – R13,5m

� R2,3m extra Sales recovered annually

� PPU Losses reduced to 8 – 10%

� Project breakeven point in 6.13 years

� Reduction in meter tampering & bypass

� Vandal-proof pillar boxes required

-15

-10

-5

0

5

1 2 3 4 5 6 7 8 9 10 11

Cas

hflo

w (R

'm)

Years

Expected break-even point of WR pilot project

Cash Flow

NPV Cumulative CF

Payback period of pilot

6.13 yrs

Challenges Expected

� Access to customer’s property during roll-out

� Intimidation of field staff by community

� Continued attempts at meter tampering

� Limited suppliers at present

� Meter quality assurance

� Staff training on new systems

Conclusions

� Split metering would not be a financially viable solution for blanket retrofitting across Western Region

� For a region with as low a losses percentage as Western Region, split metering should only be used in specific areas

� It can be used effectively to combat issues such as meter tampering and bypass

Recommendations

� Before large scale implementation of split metering occurs, a pilot project should be conducted in an area such as Grabouw

� Conduct further losses investigations to determine where within the region split metering would be beneficial

� Engage counterparts in regions where split metering is already being implemented in order to share knowledge and learn

THANK YOU

Extra slides …

Chiawelo