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28 February 2011 at 11:36 - Posted by Anonymous

City Power's big losers


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City Power has apparently been running for months at a time without processing a single invoice for large users.

The City of Johannesburg has been estimating the monthly bills of large electricity users since a tender was awarded to a company that lacks the experience and expertise to read their meters, according to experts.

City Power has apparently been running for months at a time without processing a single invoice for large users. "They've just been estimating based on old figures," says Stephan Dolk, an energy consultant to large users. "One of my clients was overcharged by R800 000."
 
Large users make up less than 20% of the city's user base but account for more than 60% of its revenue, or R400-million a month. Their meters are read by a private company using an automatic meter-reading process. At the end of 2009 a company called IST Otokon was contracted by the city to read the meters.
 
Its predecessor, Utility Risk Management (URM), read the meters of large users from 2005 to 2009. Towards the end of its contract, URM was working on a month-to-month basis. But the service provider became estranged from the city allegedly after its directors refused to bribe officials. "At various stages we were approached by senior staff in the city who said we needed to pay 'financial incentives' if we wanted a guarantee that we would be awarded the contract again," says Graeme Mellis, the URM director. "We made it clear we were not going to toe the line."
 
'There was no handover process'
IST Otokon was selected as the new contractor in an open tender, but experts say they couldn't read the meters.
 
"First, they didn't have the technology to provide the service they said they could," says Dolk. "[URM] took years to build up their system, then these guys came in thinking it was straightforward." 
 
Another issue was the SIM card technology involved in meter reading. "Each meter has a SIM card installed which is registered under our name to MTN," says Mellis. "These should have been handed over to City Power. I sent them lots of emails but they ignored me and I eventually had to cancel the SIM cards ... We are talking about almost 8 000 SIM cards scattered all over the Johannesburg area. Even with the best information in the world about their whereabouts, it would take at least six to eight months to get to each one and change it."
 
Mellis says: "There was no handover process for what is an extremely complex system ... Other data such as the historical readings held in our database were only requested in January, long after the new company had taken over ... They did not even know where all the meters were at the time because City Power's own records on this were shambolic."
 
Mellis says IST Otokon may not have fully complied with a number of the criteria required as part of the tender. "Paragraph 3 of the tender document requires the successful tenderer to be able to communicate with all modems and meters in the City Power-installed base. I can confirm that IST could not do so at the time that the contract was awarded. We have documentation proving that key information required to communicate with at least one of the meter types used by City Power was requested by IST only after the contract was awarded.
 
"Paragraph 17 requires 99% meter-reading performance ... I know for a fact that almost no meters were read within three months of the contract being awarded."
 
But Chris Nell, the managing director of IST Otokon, says that the company met all the tender requirements and that it has the experience and technology to read meters. They were currently reading 15 000 meters. But he agrees that there was no handover from URM. 
 
The City of Johannesburg had not responded to questions by the time of going to press.
 
More guesswork than actual readings
The City of Johannesburg often estimates more electricity bills than it reads.
 
According to a quarterly departmental performance report, the number of actual meter readings for July 2010 was 117 923. The number of estimated meter readings for the same month was 173 382 -- 41% more than the 122 000 estimated readings in June last year. More than 36 000 meters could not be read. But by August last year the number of estimated readings had dropped to 118 602.
 
The report also says that 40% of electricity bills had been "dispatched and billed to customers but monetarily could not be recovered".
 
Patrick Atkinson, the Democratic Alliance spokesperson on finance in Johannesburg, says: "This goes to the heart of problems in the city. The issue is that there are contractors out there who are meant to do the readings but are not fulfilling our criteria.
 
"We need a far more stringent process with our meter readers."
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