City Power head sees light at the end of the tunnel

Posted On Wednesday, 17 April 2013 12:22 Published by eProp Commercial Property News
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City Power MD Sicelo Xulu brushes aside doubts that smart metering will solve Johannesburg’s problem of billing estimates, saying the utility will continue to invest in new technologies to reduce inefficiencies.

EskomCity Power is among the City of Johannesburg’s entities that the auditor-general has found to be struggling with its finances, primarily as a result of the electricity distributor’s reliance on billing estimates.

The utility buys power from Eskom and sells it on to residents. It has recently come under criticism for what was seen as proposals for excessive tariff increases.

"The smart meter technology would ensure that the city collects all meter readings and sends out accurate bills to residents," says Mr Xulu.

Earlier this month, City Power announced the roll-out and installation of smart meters over three years. The focus in the first phase will be on larger power users such as factories, residential complexes and shopping malls. The smart meters will allow City Power to collect meter readings without having to send technicians to customers’ homes.

The announcement was preceded by the start of public consultation on Johannesburg’s proposed new electricity tariff increases. These granted business the lowest tariff increase (4%) over the next three years, while residents using prepaid meters would endure low increases of 1.04% — but only in the first year. This will shoot up to 8% in the third year.

Mr Xulu says absorbing future electricity costs can only be achieved if there is a joint effort by the utilities, the government and business.

He also says increases in the cost of electricity could open up opportunities for business to viably invest in some of its own power generation using alternative methods.

"In some cases you find that customers want to do these things but because we do not have a policy environment to deal with some of these issues, it becomes difficult for them to apply," says Mr Xulu.

He says the utility is engaging with the City of Johannesburg, the National Energy Regulator of South Africa and the government over the possibility of a new policy environment. Mr Xulu’s concerns for more private sector investment come amid increased activity by independent power producers across South Africa. Several renewable energy projects have recently been approved in the first "window" of the Department of Energy’s Independent Power Producer procurement programme, which is expected to supply South Africa with 3,725MW of power by 2016.

Policies are a prerequisite for business to invest, but so too is clean governance. Questions over tender irregularities emerged at City Power recently — including on the procurement of smart meters.

In January, the Mail & Guardian reported allegations of irregularities during the procurement processes surrounding the awarding of the Advanced Metering Infrastructure smart metering contract. This had been awarded to a company with perceived links to the African National Congress.

The contract was given to Edison Power, a company linked to President Jacob Zuma’s benefactor and KwaZulu-Natal businessman Vivian Reddy. Earlier this month, union leaders were reported to have been pushing for Mr Xulu to resign, citing a lack of accountability.

Mr Xulu says the adjudication and review of the Edison contract is now under review. "Whatever comes out of that process should be respected. In this organisation no one is above the law. There is no tolerance in terms of corruption," he says.

However, Business Day understands that allegations of irregularities are part of a factional battle between two camps in City Power that have "always" shared the spoils of procurement contracts. But the smart meter contract was only awarded to a single company, Edison, which allegedly infuriated one of the camps and led to media leaks.

Mr Xulu says it is important that the utility complies with procurement regulations. "The best company has to win," he says.

The process has to be "fair and transparent", he says.

Mr Xulu, a qualified electrical engineer, says he has been with City Power long enough and is prepared for any challenge. He joined City Power in 2002 after working for Eskom since 1996.

Despite all these assurances, not all Johannesburg residents are convinced that smart meters are the solution to incorrect electricity billing estimates.

The incorrect estimates were flagged by the auditor-general in the City of Johannesburg’s 2012-13 audit report.

Johannesburg resident Sophia Hajibey says City Power is unlikely to sort out its "accounts or systems when an abundance of incapable management and staff continue to plague us".

Gauteng director-general Margaret-Ann Diedericks said in an interview last year that for the government to change perceptions of inefficiency in service delivery, it was critical that the frontline staff were competent and properly skilled.

Mr Xulu says while the city is striving towards a customer-centric approach, some incidents of nonperformance have fallen between the cracks but these are being addressed.

Two subcontractors in charge of meter readings have been fired in the last two months, he says.

Customer service has since 2009 been managed by the city, with City Power acting as a "back office".

However, says Mr Xulu, effective communication can assist in smoothening the relationship between the city and its residents.


Last modified on Wednesday, 06 November 2013 08:50

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