A bitter spat between City Power and a former service provider over SIM cards has resulted in large companies in Johannesburg receiving estimated bills for their electricity consumption.
City Power this morning admitted that some of its largest clients did not receive accurate bills for the first six months of last year because of a “bitter supplier”, which resulted in estimated accounts being sent out.
The utility's largest customers, which account for about 70% of revenue, are billed through an automated process that uses smart meters. However, when the utility awarded a new contract at the end of 2009, the SIM cards in the meters were never handed over.
Johannesburg residents have been complaining for months about inflated bills, a lack of response from the call centre, estimated consumption and unfair disconnections. About 8% of the city's million clients have logged queries about their bills.
Graeme Mellis, director of empowered company Utility Risk Management (URM), argues the problem is far deeper than issues with the post-implementation phase of project Phakama, the city's plan to move from disparate legacy systems to SAP.
Mellis alleges that one of the biggest issues is that large companies, which get their electricity straight from City Power, received 'guesstimated' invoices for at least the first six months of last year.
This is because URM was forced to cancel the SIM cards it had installed in meters when the utility ignored its requests to take over ownership of the cards, says Mellis. As a result, he alleges about 6 500 large electricity consumers would not have received correct bills for about six months from the beginning of last year.
City Power, which is owned by the City of Johannesburg, supplies electricity to about 300 000 customers, which range from domestic to commercial and industrial properties.
Smart systems
Mellis explains URM had a long-standing contract with City Power to read the meters of the largest enterprises in the city, which account for at least R400 million of its electricity revenue. However, when URM's meter reading contract concluded at the end of 2009, there was no handover to the new company, IST Otokon.
About a decade ago, URM installed smart meters with SIM cards that submitted readings to a central system, says Mellis. The readings were uploaded onto City Power's Web site so that large companies could draw consumption reports so that City Power could issue bills.
URM refused to pay the kickbacks, says Mellis, and ended up on a month-to-month contract with City Power, while the saga continued.
The utility issued a new tender in September 2009, which was won by Powertech subsidiary IST Otokon in December of that year.
Mellis alleges that around this time, suspecting that the company would not win the tender, he e-mailed City Power to sort out the issue of the SIM cards, which were registered to URM, and to do a proper handover.
City Power ignored the mails and URM did its final reading on 1 December 2009, and then cancelled the SIM cards to avoid a rental bill of R100 000, says Mellis.
Mellis alleges it would take at least eight months to swap out SIM cards so that proper readings can be obtained, because even City Power doesn't know where all the meters are. “There are 6 500 meters out there, scattered all over,” notes Mellis.
Consequently, he says, for at least six months from the start of the new contract, IST would have been estimating consumption data.
All over the show
Gerard van der Merwe, IST's utilities, municipal and commercial manager, confirms there was no handover process when the company took over the contract. He says, however, that IST is able to read meters as long as they are online, and hasn't needed to estimate readings.
However, City Power spokesman Sol Masolo concedes that the utility's largest customers received estimated bills for about six months. He accuses URM of refusing to hand over the SIM cards, saying the company is “bitter”.
“Requests were made to URM and e-mails were sent for handover and there was no reply until mid-January 2011. URM refused to hand over the contract to City Power even when they were requested formally,” says Masolo.
“Our customers were affected, but we have learnt that we must not do the same mistake in the future,” he notes.
Masolo says he is “not sure” about the allegations that utility officials tried to bribe URM into having the contract extended.
Democratic Alliance city councillor John Mendelsohn says while the allegations are “untested”, billing estimates have been plaguing the city for years. He says estimates are a problem across the board - from big business to residential consumers.
Mendelsohn is aware that big businesses have been receiving estimated bills, but has no idea how this has affected City Power's debtors' book, as no information has been made available for at least a year. “Everything is shrouded in mystery.”
According to City Power's mid-term report for the six months to December 2009, the latest available report on its Web site, about 12% of the electricity it dispatches is unaccounted for, and couldn't be billed.
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