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Bringing the case for prepaid electricity to light

By Citiq Prepaid

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Hardly a day goes by without the future of South Africa’s power grid making front-page news. Keeping the lights on, and sustainably, is a favourite topic around the dinner table, whether you live in Port Elizabeth or Pearl Valley.

As our national power utility grapples with recovering the debt owed to it by several municipalities, prepaid electricity meters have been touted as the silver bullet.

According to Cooperative Governance Minister Zweli Mkhize, Eskom was owed more than R24 billion by the end of December – R18 billion of that from unpaid electricity bills originating in Soweto alone.

To combat this, Eskom is putting in place a target to install more than 26,000 prepaid electricity meters in Soweto by March 2020. The City of Johannesburg has already credited prepaid meters with a 10% decline in illegal electricity connections.

Not only do these prepaid meters reduce the debt owed to Eskom by municipalities, improving cash flow and reducing network maintenance costs, their introduction also benefits Eskom’s customers directly in the form of improved services, accurate charges and reduced costs.
Prepaid meters can actually help consumers better manage their budgets and, in some cases, reduce their energy consumption. The prepay power model has been estimated to reduce average consumption by between 10 and 15 per cent, a significant reduction when one considers that behavioural efficiency programmes have yielded a low reduction of only three per cent.

There’s no question that gaining a better understanding of your household’s energy consumption habits could save you on your monthly electricity bill, and reduce your impact on the environment. By fitting a prepaid meter in your home, you can begin to measure exactly what you spend on your electricity, when and why.

In a rental environment, prepaid sub-meters assist property owners to collect prepaid payments from their tenants. Citiq Prepaid Managing Director Michael Franze explains that prepaid sub-meters provide transparency, and reduce risk for everyone involved.

‘Funds are collected from tenants upfront and are kept in a trust account. Citiq Prepaid levies an 8.75% handling fee, and then transfers the collected funds to the landowner who pays the municipal bill directly, enabling the landlord to stay in control of the billing relationship with the municipality, but with no collection issues. For tenants, prepaid makes their own electricity consumption more visible and ultimately more manageable. If you only get your bills a month or more in arrears, it’s easy to forget that day you accidentally left the heater on, and wonder if the landowner is overcharging you. When you can track your consumption from day to day, or even from hour to hour, it’s much easier to budget.’

While most of the cost of prepaid electricity goes to purchasing electricity, there are some additional costs, including a service fee, a channel fee, and sometimes even a building recovery fee. Traditionally, like cell phone charges, prepaid is a little more expensive than post-paid.

Municipalities across the country are encouraging the inclusion of prepaid meters in new dwellings. In fact, the City of Cape Town has made it mandatory, and is encouraging usage of prepaid meters through its meter replacement programme, in which defunct credit meters are being replaced with prepaid meters at no cost to residents. Eventually all neighbourhoods in the city will undergo the conversion.

The market for prepaid meters worldwide is gaining steady ground, due to the spread of smart metering technology, and growing acceptance of the idea of pre-paying for services. Navigant Research estimates that by 2024, the installed base of prepaid meters will grow to 85.1 million households globally, driven by the need to achieve operational efficiencies, reduce energy consumption and comply with regulations.

In the UK, some 12 to 15 per cent of consumers already have prepaid smart meters installed in their home, with 27 million scheduled to be installed by the end of 2019. In the United States, 60 million meters will be installed by 2020, and in Japan, 17 million prepaid smart meters will be installed in Tokyo by end 2019, according to research firm, Frost & Sullivan.

Energy is a precious resource, and managing its consumption is becoming increasingly important, not only in financial terms, but also for the benefit of our environment. Are you ready to take your energy consumption seriously? It’s time to join the prepaid meter revolution.

 

About Citiq Prepaid

Started in 2010, Citiq Prepaid has become the biggest and fastest-growing prepaid meter and utility vending system provider to landlords, bodies corporate, property managers, property developers and electrical contractors. To date, it has sold 850 GWh of electricity (equivalent to 25 years of the output of one 4MWh power station) through hundreds of thousands of active meters across South Africa. An ongoing pioneer in the prepaid sub-metering vending industry, Citiq Prepaid’s proprietary vending system enables property owners and landlords, as well as their tenants, to access detailed reports to efficiently track and manage electricity and water purchases. This helps eliminate unexpected costs, quickly resolves disputes, and takes the hassle out of payments, so that utilities can stay on.

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