Eskom Distribution Prepayment Overview

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• Eskom Distribution Prepayment Overview
• Maboe Maphaka
• Senior Manager Distribution Energy Trading

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Content

• Overview of Prepayment
• History of prepayment in South Africa
• Eskom Prepayment Strategy
• Evolution of Prepaid Meters
• Critical Success factors
• Online Vending
• Prepayment Supporting Structure
• Remote Prepayment Meter Management
• Concluding Remarks

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Overview of Prepayment

• Allows customers to pay for a credit token in
  advance
• Enables automatic switch off once credit expires
• This has the potential to
• Increase cash flow for utility
• Lower operating costs and management complexity
• Prevention of bad debts and recovery of arrears
• Sustainable solution with community involvement

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History of prepayment in South Africa

• 1988 -"Electricity for All" concept developed
• Mass electrification programme established
• System to operate with a low level of management
  and maintenance.
• The standard billed system required a lot of day-
  to day management to process accounts and to
  maintain connections and disconnections
• Many of the areas where potential customers
  reside had almost no infrastructure
• No fixed addresses, high unemployment, no bank
  accounts and no postal services
• Many customers were illiterate and did not
  understand bills
• Eskom started the development of the basic
  prepayment system which is still in use today

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Evolution of the Eskom Prepayment Strategy
Reduces risk of consumption without payment and
improves cash flow
Prepayment gives customers dailly visbility of
consumption thus enabling improved budgeting
Utilising technologies and processes to manage
prepaid points of supply
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Typical Prepayment System
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Current Eskom Vending System
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Evolution of Prepaid Meters

• Proprietary Meters
• Different meters from different suppliers
• Different tokens - proprietary tokens
• Each supplier had own vending system
• Different meter sizes
• When meter fails, same product used to replace
  product that failed
• Strong possibility of being locked into one
  supplier
• Standard Transfer Specification (STS) Meters
• Standard Common Base
• Standard tokens
• Current
• Standard vending systems from different suppliers
• Faulty meters can be interchanged
• Eliminated the possibility of being locked into
  one supplier

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Sustainable Prepayment System
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Critical Success Factors

• Know why you are implementing a prepayment system
  
• Service philosophy
• Engage customers at all times
• Sound procurement strategy
• Set criteria for manufacturers to qualify for
  tender
• Set a vendor selection criteria
• Keep database accurate by doing updates regularly
  
• Strong supporting structure
• Energy balancing
• Vending management

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Engage Customers

• Customer education
• Communication with customers
• Continuous community involvement
• Accessibility to customer query

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Database Accuracy

• Ensure meters and customers are correctly linked
  in Management System
• Ensure all vending machines are reflected on
  Management System
• Upload sales regularly to the Management System
• Non-prepayment points of delivery in an area are
  known for energy balancing purpose

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Online Vending
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Prepayment Supporting Structure
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Remote Prepayment Meter Management
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Benefits of Online Vending

• Improved tariff management
• Reduced financial risk exposure
• Improved financial control and sales data
• Improved data integrity
• Improved customer service
• Customers able to purchase tokens nationwide
• Increased vending footprint
• Ease of maintenance and enhancements to meet
  Vendor and customer needs
• Centralised management of transactions and
  customer data

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The Online Vending Models
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Migration to Online Vending
/-1600
Off-line Vending Agents (Phase out CDUS)
Retail Chain Stores
ATMs
Engage National Agents using Merchants
Internet
Contact Centre
Target of /-10,000 Vending Merchants Nationally
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Concluding Remarks

• Customer requirements and environment must drive
  your prepayment project
• Prepayment solution is only as good as your
  management systems
• Do not implement new technology until it is tried
  and tested
• Never implement a proprietary system
• Engage with other prepayment system users to
  learn from their experiences
• Online Vending manages the cash flow in the
  process
• Effective technologies and processes required to
  manage point of supply

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QUESTIONS ?