by Leon Prinsloo, Associate: Asset Management of Zutari

Electricity that is used by consumers and is not paid for results in loss of revenue for the providers which are in most cases municipalities.

High losses place a burden on municipalities as the revenue generated from electricity sales may become insufficient to service the cost of purchasing electricity from ESKOM.

To just increase the tariff for electricity sales is not the answer as there are NERSA compliance requirements, but it would also be unfair towards paying customers to foot the bill for non-paying customers.

Municipalities, therefore, need to have comprehensive management plans to address the issues of energy losses.

Energy losses can be described as energy bought from the supplier (Eskom) which is not sold for various reasons, thereby leaving a gap between what has been bought and what is being sold.

Losses can further be broken down into technical and non-technical losses. Technical losses occur naturally in the network. It is basically the dissipation of power in electrical system components such as transmission lines, power transformers etc.  

Non-technical losses occur when electricity is consumed but is not accurately recorded, either through legal or illegal consumption.

Typical examples of where non-technical losses may occur are:

  • Unknown or unmetered connection points: This typically occurs where a meter is installed, but the information of the meter (whether prepaid or conventional) has not been recorded in the municipality’s financial system. A connection point that is not correctly registered in the system leads to a user that legally consumes energy but is not billed as the user or the meter is not in the database.
  • Faulty meters: For as long as the faulty meter remains at the connection point, the user is consuming energy legally, but does not get billed due to the meter not registering consumption.
  • Meter tampering: Meter tampering happens when a user illegally tampers with a meter by either bypassing the meter completely or making the meter “slow” so that only a portion of the consumption is recorded.
  • Ghost vending: This term is generally used where syndicates are selling prepaid electricity to a consumer, but the consumption does not register in the municipality’s official system.

Non-technical losses, therefore, happen on the commercial side of a municipality’s business and are also often termed commercial losses. If left unchecked, non-technical losses will quickly escalate out of control.

Through the Vuthela iLembe LED Support Programme, Zutari (Pty) Ltd was appointed as the consultant to assist the local municipalities of KwaDukuza and Mandeni to reduce their energy losses and at the same time improve revenue from electricity services.

Leon Prinsloo, Associate: Asset Management of Zutari, said the Vuthela Programme launched the Non-Revenue Electricity Strategies & Programmes (NRESP) project with the aim of assisting the KwaDukuza and Mandeni local municipalities to reduce their non-revenue energy.

He said two interventions that emanated from the project and that could reap short-term benefits for the municipalities are:

Eskom tariff review for Mandeni Local Municipality

During the analysis process it was discovered that Mandeni Local Municipality is on an Eskom tariff that leads to them paying more per giga Watt hour (gWh) of electricity than the metros. Mandeni has been assisted with a draft letter to query this tariff with Eskom with the aim of possibly moving to a tariff structure that is more conducive to the municipality’s needs.

Large power user (LPU) consumption audits for KwaDukuza Local Municipality

Experience has shown that one of the best examples of a quick win is to review the consumption patterns of LPUs. A short-term intervention of auditing the consumption patterns of at least 120 LPU customers of KwaDukuza Local Municipality that are on functional automated meter reading may well lead to a conservative estimate of the recovery of R12m of lost energy at a return on investment (ROI) of over 600%.