If revenue collection from electricity sales continues to fall in light of the ongoing pandemic, the impact could be devastating. This is largely because some municipalities in South Africa generate as much as 45% of their revenue from electricity sales.
Before the COVID-19 pandemic, revenue collection was already dismally low – a 2019 Municipal Report by the Auditor-General suggests that 60% of revenue reflected on the books of municipalities will never be paid. Yet, as the financial realities of life in a (post-)pandemic world start making themselves felt, power theft andpayment delinquency are increasing.
Viven Perumal, Marketing Director at Conlog, says: “We have spent a lot of time getting insight from our customers. One particular issue is that billing and cash collection cycles are getting longer. We knew that many of our customers had similar challenges and we have tried to address a number of these through a single offering. We believe that scale will ensure more clients benefit from our solutions.”
Prepaid meters have long been a gateway to revenue collection and management for utilities. Anything that can impact the accuracy of a meter or a subsequent bill will compromise revenue collection and protection in one way or another – these include errors in billing, inaccurate meter readings or outright tampering and theft. As a cluster of considerations, it is vital to therefore ensure that the meter is as accurate, robust and reliable as possible; that it remains 100% functional; that vending is facilitated seamlessly; and that revenue management and protection operate in tandem.
A fundamental objective for any utility is to keep non-technical losses as low as possible. Generally, non-technical losses in the region of 8-9% are considered acceptable. However, if you look at South African municipalities, and African utilities in general, this figure can vary from between 18% and 30% and can even be as high as 40%. In plain language, the higher the non-technical losses, the more debt the municipality or the utility needs to carry, the more the financial losses in the system continue to mount.
THE RISK OF TECHNOLOGY AND CYBERSECURITY
Two foundational elements in the management of non-technical losses are process and technology. From a technology perspective, as utilities become increasingly digitalised, a growing concern is exposure to cyberattacks.
For many already financially compromised utilities, cybersecurity would be considered sufficient, but not outstanding. Cybersecurity is a moving target with utilities trying to defend multiple attack surfaces at once and comes as a high resource and financial cost. The COVID-19 pandemic has opened the door to an increase in the number of cyberattacks and ransomware attacks worldwide. It is not unusual for hackers to generate duplicate and fictitious meter tokens as a means of enriching themselves and defrauding the power company. Says Perumal: “We’ve come across a situation where one of the municipalities noticed there was a decline in the revenue collected. They were collecting less and less revenue, but they still had the same number of meters; something was not right.”
During their investigation, Perumal explains, the municipality uncovered that hackers were able to duplicate tokens and interrogate and control the meters in such a way that when utility staff came around to check the meter, with the touch of a button everything operated correctly. “Once the inspector left the premises, the meter was switched back into bypass mode.” An undercover investigation resulted in a complete rethink of the solution on the table for municipalities and of the supply chain security implications.
Conlog developed its own Crypto Vault software, which is an added layer on top of its cloud and hosted services offering. It has been designed to address and mitigate the risk of hacking, data cloning, token duplication and tampering. Crypto Vault mitigates much of the risk by securing the meter online and also ensuring that cloning, duplication and cyberattacks cannot unlock meters and gain access to any vending information.
THE POWER OF DATA
However, this process requires more than managing the physical meter. It entails utilising the power of analytics to dig deep into the data and provide insights into consumer usage and signals misuse. “We’ve been encouraging customers to digitise to beef up their security. But that’s not the only reason. We know the challenge that African utilities have when it comes to debt management, cash collection and funding. We believe that by moving to a hosted service platform, we can help them address all of these challenges – without the outlay of significant amounts of CAPEX.
“We provide a service that is best of breed, fast and secure. We utilise state of the art IT encryption software and processes, and with our security team, we’ve got the skills and the expertise to monitor, upgrade, and improve these systems,” says Perumal.
Those that had already shifted to digital before COVID-19 were able to shift smoothly to remote working because the database, administrators, SQL engineers and necessary support staff were already available remotely to keep the system running. This digital shift has enabled the swift implementation of protocols to support social distancing while continuing services for consumers.
Perumal concludes: “Utilities don’t need to continue operating in a situation where revenue collection and management is a daily struggle. Technology is available to help them – technology which not only takes the realities of their current financial situation into account but considers the consumers at whom it is aimed as well. For both consumers and utilities, we offer services and products that are secure, convenient and reliable.
“The timing is perfect for utilities to embrace the shift to digital, to do more with less, to improve efficiencies and their financial situation at the same time.”