METERING SERVICES GROUP

Revenue and Collection Improvement Plan

 The main purpose is to COLLECT REVENUE by implementing
MANDATE POLICIES, PROCESSES AND ANALYSIS that will PROTECT,
ASSURE, ENHANCE AND COLLECT REVENUE and minimise the risk of
NON-TECHNICAL LOSSES that might arise from people, infrastructure
and customers
O P E R AT I O N A L P E R F O R M A N C E A G A I N S T K P I s & TA R G E T S
Revenue Management

FY18/19 FY18/19 FY19/20

DEPARTMENTAL OPERATIONS KPI
Target Actual Target

# Days to audit Illegal connections Informal 20 18 18

# Days to audit of Illegal connections formal 122 130 130

# Customers disconnected 48,000 22,725 22,725

# Non-vending customers resolved 24,000 11,598 26,900
# Customers reconnected 48,000 22,725 22,725

# Customer vending below average resolved New

# Unresolved post billing exceptions New

# Outstanding Queries 12 5 5
Disconnection to Reconnection Ratio 70% 40% 50%
Post installation Audits 122,000 11,000 11,000

Revenue Recovered from Initiatives R1,6Bn R492m R667m

R E V E N U E S T A B I L I S A T I O N F O R A F I N A N C I A L LY S T A B L E O R G A N I S A T I O N

Key levers to enable revenue to be stabilised

Revenue
Revenue Revenue
Revenue Revenue
Revenue Revenue
Revenue
Protection
Protection Assurance
Assurance Enhancement
Enhancement Collection
Collection
 REVENUE MODEL PER REGION PER CATEGORY

Row Labels Sum of Customer (Current) Sum of Revenue (Current) Sum of Customers (Budget) Sum of Revenue (Budget) Sum of Customer Forecast Sum of Revenue (Forecast)
Region A 16 373 R906 434 443,67 16 373 R1 085 647 353,79 16 373 R1 024 905 425,46
Region B 60 655 R3 037 258 157,96 60 655 R3 637 760 353,19 60 655 R3 434 227 799,20
Revenue
Region C 72 671 R2 120 871 217,00 72 671 R2 540 192 774,60 72 671 R2 398 069 085,07
performance
Region D 15 661 R185 358 810,34 15 661 R222 006 459,87 15 661 R209 585 206,85
, budget and
Region E 63 295 R2 074 099 742,77 63 295 R2 484 174 021,58 63 295 R2 345 184 579,15
forecast per
Region F 67 724 R4 765 067 068,38 67 724 R5 707 177 710,99 67 724 R5 387 861 334,21
region
Region G 51 261 R541 363 597,36 51 261 R648 397 643,11 51 261 R612 119 819,54
Region U 32 354 R470 514 054,52 32 354 R563 540 299,88 32 354 R532 010 241,44
Grand Total 379 994 R14 100 967 092,00 379 994 R16 888 896 617,00 379 994 R15 943 963 490,92

Row Labels Sum of Customer (Current) Sum of Customers (Budget) Sum of Customer Forecast Sum of Revenue (Current) Sum of Revenue (Budget) Sum of Revenue (Forecast)
Business 9 317 9 317 9 317 R1 306 984 663,15 R1 565 391 133,24 R1 477 807 558,62
Revenue per
Domestic 123 173 123 173 123 173 R4 419 684 924,53 R5 293 509 394,29 R4 997 337 744,17
customer
LPU 3 849 3 849 3 849 R7 144 345 337,64 R8 556 867 696,83 R8 078 111 273,27
category
Prepaid 243 655 243 655 243 655 R1 229 952 166,69 R1 473 128 392,65 R1 390 706 914,87
Grand Total 379 994 379 994 379 994 R14 100 967 092,00 R16 888 896 617,00 R15 943 963 490,92

• The current revenue column represent the data of customers that where billed for the financial year 2018/2019
• The budget column represent the budgeted revenue expected for the financial year 2019/2010
• The forecast column represent the expected revenue
• The increase in the revenue forecast from prior year is due to the tariff increase of 13,07%
• The current initiatives are expected to stabilize the increase in non-technical losses
• The revenue modelling tool will continue to be updated considering other internal or external factors that might affect electricity consumption

5
REVENUE INITIATIVES PROGRESS AND WAY FORWARD

Current Initiatives Target Complete % Recovered Additional Possible Recovery Way Forward
d Completed Revenue Revenue from on additional
Scope Scope

1. Unmatched: Balance of the unmatched will be action with

• Prior War Room 26,813 19,213 72% R75,9 million priority to residential properties above R3
• During War Room 4,922 2,300 2,783 R21 million Yes Yes *Part of initiatives million

2. Installation Audit 2,000 1,658 83% R65 million Yes Yes * Part of initiatives Balance of the scope to be completed by end
July 2019. 25 with potential recovery waiting
for bylaw period. Exceptions on the current
scope will be resolved with the new scope.
3. New Connections 26,813 R15 million No No Process has been improved to proactively
prevent gaps

4. Prepaid New project in 2019/20

• Prepaid Project 17,000 17,000 100% R78 million Yes Yes * Part of initiatives New report will be actions for all customer who
• Below Average 50 50 100% Penalties Yes Yes * Part of initiatives are 50% below

5. War Room Initiatives

• Post Billing Analysis 300 300 100% R50 million Yes Yes * Part of initiatives The process continues to the top 2000 as part
• Pre-Billing Analysis 300 300 100% R36 million Yes Yes * Part of initiatives of the hand over and will increase until entire
• Unprocessed 3 3 100% R74 million No No data base.
adjustments City Power trained to capture adjustments to
prevent unprocessed adjustments

Total R412,9 Million

Note: Pre-billing and Unprocessed adjustment recovery will be realized in July sales as part of 2018/2019 revenue
6
 REVENUE MANAGEMENT
Short - Medium - Long-term Implementation Plan

SHORT
MEDIUM (>12<36 Months)
(<12 Months)
2019 2020 2021
INITIATIVES Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Revenue Completeness, and Accuracy
• Acquisition of a revenue forecasting tool
• Redefinition of customer segments
• Finalize plan for unmatched stands and execute the plan
• Development of debit/credit adjustment policy
• Perform billing on SAP ISU
• Monthly reconciliation of Post Billing
REVENUE MANAGEMENT

Reduction of non-technical and technical losses

• Design revenue modelling tool
• Review, model, governance and standard reports
• Define and implement customer data base and segmentation strategy
• Automation of disconnection
• Design and implement Revenue Protection Strategy
• Review bill simulation and relevant data analytics
• Review customer on boarding process
Revenue Collection
• Develop collection strategy per segment include loyalty programme
• Develop strategy for write off with focus on ESP and debt rehabilitation
• Develop and implement stakeholder engagement programme for LPUs

7
 Revenue Completeness – Improvement Method
T h e p r o c e s s i s t o e n s u r e t h a t a l l p r o p e r ti e s a n d c u s t o m e r s u s i n g e l e c t r i c i t y a r e b i l l i n g o n t h e s y s t e m .
T h e a p p r o a c h i n c l u d e s m a s s d a t a a n a l y s i s , e x c e p ti o n v e r i fi c a ti o n , s y s t e m u p d a t e a n d c o l l e c ti o n .

Analysis of New Analysis of Billboards and

CP vs JW vs
Connection and Prepaid non- temporal
Rates Developments vending Suppliers

Found Billing
Field Exception (Update
Address)

Field Billing Analysis Collection END

Data Analysis Field Work
Completed
Not Billing
Install and (Update
Maintain System)

PMO
Office Technical Team
Data Analysts Disconnection and Audit of Exceptions
• Data Comparison • Field verification of exception
• Exceptions Issuing • Confirmation of Address and Meter Condition
• Reporting • Disconnection of no access and Non paying Customers

Billing and Collection Meter Installation and Maintenance

• Individual Data analysis • Conversion and Installation of AMI meters
• Update of Billing system • All LPU installation verification
• Collection interactions and escalation • Replacement of Faulty Meters
 REVENUE ENHANCEMENT INITIATIVES
Program
1. Unmatched stands
2. LPU Installation Audits
3. Missing Billing Orders
4. Prebilling and Post Billing recovery
5. Prepaid Low Consumption and No
Consumption
Impact Department
Completeness:
• Reconcile the data bases monthly • Smart Nerve Centre and Data Governance
• Audits all unmatched and prioritize LPU and sectional • Revenue Management
titles
• Revenue recovery from unbilled • Revenue Management
Completeness:
• Audits of Installation found unbilled • Metering Field and Revenue Managements
• Install meters on unbilled • Metering Field
Accuracy
• Audit existing LPU Installation • Metering Field and Revenue Management
• Recover revenue on unbilled • Revenue Management
Completeness:
• Investigate Missing Billing • Revenue Management
• Recovery and rebilling of missing billing • Revenue Management
Accuracy:
• Investigate exceptions • Device Management
• Recovery and rebilling of exceptions • Revenue Management
Completeness:
• Audit and disconnect No Consumption • Revenue Management
Accuracy:
• Audit and disconnect low consumption • Revenue Management
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 Revenue Accuracy – Improvement Method
T h e p r o c e s s i s t o e n s u r e t h a t a l l p r o p e r ti e s a n d c u s t o m e r s u s i n g e l e c t r i c i t y a r e b i l l i n g o n t h e s y s t e m .
T h e a p p r o a c h i n c l u d e s m a s s d a t a a n a l y s i s , e x c e p ti o n v e r i fi c a ti o n , s y s t e m u p d a t e a n d c o l l e c ti o n .

Installed Meter Billing System

Capacity Configuration Update
Accurate Tariff Meter Reading
Planning Files
Commission
Sheets
MRQC Data Application Improvement

Short Term Verification

Medium to Long Term Verification

PMO
Office Technical Team
Consumption and Billing Field Audit and Meter
Maintenance
Pre-Billing Analysis • Response to Voltage and Current
• Load Factor Analysis alarms
• Consumption Analysis • LPU Installation verification
• Capacity = Meter = Billing System • Audit prepaid vending 50% below
Vending Below Average area average
Post Billing Analysis • Audit prepaid vending below post-
• Average Selling Price paid billing
• Billing Completeness(All Charges) • Disconnection
• Reversals
 REVENUE ENHANCEMENT INITIATIVES
Program
1. Collection of LPU Customers
2. Collection of Collectable Debt
3. Collection Initiatives
4. Investigate Credit Balances
Impact Department
Completeness:
• Reconcile the data bases monthly • Smart Nerve Centre and Data Governance
• Audits all unmatched and prioritize LPU and • Revenue Management
sectional titles
• Revenue recovery from unbilled • Revenue Management
Completeness:
• Audits of Installation found unbilled • Metering Field and Revenue Managements
• Install meters on unbilled • Metering Field
Accuracy
• Audit existing LPU Installation • Metering Field and Revenue Management
• Recover revenue on unbilled • Revenue Management
Completeness:
• Investigate Missing Billing • Revenue Management
• Recovery and rebilling of missing billing • Revenue Management
Accuracy:
• Investigate exceptions • Device Management
• Recovery and rebilling of exceptions • Revenue Management
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C O L L E C T I O N S S T R AT E G Y
Our collection strategy prioritises high value debt from 20% of the customers (LPUs). Going forward this will be
enabled by a centralized cross-functional team to put an increased effort to reach the collection targets

These will be managed by

20% of accounts in the
the PMO team which will
PMO Focus Areas
debtor's book which has
20% handle all queries and • Analysis and Reports
80% debt for April 2019 Priority corrections ‒ Data Analysis
1 ‒ Report Update
• 28k
accounts • Technical
• R1,8 billion 80% ‒ Meter Maintenance
Collectable
‒ Field Check

RESULTS
EFFORT

‒ Disconnections
• Query and Collections
‒ Billing and Meter update
80% queries
‒ Legal Matters
‒ Customer Contact
Priority 2
• 249k accounts
80% of accounts in the • R1,1 billion These will be managed as
debtor's book which has Collectable
20% part of the day to day
20% debt for April 2019 collections
R E V E N U E M A N A G E M E N T C A PA C I T Y

Items Period Baseline Daily Target Weekly Target Monthly Target

Informal Settlement Illegal Connections Q1 20 1 5 20

CoJ Disconnections Q1 48,000 200 1000 4000
Prepaid Audits and Disconnections Q1 48,000 200 1000 4000
No Access audits and disconnections Q1 48,000 200 1000 4000
Unmatched Q1 48,000 200 1000 4000

Actions

• Disconnection will be done as per the above targets

• All disconnections without reconnection will be audited by contractors and will only be paid on level 3 (when property found
disconnected)
• For prepaid audit and disconnections, specific contractors will be allocated per region
• No access will be done to improve meter reading performance
R e v e n u e P r o t e c ti o n I n i ti a ti v e s

Enabling the Program

Blanket Audit Protective Structures

• Data accuracy and integrity
• Protect meters to reduce tempering or by-passing on
• Reduce bridged meters
• Reduce number of faulty meter meters

Business Intelligence System Architecture

• Improved quality of reads
• Improved revenue assurance and accuracy
• Reduction in customer queries and complaints
• Reduction in system downtime;
• Improved system processing performance;
• Improved disaster and recovery management

Energy Balancing Processes

• Area balanced losses management • Improve productivity and performance
• Impact of area losses to overall losses • Drive standardization
• Installation of stats meters backend system • Being value chain driven

New Smart Connections Meter Asset Register

• Reduction in non technical losses • Improved asset management
•
• Reduce fraudulent activities
Improve accurate reading
• Customer to Network Link
• Availability of Alarms
 O P E R ATI O N A L R I S K S U M M A RY

RISK ID RISK DESCRIPTION CAUSES CONSEQUENCES RATING OPERATIONAL OBJECTIVE

• Ineffective leadership • Service delivery and the sustainability of the

• Organisation structure & resources business will be negatively affected
Collapse in service
1 deployment strategy not aligned to the • Failure to deliver on the targets or business
delivery Capability: To ensure that the City Power
strategy results
• Inability to meet shareholder objectives people have the right knowledge, skills and
attitudes to perform at the right level of
Under performing competency in their jobs enabling the business
workforce may • Ineffective performance management • Poor service delivery of today and that of tomorrow
2
compromise strategy system • Loss of revenue
execution

• Poor communication
• Poor employee relations
• Lack of change management
3 Disengaged employees
capability
• Ineffective rewards and recognition
methods
Commitment: To design and deliver a
leadership brand and an employee value
• Low staff morale
proposition that drives employee engagement
• Low productivity
and cultural transformation

• Change in company strategic direction Capacity: To create an environment where City

• Organisational structure not providing Power has the right number of people, working
Operational inefficiencies
4 role clarity • Failure to execute on the Company mandate in the right place, at the right time to enable City
and ineffectiveness
• Vacancies not filled due to financial Power’s VUCA 2022 strategy
constraints

• Management’s ability to resolve worker issues

Non-compliance to
regulations may • Employees do not have a full
5 negatively impact City
Power’s reputation
is significantly compromised
• Negative impact on City Power brand and Compliance: To enable adherence to
reputation transformation imperatives, employment
appreciation of the HR compliance /
• Possible litigation regulations and organisational directives
regulatory environment
• Financial loss
• Loss of operating license
Thank You!