An update on UMEME’s smart energy solutions: How Uganda’s electricity utility has been tackling losses in the last 3 years

August 25, 2017 | Mobile for Development Utilities | Sub-Saharan Africa | Uganda | Helene Smertnik

In 2014, the GSMA Mobile for Development (M4D) Utilities programme published a report on the use of mobile for smart energy solutions in Sub-Saharan Africa. At the time, UMEME, Uganda’s national electricity utility, had begun piloting mobile-enabled metering solutions to tackle losses and improve efficiencies. Today, UMEME is ranked as one of the two national utilities (out of a total of 39 utilities) that fully recovered their operational and capital costs according to the World Bank’s recent report on Making power affordable for Africa and viable for its utilities. This blog provides an update on UMEME’s progress and the direct and indirect benefits of implementing metering solutions and mobile payments for their different customer segments.

This blog has been written in partnership with John Kalyesubula and Nelson M Bagenda from UMEME.

Moving domestic customers to pre-paid meters to improve services and reduce cost of connection

In December 2010, UMEME piloted a pre-payment technology solution for its domestic customers. As part of the pilot, 8,600 post-paid domestic customer meters were retrofitted with pre-payment meters, at an estimated cost of $3.5 million. The pilot was deemed successful and the technology is now being rolled out to all UMEMEs’ domestic customers. On average, 130,000 new domestic customers are added to the grid annually. Some of the key direct and indirect benefits to both the utility and the customers are outlined below.

Direct benefits:

  • Reduction in operational costs (approx. $36/customer) by saving on billing related costs i.e. meter reading, bill printing, bill delivery, disconnection and reconnection costs; and
  • Cheaper cost of new domestic connections, as no security deposit is charged to the customer.

 

Indirect benefits:

  • Eliminating inaccurate bills and abrupt disconnections to customers caused by late bill delivery; and
  • Helping customers to reduce their monthly expenditure on energy consumption by allowing them to monitor and manage their daily usage.

The case of Large Power Users (LPUs): The use of automated meter reading (AMR) technology

Whereas the majority of customers are households, the industrial and commercial customers (0.5 per cent of total customer database) account for over 70 per cent of UMEME’s sales and revenue. Tackling losses from this customer segment could drive significant revenue increases, which in turn can help UMEME connect more households.

As early as 2011, UMEME piloted an automated meter reading (AMR) technology for 1,000 industrial customers. Through the pilot, LPUs’ meters were read remotely for billing, events and consumption data, which was relayed to a central server, processed and presented for analysis. The pilot revealed that LPUs continued to breach and tamper with metering installations. These learnings were used to develop a more resilient AMR solution that has been rolled out from 2014 to date.

Over 3,700 large power user meter installations have now been retrofitted with AMR technology. While the cost is estimated at $15 million, the direct and indirect benefits to the utility as well as to the customers outlined below suggest the recovery from this initial investment.

Direct benefits:

  • Over 45 GWh has been recovered from the large power user meter retrofits, this translates into savings of $6 million for the electricity sector over the three years; and
  • The billing cycle has been shortened from 14 days to 6 days hence customers receive bills earlier and can pay on time.

 

Indirect benefits:

  • Availability of status information on customer installations to improve customer service e.g. early detection of outages, early detection of meter faults; and
  • Customers use the data on the web portal for internal analysis such as computing the cost per unit of production, power supply status.

 

Installing pre-paid metering for government buildings to improve budgetary control

Following positive results of metering households and LPYs, in 2014, the government of Uganda tasked UMEME to deploy pre-payment to all governmental installations in a bid to improve budgetary controls and planning for government institutions. All domestic accounts owned by the government were retrofitted to pre-payment. This solution was nominated for the Innovation of the Year Awards at the African Utility week held in Cape Town in May 2017.

To date, 250 accounts have been retrofitted and the remaining accounts are to be retrofitted before November 2017.

 

Pre-payment and metering solutions have been catalytic for UMEME to improve its business efficiencies and customer service to its three main segments, domestic, LPUs and governmental. The Ugandan utility’s journey illustrates the use of mobile technology for improved and convenient billing as well as a communication platform for metering. Beyond the technology, some mobile operators are exploring how to further support utilities through their digitisation, offering their expertise and customer services.

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