Getting consumer buyin for prepaid utilities
-
Upload
iola-valdez -
Category
Documents
-
view
33 -
download
1
description
Transcript of Getting consumer buyin for prepaid utilities
Overview
Who is Syntell? Some case studies:
Electricity (Cape Town) Water (Madlebe, Johannesburg,
Kannaland) Lessons
Background
Syntell among the first companies to develop prepayment systems
Current installed base: Over 100 municipalities Over R80m electricity sales per month 1.5m transactions per month 400,000 meters in Cape Town alone
Electricity: Cape Town
Early ’90s: Cape Town residents billed for electricity consumption
Issues familiar to most municipalities: High levels of arrears and bad debt Cycles of disconnection and reconnection High administrative costs
Prepayment pilot scheme initiated 1992
Cape Town key factors
Councillors and senior officials got first meters Rollout to Hanover Park implemented in
partnership with a marketing firm Meters on application only (voluntary) No charge for meters
Waiting list of 50,000 by 1993 200-250 installations daily
Lessons from Cape Town
Demand for meters closely linked to rollout of vendors
All new houses built with prepayment meters installed
Meters were installed free of charge until 2000: incentive to convert
SMS and Internet purchases offer additional convenience
What consumers like Monitor and control consumption daily Buy ahead to cover extended absences Tenants can’t leave with unpaid bills No need to admit a meter reader Accurate readings guaranteed Easier budgeting Buy units when there is cash, instead of
saving for lump sum payments
Issues
Losses went up by 2% because of tampering Managed with ad hoc inspection teams –
motivates residents to report “faulty” meters Prepayment discount desirable but not feasible
The picture today
Cape Town metro has around 380,000 meters installed
65% of all domestic consumers The reputation of the electricity
department has improved – helped by change in truck livery (“Energy Dispenser Response Team”)
Water 1: Madlebe
Semi-rural informal settlement near Richards Bay Nine public standpipes installed 1982 as a public
health measure after cholera outbreaks Prepayment meters attached starting in 1997 Residents who couldn’t afford to pay started taking
water from a nearby river The result was SA’s largest outbreak of cholera:
From August 2000 - February 2002 113,966 people were infected
259 died (compared to 78 in the two decades 1980-2000) 6,000 l per month free water allowance introduced
soon after
Water 2: Johannesburg Johannesburg Water launched Operation
Gcin’amanzi (‘conserve water’) to combat water wastage
Prepayment meters introduced as part of this campaign
First pilot project in Orange Farm; then Phiri in Soweto.
6,000 kl per month free; then supply is cut off at the meter unless more units are bought.
Vociferous and high profile criticism followed:
SECC March against Water Meters SN, 27 January 2006. Soweto Electricity Crisis Committee (SECC) and residents of White City Jabavu in Soweto marched to the offices of Johannesburg Water in Klipspruit on Wednesday demanding free access to water and the removal of pre-paid water meters.
The protest was against the installation of prepaid water meters in the homes of the residents of White City Jabavu, saying that the water meters go against the resident’s constitutional rights. Teboho Mashota, a member of the Soweto Electricity Committee, states that, “Water is not a commodity, it is a right.”
From “Nothing for Mahala” – a research report by Public Citizen, the Anti-privatisation Forum and the Coalition Against Water Privatisation
“Well received…” First prepaid electricity meters installed Sept 1995 Subsequently combined water and electricity meters
installed in a new housing development Currently 1,500 prepaid meters and 4,500 billed
accounts New meters are installed in all new housing, and on
request by home owners Issue: During power failures water is cut off. The
municipality can either replace the meter or reinstall a conventional meter within 24 hrs
Lesson 1: Don’t target the poor
Installing first where arrears are highest makes administrative sense – but is a recipe for conflict and rejection
Perception that poorer households get unequal or unfair treatment leads to resistance
There are genuine advantages for wealthy users too -- sell these aggressively
Offer real choice, especially in the beginning. Application for meters should be genuinely voluntary and well-informed
Lesson 2: Don’t start with water
Access to clean water is essential to human health – electricity is a luxury by comparison
There are substitutes for electricity (eg paraffin and wood) – not for water
Some people genuinely can’t afford to pay Payment for access to water exposes deep
moral and ideological conflicts Water is a bad starting point for prepayment
If you MUST start with water
Sensitivity, consultation and creativity are paramount: be prepared for protest
Some speculative suggestions: Meter and release 6,000 l free allowance
daily rather than monthly Offer metered access inside people’s
homes or yards and unmetered access at communal standpipes
Lesson 3: Get the tech right Meters should very, very rarely break down
If they do break down, guarantee repairs within 24 hours
Online vending systems should very, very rarely be offline
What about a minimum service level agreement with customers?
Design meters for user friendliness -- especially for the elderly, illiterate, and the disabled
Delivering
Convenience is one of the selling points – make sure you deliver
Vendors should be plentiful, easy to access, open at convenient hours – and always online!
Be creative about offering value added services Eg 24/7 SMS purchases in Cape Town
Lesson 5: No extra costs
Prepayment shouldn’t cost consumers more
Free installation drove early adoption in Cape Town
Prepaid users should never pay more per unit than billed clients – and ideally less. Why not pass on some of the savings?