COMPANY OVERVIEW ABOUT PEC METERING. Background

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2 COMPANY OVERVIEW ABOUT PEC METERING Background PEC Metering (Pty) Ltd is a private professional company established in 1994, specialising in utility management services and energy management with operations all over Southern Africa with our head office in Pretoria. ESKOM MYPD 3 APPLICATION 2

3 PROFESSIONAL AFFILIATION GBCSA (Green Building Council of South Africa) SAEE (South African Association for Energy Efficiency) ECSA (Engineering Council Of South Africa) SAPOA (South African Property Owners Association) SACSC (South African Council of Shopping Centres) AEE (Association of Energy Engineers) ESKOM MYPD 3 APPLICATION 3

4 THE NEED FOR ELECTRICITY RESSELERS Property owner constitute a significant amount on the Eskom and the Municipalities customer base. The majority of supply authorities (Eskom/Municipalities) operate on a one meter per stand policy. Landlord makes use of the resellers to manage the downstream distribution of electricity from bulk to the individual occupants/end-consumers in a complex. The resellers and landlords have to ensure that adequate metering infrastructure is in place in order to optimise the recovery of energy (kwh). The resellers have to put together a billing and management system in order to process the accounts, credit control and account distribution thereof. ESKOM MYPD 3 APPLICATION 4

5 MANAGEMENT COST PEC Metering together with the other resellers are guided through by-laws not to charge a cent extra to tenants on reselling of electricity. The tariffs as derived by Eskom and Municipalities are the sole basis of billing the end user. As it is evident from the above page, there are significant costs incurred by the landlords/resellers for the following but not limited to: Credit control risk (Non-paying tenants) Management systems Human Resources Transport Overheads Technical infrastructure Maintenance on the reticulation Technical loses (Where applicable) ESKOM MYPD 3 APPLICATION 5

6 OPERATIONAL MODEL. ESKOM MYPD 3 APPLICATION 6

7 OPERATIONAL MODEL As outlined above, PEC Metering is the main connection between the supply authorities (Eskom and Municipalities), Landlords/Property Managers and the End Consumer. We or the Landlord we represent, buys electricity directly from Eskom or the applicable Supply Authority and resells to the end consumer. We apply the same tariff that the relevant supply authority would apply to that end consumer We therefore derive our income from the diversity between tariffs i.e. Bulk vs resell tariff, or from a portion thereof paid to us by our clients (the property owner) ESKOM MYPD 3 APPLICATION 7

8 IMPACT OF ESKOM AND MUNICIPALITY TARIFF INCREASE TO RESELLERS It is common knowledge that when Eskom tariffs increase by 16%, the Municipalities will increase their tariffs by 16% plus what ever additional percentage that will be approved by NERSA based on their individual proposals. However, the Municipality tariff structures are most of the times different and complex compared to the Eskom tariffs and that becomes problematic for the resellers, as the level of consistency becomes compromised. NERSA needs to look deeper into the tariff structures proposed by Municipalities, as in most cases the proposed average increase may not necessarily be what the true Municipal account will reflect and ultimately payable by the bulk consumer. Below is an example of a typical Elecflex ll tariff used by Centlec on medium size shopping centre with a 47% load factor and the true percentage increase that will reflect on the municipal account. ESKOM MYPD 3 APPLICATION 8

9 ELECFLEX 2 ILLUSTRATION Retail 2012/ /2012 Elecflex II Elecflex II Summer Winter P Summer Winter O P S O kva Acc S kva Demand kva Acc Basic kva Demand Enviro Basic TOU Acc (Winter) TOU Acc (Winter) % Increase P P % O O S S kva Acc kva Acc kva Demand kva Demand Basic 1400 Basic Enviro R R TOU Acc (Summer) % Increase TOU Acc (Summer) P % P O O S S kva Acc kva Acc kva Demand kva Demand Basic Basic 1400 R Enviro Avg Increase R % ESKOM MYPD 3 APPLICATION 9

10 IMPACT OF ESKOM AND MUNICIPALITY TARIFF INCREASE TO RESELLERS We must also note that, as important as the cross-subsidisation is to accommodate the poor by improving the living conditions for all, it sometimes appear as being utilised for non deserving customers, in that, there is a difference between a consumer having a 60A supply and living in an urban town house having all the energy saving infrastructure and appliances, and a 60A consumer leaving in a rural area dependent on maybe non-commercial farming for a living, yet we would treat those the same based on their supply size. Distinct between urban and rural/rdp should be made when municipalities design their tariff structures. A higher percentage increase on bulk tariffs against lower percentage increases on reselling tariffs would a have negative impact on the end user, as the narrowing of diversity between bulk and resell tariffs would inevitably create a shortfall. Such shortfall will unavoidably be passed on to the end consumer and eventually to the customer buying from such end consumer (The poor included). The end-user will thus not benefit.this will erode transparency from electricity reselling. ESKOM MYPD 3 APPLICATION 10

11 CONCLUSION It is imperative and in the interest of everyone, i.e. Eskom, Municipalities, landlords, Tenants and his customers, for NERSA to enforce a balanced percentage increases to ensure that all involved stakeholders are not more negatively affected by the tariff increases than the other. As with municipalities, the landlords will incur cost to distribute electricity downstream to tenants yet maintaining the bylaws of not adding a cent more than the prescribed tariff. Balanced tariff structures will optimise the efficiency of the management of this utility. Transparent municipal tariff design is a necessity as inputs by the affected stakeholders may better the tariff structures. ESKOM MYPD 3 APPLICATION 11