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Why Is Kenya Power Dumping Pre-paid Meters?

May 19, 2015 9 comments

meter2Recently, the country’s only power utility company announced that it was slowing down the roll out of the prepaid metering system that they launched about 6 years ago. The reason given for this about turn was that the company is losing revenues as it is now collecting less from the same customers who are now on prepaid metering than they did before when the same group of customers were on post paid metering system.

According to the Kenya Power records, about 925,000 out of the 3.17 Million customers are on prepaid meters. Before the 925k moved to prepaid, they were collecting about four times more than what they currently collect from the same customers. The Kenya Power MD stopped short of accusing customers with prepaid meter tampering as his explanation of the reduced revenues. With the reduction in revenues, Kenya power has decided to classify this reduction as ‘unpaid debts’ in their books. Meter tampering would be across both pre and post paid users if he still holds the opinion that prepaid users are tampering with meters. In fact there are lower chances of a prepaid user tampering with the meter than a post paid user doing the same.

My little accounting knowledge tells me that it is every company’s dream to convert all their customers to prepaid. This shifts the cash flow position to a very favorable one of positive cash flow, you have the money from customers before they consume your service/product. With a prepaid metering system, Kenya power was heading to accounting nirvana but the recent revelations about the accumulating ‘debts’ from prepaid customers was a shock to many. First and foremost, if you do not buy prepaid meter tokens, you cannot consume power on credit and pay later, so how is this reduction in  revenues from prepaid meter consumers classified as a debt as opposed to an outright reduction in collected revenue?

Faulty meters?

There are two main brands of power meters used by Kenya power, Actaris and Conlog. The later brand was found to be defective 3 years into the roll out, the meters were erroneously calculating remaining power tokens especially after a power outage, you could be having say 30Kwh’s remaining on your meter and after a power blackout, the meter reads -30Kwh or some other random negative value. This is what consumers would notice, we cannot for sure say that the same meters also under bill on the same breath. Of course if it under bills, very few consumers would complain or even notice, they would however be quick to notice a negative token value because they would lose power. Could faulty meters be the problem here? Could Kenya power be suffering from substandard meters? Here is a blog link to one affected consumer who complained in 2012 about the faulty meters. Kenya power attempted to replace some Conlog meters but I still see some in the wild in use.

Reality of estimate billing?

We have all been there, where you receive an outrageous bill from Kenya power. This is because more often than not, they estimate power consumed and never get to read the meters in your house. When was the last time you saw a Kenya power meter reader on a motor bike in your estate if you are on postpaid? According to Kenya power books, one post-paid domestic customer consumed 12 Kwh of electricity and on average paid Sh1,432. And each prepaid customer consumed an average 23 Kwh and paid roughly Sh756 to the power company. This can only mean two things:

  • The postpaid customers are over billed due to poor estimation methods as meters are seldom read. I noticed this on my water bill too. When my bill is say 600/= and i overpay 2000/= when settling the 600/= bill, my next bill will be in the regions of 2000/= (estimated from my last payment). So i make sure i pay the exact amount on the bill these days to deny them room to estimate and over bill me.
  • The prepaid meters are spot on accurate. This is the most plausible reason and I will explain below.

Prepaid meters are accurate?

Unlike the old school postpaid meters that measure total ‘apparent’ power consumed, the new prepaid meters assume an efficient electricity grid and measure effective or real power consumed by the customers appliances.  In a situation where the power distribution grid is inefficient, the voltage and current are not in phase. This leads to a lot of ‘wasted’ power. In postpaid, consumers pay for the grid inefficiencies, in prepaid, they do not. This is why there has been a drastic reduction in revenues because consumers are now paying for what they consume and not the wastage on the grid. Perhaps this is what Kenya power sees as ‘consumed but unpaid for power’ by the prepaid meter users? Could be, this is because its not possible to consume more than what you have paid for on a prepaid meter. apparent power is consumed but not measured by the meters. This is especially true if you have appliances with electric motors in them such as washing machines, water pumps and air condition systems.  Read more about power factor by clicking here

You can read older articles on my blog touching on Kenya Power by clicking the links below:

  1. How Kenya can enjoy lower electricity tariffs
  2. Kenya is ripe for a Demand Response Provider
  3. Kenya Power Needs To Be Penalized For Blackouts
  4. There is need to end the Kenya Power monopoly