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Organised by

Kathy Eales

Infrastructure and Services Dept

City of Joburg

Free-payment meters as a tool for water demand management in Joburg

Overview

� As Gauteng moves into an era of growing water scarcity, metering becomes a key tool to manage demand

� Big focus in Joburg on cutting Non-Revenue Water losses

� Our biggest non-revenue water ‘losses’ stem from unmetered, flat rate consumption – hence metering initiatives

� Through Operation Gcin’amanzi, Joburg has saved over 45 billion litres in 2.5 years

� Huge shifts in users’ water usage behaviour with free-payment meters

� Our research indicates strong acceptance of free-payment meters: ‘pay as you go’ helps households avoid big bills

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Joburg’s water sources

Indian Ocean

Atlantic Ocean

From the Vaal River

� KwaZulu-Natal – Thukela

� Lesotho – Senqu / OrangeFrom Joburg, it drains

North: Jukskei

– Crocodile/Marico –

Limpopo – Indian Ocean

South: Klip

– Vaal – Orange –

Atlantic Ocean

Looming water shortages

By about 2014, available

water will be inadequate to

supply Gauteng

- if current trends continue

��

We need to � reduce water losses

� promote water use efficiency

to postpone the huge costs of a major new dam as long as possible

� otherwise our water bills could double

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Stabilising demand

� Despite big economic and population growth, Joburg is holding demand for water steady around 470 million kilolitres p.a.

� Big emphasis on water demand management

300

350

400

450

500

2002 2003 2004 2005 2006 2007

Year

Million kls pa

Actual

Projected

469-mkl 474-mkl

Managing demand in Joburg

� Ensure all residents have enough water – i.e. ensure access to at least a basic service, before promoting water saving!

� Minimise physical losses

� Minimise commercial losses

� Replace ‘deemed consumption’ with metered consumption

� Develop targetted strategies to promote more efficient usage

� We need to reduce demand, despite ongoing growth!

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Reducing nonReducing non--revenue waterrevenue water

� The % of Non-Revenue Water is the standard tool for measuring inefficiencies and losses in water supply

� Crudely, NRW = All water put into the network

Minus all water billed or accounted for

� Physical losses: leaks and spills

� Commercial losses: inaccurate billing, illegal connections etc

� Deemed consumption: users are charged a fixed rate for an assumed volume of unmetered usage – but in fact use far more

� NRW in Joburg is currently 31.3%

= 147 million kls ‘lost’ in the year to March 2007

Non-revenue water cont.

� In metered areas, average NRW is 15.3%

� Split evenly between physical and commercial losses

� In unmetered areas with deemed consumption, like Soweto, average NRW is 70.1%

� Physical losses: about 20%

� Deemed consumption accounts for most of the remainder

� E.g. Soweto residents are ‘deemed’ to use 20 kls per account per month, and are billed for 20 kls per month -but average consumption per stand is about 66 kls

� On-property leaks

� Inefficient usage

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Unmetered deemed

consumption areas

About 35% of tariffed users

Metered consumption

areas

About 65% of tariffed users

70.1% non-revenue water

80% of losses are commercial losses

related to deemed consumption

15.3% non-revenue water

48% of losses are commercial

losses related to billing errors,

under-registering meters etc

These differences fundamentally shape Joburg’s NRW strategies

Different approaches for different areas – and priority emphasis on

deemed consumption areas

Physical losses

Physical losses

Operation Gcin’amanzi

� Johannesburg’s flagship loss reduction programme

� Objectives:� Reduce Non Revenue Water

� Improve service delivery

� Improve revenue collection

� Promote water use efficiency

� Targets Soweto

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Operation Gcin’amanzi�� R700R700--m capital program m capital program

�� Rehabilitate and upgrade Rehabilitate and upgrade networksnetworks

�� Decommission midDecommission mid--block block secondary mains secondary mains

�� Reduce leaks through Reduce leaks through fixing household plumbing fixing household plumbing onceonce--offoff

�� Install freeInstall free--payment payment meters on 170 000 standsmeters on 170 000 stands

�� Promote more efficient Promote more efficient use of water among usersuse of water among users

�� Ends late 2008Ends late 2008

Upgrading water connections

Upgrading water networks

Improving the water supply to the house

Repairing leaks, installing valves

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Repairing in-house leaks

Fixing leaksFixing leaks

Installing new fittings Installing new fittings ––

Free, onceFree, once--offoff

Installing Installing

freefree--payment payment

metersmeters

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Achievements

� Over 44 billion litres water saved through reduced bulk purchases from Rand Water since July 2004

� Over 69 000 free-payment meters installed

� R126-million saved through reduced bulk water purchases from Rand Water

� R17.3-million in water sales through prepayment meters

� 32% return on investment after 2.5 years

� Over 11 500 jobs created between July 2004 and January 2007

Savings far exceed income

� R126-million saved through reduced bulk water purchases from Rand Water

� R17.3-million in water sales through prepayment meters

� Savings through reduced bulk purchases far outweighs income from water sales� Seven times greater!

� Leak repair and free-payment metering is driving water use efficiency

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Reducing commercial losses

� Before Operation Gcin’amanzi, Soweto residents are charged a flat rate of R80 per month for water (plus a fixed rate for sanitation)

� Based on consumption of 20 kls per stand per month� Includes 6 kl free basic water

� Actual average consumption is over 66 kl� Payment levels are low

� Once a free-payment meter has been installed, people pay in advance above 6 kl

� 6 kl free water credited automatically at the start of each month � ‘free-pay’ meters

Impacts of metering

� Because people are now obliged to pay for the water they use beyond their 6 kl free water, water use efficiency has improved significantly

� Huge water savings (average has fallen from 66.6 klto 10.5 kl per stand)

� Huge savings to households (average has fallen from R80 to about R15)

� Just under half are using 6 kls or less, and pay nothing for their water

� Strong support from users, because it helps households manage their consumption and budgets better

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‘Pay as you go’

� “You don’t get into the situation where you owe a lot of money and you don’t even know how much.”

� “…I think that prepaid is the best, because with credit meters you can get a bill at the end of the month that says you have to pay four hundred Rand for water -but with prepaid you can buy water for twenty Rand.”

� “Water is not expensive. But it all goes back to the difference between pre-paid and credit meters. With the prepaid meter you can buy water for five rands and that is cheap.”

� Soweto residents, Focus Group DiscussionSeptember 2006

Payment and pricing

Requiring payment for water is a key way of promoting water use efficiency

But this requires

� Strong support measures for households who are poor or vulnerable� Well targetted free basic water, plus mechanisms for

making representation on the basis of special need

� Affordable tariffs

� Stepped tariffs, with steps in the right places

� Efficient revenue collection on all consumption above free basic water, to raise aggregate revenue

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Joburg’s pro-poor pricing measures

� Substantial tariffs subsidies for domestic water

� Below 30 kls p.m., the price is 1/3 of the real cost

� Policies and strategies to target relief better to vulnerable households

� Increased free basic water to indigent households from July 2007

� Stronger and more accessible mechanisms for making representation to the City

� Comprehensive data cleansing, to ensure effective revenue management – better cost recovery helps keep tariffs down

� Research to inform a revised approach to tariffing and water conservation and demand management

Water resource impacts

� Metering is not just about improving revenue and financial sustainability

� Metering, with volumetric tariffs, provides a significant economic incentive to use water efficiently

� Meters – especially free-payment meters – alert users to leaks

� Significant long-term water resource management implications

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Controversies� Ongoing opposition by some to payment for basic water

� Particularly strong opposition to prepayment meters

� New research claims ‘Prepaid water unhygienic’

� “Prepaid water meters impact negatively on handwashingbehaviour, raising the risk of water-borne diseases in lower-income communities, says a report.”

� “The study found that there was a significant difference in the proportion of household carers with deemed (43%) versus prepaidwater (77%) who never washed their hands with flowing tap water.”

� But the research findings show clearly that those with free-payment meters actually practice better hygiene!

� More people with prepayment meters wash their hands before handling food or after using the toilet

� More people with prepayment meters wash their hands better –with running water and soap – before handling food or after using the toilet

Diagrams cut and pasted from the Municipal Services Report, ‘The Problem of Handwashing and Paying for Water in SA’ by Farhaad Haffajee, David Saunders and Mickey Chopra. March 2007

“Adequate washing was defined as using soap, rubbing the hands together four times or more and then rinsing them under clean flowing water.” p25

The MSP report’s conclusions about prepaid meters are not supported by their findings

Same

Better

Better

Same

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Joburg’s 2006 hygiene research

� In September 2006, a study of 370 low income households with free-payment meters and credit meters showed unequivocally that there is no difference in the hygiene behaviour of the two groups of users

� No reduction in hand or body, toilet flushing,dish-washing, laundry, floor cleaning etc among those with free-payment meters

� But people with free-payment meters tended to re-use waste water more – and used it for toilet-flushing or in their gardens

� No impact on hygiene

Conclusion� Free-payment metering is a valuable tool for water demand

management and Non-Revenue Water reduction

� Joburg’s biggest non-revenue water ‘losses’ stem from unmetered consumption on a fixed tariff – hence metering initiatives

� The biggest financial benefit on Operation Gcin’amanzi is savings through reduced leaks and losses – 7.5 times greater than water sales!

� Huge shifts in users’ water usage behaviour

� Our research shows strong acceptance of free-payment meters: ‘pay as you go’ helps households avoid big bills

� No evidence of compromised hygiene among users with free-payment meters!