22 may 2013 private and confidential 2 - smart …smartmeter.tshwane.gov.za/documents/smart...

Smart meter roll out

22 May 2013 PRIVATE AND CONFIDENTIAL 2

Contents Objective 4

Overview of the Security of Revenue Project 5

Executive Summary 6

Electricity related challenges 7

Why prepaid smart meters 8

Milestones achieved to date 9

About smart meters 10

Key design principles 14

Impact on LPUs 15

Installation 16

Opt-out option ? 17

Cost 18

Benefits 19

Prepaid electricity credits 24

The proposed roll out plan 26

Conclusion 27


Objective

• The City of Tshwane’s (“CoT”) Security of Revenue Project is a bold initiative to transform local government finances by converting all its residents (residential, commercial and industrial) from a post paid to prepaid system of electricity consumption.

• Simultaneously, CoT would like to benefit from the advantages of a smart electricity network.

• The purpose of this presentation is to provide information regarding the Security of Revenue Project and in particular the rollout of smart meters to CoT consumers – residential, commercial and industrial.


“...we will, during the 2012/13 MTREF, be launching an initiative called the Security of Revenue Project that entails a full roll-out of prepaid electricity meters throughout Tshwane. The project will link all consumers of electricity in the city to a prepaid meter and this will be enforceable by law. Once in full swing, the project will help the City overcome problems of inaccurate billing and loss of revenue to the City, and secure the financial position of the City. This is a game-changing project and will most likely redefine local government's financial management.”

Executive Mayor - Kgosientso Ramokgopa - State of the City Address in March 2012

PRIVATE AND CONFIDENTIAL 5 22 May 2013

Security of Revenue Project

http://www.google.co.za/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=RAgWJgcjczYnOM&tbnid=yIK67KIJdr6n2M:&ved=0CAUQjRw&url=http://www.tshwane.gov.za/AboutTshwane/Council/OfficeofExecutiveMayor/Pages/Profile-of-the-Mayor.aspx&ei=2-42UaSwM-as0QW4yIHYCA&bvm=bv.43287494,d.d2k&psig=AFQjCNGNA3cqOtlmb45PxOMFTCq5VQu8rQ&ust=1362640981403680

Executive Summary


Peu Capital Partners and its partners (“Peu”) will acquire, build, finance and implement the

system

CoT will ensure compliance to various legislations for approval of the Agreement (particularly

Section 33 of the MFMA and municipal by-laws addressing mandatory pre-payment)

Installation of prepaid smart meters as from July 2013.

Benefits of : reduced outages, better electricity consumption data, no billing queries, no

estimates

Prepayment model: flexible, available and real-time points of sale No cost for installation of the meter

No additional tariff related to the smart meter project

Electricity billed at the same tariff as conventional meter

Send comments by end March 2013

CoT will implement a fully funded smart pre-paid meter system solution to enable CoT to sell

prepaid electricity to ALL its customers Scope

Mode

Approvals

LPUs

Cost to LPUs

Request

Electricity related challenges

• Ageing infrastructure and underinvestment

• Irregular meter readings

• Numerous Billing queries

• Non-payment by customers resulting in debt collection costs for CoT

• Significant percentage of CoT electricity debtors >90 days

• Inadequate demand management with high and unsustainable peak loads

• High infrastructure costs

• High incidence of electricity theft and meter tampering

• Compliance with National regulation 773 - mandates the use of smart systems and time-of-use tariffs for customers consuming over 1000kWh

• Rising bulk purchase tariffs

• Inefficient use of electricity by consumers


Why prepaid smart meters ?


The CoT is looking to install a smart metre system in prepaid mode across Tshwane at all points of consumption of electricity with the following key objectives:

• Comply with National regulation 773 - mandates the use of smart systems and time-of-use tariffs for customers consuming over 1000kWh

• Maximize Operational efficiencies – Deliver better electricity service & reduce operational costs through improved alarming and reaction

• Improve revenue collection - Reduce non-technical losses and meter reading costs through improved alarming

• Reduce Billing related issues – No bills are required however consumption data is provided.

• Shift Load as part of National Demand Management - Shift residential load from Morning & Evening peaks using Time of Use (“ToU”) tariffs

• Change Customer Behaviour - Incentivise the efficient use of electricity with real-time energy usage information & ToU tariffs

• Participate in a National Load Management Programme – shed both Commercial and Industrial and Residential load as a result of grid capacity constraints to the extent required

Milestones achieved to date


Launch by CoT of the Security of Revenue Project in the 2012 State of the City address and budget speech

March 2012 / May 2012

Proposal by Peu accepted by CoT 25 May 2012

Heads of Agreement entered into between Peu and CoT 2 October 2012

By-law allowing for prepaid smart meters approved for public consultation 27 October 2012

Consideration and approval of the Service Agreement by CoT Mayoral Committee – approved for public consultation

18 January 2013

Council of the CoT approved a public participation process in terms of Section 33 of the MFMA for the draft Services Agreement

31 January 2013

Feasibility study and Draft Service Agreement Substantially completed

Key stakeholder engagement – National Treasury – Department of Energy – Eskom – Department of Trade and Industry.

Completed January 2013

Section 33 of Municipal Finance Management Act In progress

About Smart Meters

What is a smart meter?

Smart meters are the next generation of electricity meters and they can offer a range of intelligent functionality.

A smart meter is a digital meter that records your usage in hourly increments. The new meter and the new communication system we are installing also allows for two-way communication – the meter sends signals to CoT and CoT can communicate directly with the meter


About Smart Meters (cont)

A smart meter system is the integration of intelligent information and communication technology into electric transmission and distribution networks. The smart system delivers electricity to customers using two way digital technology. This enables efficient use of electricity by customers and allows efficient use of the network by identifying and correcting supply and demand imbalances, thereby improving service quality, reliability and ultimately reducing costs. The smart meter system is a combination of the existing electrical grid with Information and communication infrastructure built on top of it.


What Makes a Smart Meter smart?

Old Meter Smart Meter

Captures only electricity consumption Captures voltage, power quality measurements, hourly electricity consumption data

No communication capability Integrated two-way communication between the meter display unit and CoT/Peu

No outage detection Automated outage detection and notification – "last gasp" and "first breath"

No tamper detection Automated meter tamper alarms and support for theft detection and other analytics

Manual on-site meter reading Manual meter connects and disconnects

Automated and on-demand remote meter readings Remote meter connect and disconnects Disconnect policy remains the same

Estimated cost and consumption feedback provided through monthly bills only

Customer cost and consumption feedback provided in near real-time via multiple choices


Smart system


Key design principles

• The planning of the CoT Smart Meter System was guided by a number of key principles including:

– Quality – delivering a solution based around customer and CoT needs

– Equality – Ensuring that all segments of society receive an equal, high-quality service taking into consideration needs of low income earners.

– Security – A system that gives customers full confidence in their safety and security

– Sustainability – A system that is world-class and sustainable in terms of economic viability, the environment and social equity

– Integrity – implementation in an open, transparent and participatory manner


Impact on LPUs

Why are LPUs getting smart meters?

• The SA Government, along with others around the world, has committed to reduce energy usage and has set a target for all electricity users above 1000kwh per month to have a smart meter by 1 January 2012.

• CoT is working with Eskom to help meet its energy-reduction goals, and smart meters are a critical part of that effort whilst securing the revenue base of the City.

• Equally important, CoT is making a proactive effort, through its deployment of smart meters, to help all customers make better informed decisions about their energy use.

• Smart meters are designed to offer utilities and their customers a number of key benefits. These include better insight into customer usage, as well as outage detection and improved customer service.

• Further the current metres installed in the CoT are ageing and are not capable of converting to prepay mode.


Installation

• Who is in charge of the smart meter roll-out? – The CoT has appointed Peu Capital Partners to acquire, install and

operate smart meters on its behalf.

– In terms of the proposed solution, Peu would effectively build, own and operate the smart system which would provide CoT with the ability to measure, monitor and control its electricity distribution/sale to its customers over an eight year contract period.

– CoT has set out rules to ensure that they do this in a way that is in the interests of customers, including rules around data access, security, technical standards for the smart metering equipment, and meeting the needs of vulnerable consumers.

• Crews will begin installing the smart meters in Oct 2013 and will

continue with the installation process through November 2013 until all CoT LPU customers receive a new meter.


Opt-out ?

• No opt outs are considered.

• CoT’s electricity system supports our economy and our quality of life. We are using more technology in our homes and businesses today than ever before. However, the electricity system that powers the city has not changed significantly in 50 years, and has not kept pace with the rapid growth of technology and other demands on the system. Updating CoT’s meters is a key step in modernizing our entire electricity system, keeping our rates lower and ensuring CoT can continue to deliver safe and reliable power.

• CoT is authorised by legislation to replace the current meters with the new smart meters for all of the customers in the City. This initiative is part of CoT’s energy plan and the Security of Revenue Project.

• As a reminder, the customer is responsible for providing CoT access to our meter in order to read, test, disconnect, remove and/or replace it. If reasonable access is not provided, service can be disconnected until access is provided.


Cost implications

• NO ADDITIONAL COSTS TO CUSTOMERS

• CoT and its service providers have made the initial investment in smart meters for our customers. CoT has indirectly received R6.5 Billion in funding to help fund CoT’s smart meter program.

• CoT customers will not be required to pay for the smart meter and its installation.

• The funds raised and the operational efficiencies realised will help to offset customer costs for this project.

• CoT will not seek to implement a rate adjustment from customers to recoup investment costs directly associated with the reliability improvements and infrastructure investments.


Customer benefits

• Consumers will be empowered to save money through their own decisions and actions and in their own ways, by their own

will. Smart meters enable you to view your electricity use in an easy to read manner. Armed with a better understanding of your energy use, you can make informed decisions on how to manage and control your electricity consumption.

• Consumers can be informed remotely (historical data) or locally (real-time data) on:

– Current energy costs and

– Related carbon emission data

• Energy consumption of premises can be displayed on displays

• Smart meters will ensure that your energy bill is based on your actual, rather than estimated use.


Customer benefits (cont)

• Smart meters will reduce the need for CoT meter readers to come to your premises. Features will enable wireless meter reading.

• Multi tariff functions can be added to allow demand response techniques – Allowing electrical appliances to be automatically controlled; or

– allowing the consumer to reduce costs by increasing energy consumption during off-peak cheaper tariff periods.

• In the event of a power outage, the new meter will alarm immediately, so CoT can restore power faster.

• Reduced power outages.


Benefits to CoT

• The project will enhance CoT’s status as a leading African capital city

– Once rolled out, CoT will have the most advanced and smartest metering system on the continent

• Reduction and/or elimination of costs and losses associated with operating a post paid metering system (debt collection, working capital, bad debts write off, etc)

• Improved customer service – through elimination of electricity billing related queries, which account for the majority of customer

queries

– Earlier detection of faults, allowing for reduced response times

• The system will enhance the ability for demand management – Time of use tariffs, should CoT decide on this approach

– Enhanced consumer awareness of their consumption patterns

– Avoiding the capital expense of building new power plants

• Helping optimize income with existing resources


Benefits to CoT (cont)

• A reduction in ‘costs to serve’

• More effective grid management

• A new communication channel to customers.

• Smart Metering allows CoT to

– gain first-class data

– influence the energy consumption of their users

• As an off balance sheet arrangement, the transaction

– Improves cash flow certainty and predictability

– Maintains CoT’s strong financial position

– Enables an accelerated roll-out of the solution, and thereby maximises cost savings

• By protecting and enhancing both current and future revenues CoT can invest in development and growth which is sorely needed for employment creation


Supporting improved energy efficiency

The Smart Meter Solution has the potential to provide the CoT with near real-time consumption information from which the Electricity Department can make informed decisions about their distribution network (reinforcement or expansion plans)

Improved status information at the consumer end of the network could be provided which will assist in fault location and improvements to customers in fault rectification times

By having greater network visibility through to the end customer, the Electricity Department will create efficiencies in operation and maintenance, being able to prioritise activities

Technical and non-technical losses will be easier to identify, diagnose and remedy. This will create increased performance across the network as well as deliver improved revenue collection.


Prepaid Electricity Credits

CoT recognises that making it easy for the citizens of Tshwane to access pre-pay is essential and access for them is through the diverse PoS / vending platform.

• The smart meters will work with remote, on-line and real-time credit top-up facilities to make buying more credit easy, flexible and convenient.

– Online

– Points of sale

– Mobile

– SMS

– IVR

• Your smart meter may be set so that if you do run out of credit you won’t be left without power – CoT is working to provide some form of minimum emergency credit to avoid immediate shut down of operations. This is still being negotiated with the service provider.


The Vending Architecture


Internet

Billing Portal

Smart Phones SMS IVRS Existing EasyPay

MPLS / Internet

Network

Data Center Pre Paid (Smart)

Billing System

Payment Gateway SAP Billing

System

GPRS

Network

GSM / Telephone

Network

Customer

Existing

Kiosks

New Kiosks Hand held

devices

Self Use

Options

Vending /

Recharge

Options

Integration to be assessed

Recharge Terminals

(Desktop PC loaded with vending application)

At Retail Chain

stores

For small

entrepreneurs At Small shops

across Tshwane

Banks /

Post Office

Proposed phased roll out plan


• Phased roll out in waves • Focus on LPUs and government

entities first • Then SPUs with 3 phase

electricity meters • Finally SPUs with 1 phase

electricity meters

Conclusion

• Probably the largest deployment of smart meters in Africa. We have been very careful to ensure success

• Secures CoT Revenue and liquidity

• Consumers will not be financially impacted by the project

– No rate change to customer

– No charge for meter • Expected faster fault location and power restoration hence lesser outage time for

customers

• Project will result in the modernisation of electricity infrastructure

• Major job creation and skills development expected

• Payment points by online EFT, cell phone and other electronic means and increased vending points

• Best skills locally and internationally to advise on the project


Where to submit your comments

Written comments must be submitted by 30 March 2013 to:

Andile Dyakala

Chief Financial Officer - CoT

E-mail: [email protected]

Tel: 012 358-8100/1

Queries you may have about this information presentation should be directed to BOTH the following contact persons:

Andile Dyakala

Chief Financial Officer - CoT


Tel: 012 358-8100/1

Busi Tshili

Director – Peu Capital


Tel: 011 447 9745


mailto:[email protected]



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