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INTEGRATED RESULTS PRESENTATION
KING III APPLICATION
 
   



Being customer-centric

Eskom aims to ensure that its customers are consistently satisfied with the level of service they receive. Customer-centricity extends to the company’s revenue-collection practices. Billing should be accurate and prompt, and payment should be collected in a timely fashion.

Eskom technical services centres
Eskom technical services centres send out
special trucks to do maintenance on the lower
voltage distribution lines
  Eskom assesses its customer-centricity in terms of:
Eskom’s customer-service index, which combines six external and internal customer-service assessments to determine an overall score for service to residential, small- and medium-sized customers
Eskom’s KeyCare rating, which measures the satisfaction of Eskom’s large industrial customers
The average number of debtor days, which measures the average age of outstanding customer debt

These indicators help Eskom identify aspects of service that need to be improved.

Key performance indicators for customer-centricity

Indicator and unit
Target
2017/18
 
Target
2013/14
  Actual
2013/14
 
Actual
2012/13
 
Actual
2011/12
 
Target
achieved?
 
Customer service index, % 89.7   88.7   86.6   86.8   85.6    
Eskom KeyCare, % 102.0   102.0   108.7   105.8   105.9    
Arrear debt as percentage of revenue, %   0.50   1.10   0.82   0.53    
Average debtor days for municipalities, average days1,2   22.0   32.7   22.4   n/a    
Average debtor days for large power users (<100GWh a year), average days2   16.0   16.9   18.3   n/a    
Average debtor days for small power users (excluding Soweto debt), average days   42.0   50.2   48.2   42.9    
Average debtor days for large power top customers (excluding disputes), average days   14.0   14.5   12.3   14.4    

1. The earlier key performance indicator for large power users (including municipalities) was replaced by two key performance indicators: average debtor days for municipalities and the average debtor days for other large power users (<100 GWh per year).
2. These key performance indicators only came into effect on 31 March 2013. Data is not available for 2011/12. The calculation for debtor days excludes international customers and major disputed accounts that are involved in litigation or arbitration.

Customer satisfaction metrics

Key industrial customers regard Eskom’s customer service highly, reporting 110.84% satisfaction against a target of 102% on the KeyCare metric despite being asked to contribute significantly to keep the lights on. This is largely due to Eskom’s proactive and regular interaction with this group to keep them informed on the status of the power system and the capacity expansion programme via a number of forums as well as regular visits to customer management.

Eskom narrowly missed reaching its customer service index target, reporting an overall rating of 86.6% (2013/14: 86.8%). The main reasons cited by customers for dissatisfaction in this customer grouping were tariff increases, the threat of load shedding, metering accuracy, the speed of installing new connections, the quality of supply, outage management and slow response for quotations and connections on small projects.

Managing electricity debtors

Eskom makes every effort to ensure that customers pay their accounts. It constantly monitors payments and is willing to enter into reasonable payment agreements that take into account defaulting customers’ circumstances.

Electricity debtors (before impairment provision) increased from R16.7 billion at 31 March 2013 to R20.2 billion at 31 March 2014. The allowance for impairment for trade and other receivables increased by R1.4 billion, from R4.3 billion in 2012/13 to R5.7 billion in 2013/14.

The residential revenue management strategy, which includes Soweto, is critical to enhance energy protection and energy loss programmes, and improve debt collection for Soweto, large and small power users. The strategy entails:

The installation of split metering with protective enclosures and converting customers to pre-paid meters with new supply group codes to eliminate illegal pre-paid vending
There is now a focused credit management process for all businesses, which, together with disconnections, should assist in recovering outstanding debt

Implementation of the strategy is planned for early in the new financial year, as the PFMA approval was received late in the financial year.

For more information regarding Eskom’s financial risk management, including credit risk, refer to note 4 in the 2014 annual financial statements (www.eskom.co.za/IR2014/01.html).

Large power users’ arrear debt

There has been a slight increase in the number of key industrial customers not honouring their payments on time, due to cash flow problems caused by the economic climate. All non-payments are handled according to Eskom’s credit-management policy, with the disconnection process being initiated where necessary.

Municipal arrear debt

Historically, payments by municipalities are strongly correlated to them receiving the equitable share from National Treasury (payments in December, March, June and September). Previously this funding was sufficient to settle outstanding electricity debt, but this is no longer the case with municipalities facing increased electricity prices and reduced funding.

Disconnection of supply is the last resort for Eskom. In line with the Promotion of Administrative Justice Act (2000), the company sent disconnection notices to some of the defaulting municipalities during the year. No disconnections have yet been effected, as all the municipalities that received disconnection notices responded appropriately, with the exception of one municipality. This matter is the subject of litigation.

The total municipal arrear debt as at 31 March 2014 is R2.6 billion (2013: R1.2 billion) and numerous meetings were held with the DPE and National Treasury to discuss sustainable ways to address municipal debt and implement longer-term interventions to deal with this challenge.

Soweto arrear debt

Soweto’s arrear debt continues to increase. Eskom supplies electricity to about 180 000 households in Soweto and average payment for the year is 16% (2012/13: 16%). The total Soweto debt, as at 31 March 2014, stood at R3.6 billion (31 March 2013: R3.2 billion), excluding interest charged on overdue amounts. During the year, 4 838 defaulting customers were disconnected, which is not enough to curb the debt. The implementation of the residential revenue management strategy, which includes Soweto revenue management, will assist to improve future revenue streams.

Energy losses and theft

Energy losses are a challenge for utilities throughout the world. There are two broad categories of energy loss:

Technical energy losses are a natural result of electrical energy being transferred from one point to another with some of the energy being dissipated as heat
Non-technical energy losses are typically caused by theft (illegal connections, meter tampering and illegal vending of pre-paid electricity) or errors in data/billing

For internal evaluation purposes the technical losses accounted for between 60% and 75% of the total energy losses in the Distribution networks. The actual percentage in Distribution is influenced by factors such as network design, network topology, load distribution on the network and network operations. For the Transmission networks, technical losses account for all of the energy losses.

Total energy losses (%) (12-month moving average)
Target
2013/14
  Actual
2013/14
 
Actual
2012/13
 
Actual
2011/12
 
Total distribution losses, % 6.54   7.13   7.12   6.32  
Total transmission losses, % 3.40   2.34   2.80   3.08  
Total Eskom losses, % 9.28   8.88   9.08   8.65  

Eskom reduced its total energy losses to 8.88% during the year, from 9.08% in 2012/13 (target: <9.28%). While transmission losses are lower than target, distribution recorded higher than target losses. Interventions to manage the losses include, amongst others, continuing with the energy and revenue losses programme reduction activities and the Operation Khanyisa social marketing campaign.

Equipment theft

Eskom is plagued by network equipment theft (generally referred to as conductor or copper theft). This includes the theft of overhead lines, underground cables, airdac and bundle conductors, earthing equipment, transformers, pylon support lattices and so forth.

The increase in the value of material stolen remains a serious concern. This is an indication of an organised (syndicate driven) criminal activity in the conductor theft environment, which is also experienced by other state-owned enterprises.

The fight against network equipment theft is being addressed by means of intelligence driven investigations by the Hawks (a division of the South African Police Services). It also encompasses aggressive policing of the scrap metal markets for stolen goods.

The joint industry working group (formed by Eskom, Transnet, Telkom, the South African Police Services, the National Prosecuting Authority, Business Against Crime and the South African Chamber of Commerce and Industry) continues to contribute positively in the fight against this crime.

The courts are taking this crime seriously and significant sentences are being handed out to perpetrators. For example, a collective sentence of 123 years was handed out in the North West and Free State provinces to eight convicted members of a crime syndicate.

Operation Khanyisa

Operation Khanyisa was launched in October 2010 and aims to raise awareness of, and educate the nation about, the impact and consequences of electricity theft. Social mobilisation across all sectors and compliance interventions aim to instil a culture of legal, safe and efficient energy use. To address the problem of electricity theft in municipalities, Operation Khanyisa has also partnered with the South African Local Government Association (SALGA) and different municipalities.

Eskom’s Operation Khanyisa campaign addresses electricity theft and non-payment
Eskom’s Operation Khanyisa campaign addresses electricity theft and non-payment

View enlarged image

Some of the key successes include:

More than 8 000 tip-offs have been received via Crime Line (SMS: 32211) and Eskom’s toll-free reporting line (0800 11 27 22)
In the 2013/14 financial year, 18 suspects appeared before various courts in South Africa on charges related to electricity theft. Since the launch of Operation Khanyisa more than 60 court cases have been heard and over 112 arrests made for crimes relating to electricity the
Eskom teams have conducted more than two million audits of electricity meters and installations and removed over 80 000 illegal connections

Operation Khanyisa received a number of awards, both at home and abroad for its efforts in combating electricity theft.