Optimising revenue from service charges

Service charges from electricity, water and sanitation are the main source of revenue for municipalities. When not managed properly, this can result in a downward spiral of reduced income and impaired service delivery.

Consulting engineering and infrastructure advisory firm Zutari has successfully assisted a major metropolitan municipality to recover hundreds of millions of rand in previously unpaid water and electricity bills over the past few years. It now aims to roll out this Revenue from Service Charges Management (RSCM) solution to the other major metros in South Africa, as well as municipalities struggling to manage their revenue from service charges.

Zutari has produced a case study, entitled ‘Optimal Revenue from Service Charges’, to illustrate the full benefits of its RSCM solution, which is based on a water and electricity meter management consultant model. Its key deliverables for the metro were meter installation and repair management (work management), meter reading management, credit control management, contractor management, materials management, and ad hoc services such as revenue recovery and enhancement.

Leon Prinsloo, associate: Asset Management, Zutari

Avoiding estimates

The ultimate aim is to ensure the highest possible percentage of what is known as ‘readings on to bill’ – that is, the number of consumers receiving a bill detailing actual consumption and related charges, as opposed to being charged interims or estimates. Zutari assisted the applicable metro to achieve a readings on to bill rate of over 90%.

For the specific metro in question, a revenue enhancement project for water meters was also undertaken, involving investigating who the top water consumers were, identifying all feeds – whether metered or not – and then combining all of these feeds into a single, metered feed. This has resulted in a significant increase in billable water consumption and subsequent revenue. “The proper management of processes – from procurement right through to life-cycle maintenance and end of useful life replacement – plays an integral part in optimising revenue from service charges,” highlights Leon Prinsloo, associate: Asset Management, Zutari. The crux is that managing the data of hundreds of thousands of meters requires a data management system that can handle large volumes of data.

Here, Zutari’s internally developed SQL-based data management system was key to achieving the successes outlined in the case study. The system makes use of the unique 27-digit surveyor general land parcel code as the primary key to link any data to this land parcel or stand. The data ranges from

account holder and meter information, to the histories of the work, meter readings and credit control activities done at the stand. This provides for a complete record of all data applicable to a specific stand.

Capturing accurate data

An immediate advantage is that reports can be provided in formats that can be tailored to a client’s specific needs. An important report from a municipality perspective, for example, is the annual Service Delivery and Budget Implementation Plan report. Municipalities are audited on these reports, and Zutari successfully assisted the metro referenced in the case study in compiling reports conforming to audit requirements.

In order to provide accurate reports and data integrity within the client’s systems, a process of data verification also takes place. This ensures that meter information captured on the client’s system is accurate. Meter information typically consists of the meter number, meter size, the dials of the meter, date of installation and the GPS coordinates of the installation.

“The RSCM model also positively impacts non-technical losses for electricity, as well as non-revenue water management with the replacement of faulty meters not recording consumption being one example. The solution can be used either in its entirety for maximum impact, or in part. Revenue recovery can be seen as an example of a part solution,” concludes Prinsloo.

RSCM BENEFITS

Major benefits of the Revenue from Service Charges Management (RSCM) solution from Zutari for municipalities: • Optimised revenue from service charges through: - improved percentage of readings onto bill - revenue recovery initiatives (potential of high return on investment) - revenue enhancement initiatives (potential of high return on investment) • Positive impact on non-revenue water management • Positive impact on non-technical energy losses management • Data management to ensure data integrity of assets • Scalable solutions

AGRULINE

FITTINGS & PIPES RESISTANT TO CRACKS

LONGER SERVICE LIFE

crack resistant PE 100-RC

HIGH ECONOMIC EFFICIENCY

sandbed-free installation

LASTING CONNECTIONS

better welding results

ONE STOP SHOPPING

complete PE 100-RC piping system