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City Power Johannesburg’s Approach to Smart Technologies such as AMR/AMI21 May 2009

Presented by:

Silas Mzingeli Zimu

Managing Director

Presented at:

African Utility Week

Cape Town

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Vision

A World Class Electricity Distributor

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Values

RESOURCEFUL

RELIABLE

RESILIENT

RESPECTFUL

Always with INTEGRITY

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What business are we in?

We are in the business of buying electricity from a source and selling it to electricity customers, making a profi t from this

KelvinNational Electricity Regulator (NERSA)

Transmission DistributionGeneration

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Electricity Distribution Model CUSTOMER

NEEDSERVICEMEDIUM

TelephoneInternete-MailMailFax

Face to FaceMachine

TelephoneInternete-MailMailFax

Face to FaceMachine

Media

SERVICECHANNEL

CallCentre

Web Site

ProcessingCentre

Cust ExecService Rep

Agent

ATMAgent

RadioPress

SERVICECATEGORY

Account Query

Application

Claim

Complaint / Compliment

Emergency

Information

Meter Reading

Payment

Power Loss

Sales / Product Advice

Service Request

Misdirected Call

Courtesy CallCredit Control

Planned OutageMarketing

VALUE CHAIN /PROCESS

Develop & Market Products & Services

Acquire Customers

Manage Availability of Supply

Manage Revenue Cycle

Network Asset Creation

Other Processes eg Complaint Mgt

CUSTOMERSATISFACTION

SERVICEDELIVERY

Directly from the

Value Chain

eg Power Restored

Via a Service Channel

eg Query Resolved

Integrated Systems and Databases

SAP/eRespondTraining

Empowerment

Attitude

KPI’sDATA

MAINTENANCE

BUSINESSRULES &

CONTROLS

RACI

6 02/06/2009 Page 6

WORLD CLASS ELECTRICITY DISTRIBUTOR

PEOPLEPEOPLE INFRASTRUCTUREINFRASTRUCTURE

SERVICESERVICE1. Prioritize social

transformation (public lighting/electrification)

2. Seek more revenue

3. Loss reduction

1. Management style

2. Improve climate

3. Right people in right places

4. Training in key areas

1. Replacement & upgrades

2. Expand network

3. Maintenance

4. Outsourcing

5. Demand-side management

6. Alternative energy sources

Strategic Priorities

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COJ WINTER PEAK

3400 MW

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Knowledge

Data

Intelligence

Information

City Power Technology focus

City Power’s technology enhancement focus:

To forge the relationship between technology and the data stored in the technology using

Information drivers to make intelligible decisions

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Finance Commercial

Services

Customer Services Operations Human Resources Strategy &

Transformation

Manage Business Performance

Manage Availability of Supply

Manage Customer Interface

Maintain Network

Manage Revenue Cycle

Business Intelligence (BI) to Value Chains Mapping

Corporate PerformanceManagement

Customer ServiceDashboard Operations Dashboard

Work ManagementDashboard

Financial Dashboard

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RSA NATIONAL TARGETS

� A final energy demand reduction of 12% by 2014.

� For the industry sector - 15%

� For the commercial and public sector 15%

� For residential sector 10%

� For the transport sector 9%

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4 Innovative Steps to Creativity and Success

� Drink from and in existing knowledge and utilise it

� Generate an infinite number of ideas, don’t kill ideas

� Apply practical thinking

� Present the solution and move on to the next challenge

Apply the above 4 steps in life and be progressively successful

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��Increase Supply CapacityIncrease Supply Capacity

��Provide a costProvide a cost --free DSM benefit free DSM benefit

��Provide extended options for effective DSMProvide extended options for effective DSM

��Manage Energy Quotas effectively & efficientlyManage Energy Quotas effectively & efficiently

��Unlock Carbon CreditsUnlock Carbon Credits

AAdvanced MMetering IIntelligenceIntegration of Revenue Intelligence TM

& “SMART” Metering

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“SMART” METERING

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What are Non-Technical Losses – NTL’s ?

Commercial AdministrativeReceivables

� Fraud may be:

� Energy theft (illegal connections to the network)

� Meter fraud or by-passes

� Meter errors

� Fraud may be implemented by the customer or by professionals (third-party service providers and others who manipulate meter connections to reduce actual consumption volumes)

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NTL’s :

Commercial

�High cost of managing aging accounts

�Default Customers – Delayed Payments and no payment

�Defaulter consumer (*) → some will delay, some will not pay

�Volume and aging of receivable accounts has HIGH CO$T IMPACT → consumer used energy but did not pay on time, which increase company’s financial expenses

AdministrativeReceivables

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NTL’s :

Commercial

� Internal process flaws and database inconsistencies (Average 20% of all

problems identified by Audits in SA)

�Human and system errors (*)

�Incorrect tariff (*)

�Internal fraud (*)

* Usually not accounted.

AdministrativeReceivables

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Non-Technical Loss

NTLs and supply challenges

NTL

detection

Revenue Increase

Energy Consumption Reduction

Time

Energy

Energy paid

Energy consumption

32%*

68%*

* Figures from recent studies in Brazil

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• NTLs decrease ���� double benefit� Significant energy consumption reduction

� Revenue increase

• Energy consumption reduction� Diminishes total supply

� Reduces the demand-peak

• Choice’s solution delivers revenue increase benefit with an outstanding return on investment (ROI over

400% in 1 year)• Our solution can also provide huge benefits in dema nd

management without additional investments� Cost-free DSM benefits

NTLs and supply challenges

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SMART Meters

Towards a sustainable future SMART meters are ideal for:

• Effective resource management

•Rationing

•Demand side management

• Revenue Management

•Remote meter reading

•Free Basic Services management

•Limitation of demand

•Detection of tampering and bypassing

•Electronic communication with the end user

•Time of use

• Ease of vending

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SMART Meters-Advantages

•Remote disconnect and re connect of services

•Immediate final readings for Move in Move out

•Immediate notification on leaks and theft

•Reliable meter reading avoids protracted legal matt ers

•Regular and consistent meter reading dates – Accurat e energy balance

•Improved service delivery resulting in improved pay ment levels

•Control un-accounted for power usage

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Strategic Benefits•Eradicate areas with no meters

•Improve the city’s cost recovery in respect of elec tricity services

•Identify and solve problems associated with technic al loss

•Enable bulk purchases based on consumption rather l oss or ‘over-compensation’

•Redirect cost savings (administrative, meter readin g etc) to improve customer relations management mec hanisms and maintenance/back functions for the prepaid meter sy stem

•Improve refunds and clearance certificates turn-aro und times

•Eradicate interim billing

•Improved customer satisfaction

•Reduce growth of debtors book

•Save natural resources

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Implementation Progress

� All LPU’s on AMR, 9,000

� Targeted areas due to high NTL’s, 36,861 ( fully AMR, 32,299 Alex n 4262 Midrand)

� High consumption residential areas, ( fully AMR),;

� 2783 Fleurhof, Maraisburg, Florida n Delaray

� 4727 Discovery, Florida Lake/park/north horison

� 1309 Roodepoort west

� 501 Roodepoort north

� 174 Aspen Hills

� 1800 Blairgowrie

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Other Initiatives

� R1.5bn funding offer under consideration to install AMI/AMR throughout the City of Johannesburg

� Solar Water Heaters owned by City Power, R3bn phase 1, another R4bn phase 2

� SWH surcharge or levy

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The World is at significant crossroads

SystemReliability

Increasingenvironmental

pressure

Advancingtechnology

Continuingrate

pressure

� Resource adequacy

� Fuel diversity

� Grid reliability

� System operability

Record high electric prices

Significant infrastructure

investmenton horizon

Regulatorand customer

frustration

Climate change policy

Renewable Portfolio Standards

Significant energy efficiency aspirations

Renewables

Storage

Grid communications (AMI/ BPL)

Customer networks

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Global warming

Energy price

New challenges

Global warming

Energy price

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No Choice For The World

�The Best Way To Generate Energy is To Save Energy

�1kW SAVED = 3kW Generated