‘Professional theft’ accusations ‘absolutely incorrect’ – PEU

The City of Tshwane’s controversial smart metering contractor PEU Capital Partners strongly denies accusations of “professional theft” in relation to the 13 000 prepaid smart electricity meters it has installed in Tshwane through its implementation vehicle Total Utility Management Services (TUMS).

This comes as acting Tshwane city manager Lindiwe Kwele, blamed a sharp increase in electricity losses on “professional theft” related to the PEU meters in the city’s annual report. Kwele alleged that the meters were set to deliberately under-read the electricity consumption of around 600 intensive power users.

In response to Moneyweb questions, PEU says the city never alerted it to the “professional theft” and maintains there was no such tampering with the meters and that they are compliant with SABS standards and contract specifications.

The under-reading flows from the apparent use of incorrect Current Transformer (CT) and Voltage Transformer (VT) ratios. These are crucial to converting the reading of electricity usage into billing – using an incorrect ratio could result in material billing variances. It is alleged that PEU deliberately set the wrong CT and VT ratios when they installed the meters.

The city’s non-technical losses (theft) increased by 56%, valued at R858 million in 2015/16 and was flagged by the Auditor-General.

Kwele does not identify the party suspected of such conduct in the annual report.

City mayor Solly Msimanga, and MMC for finance Mare-Lise Fourie, last week said during a press conference that the meters under-read electricity usage, especially on demand charges. Large users pay demand charges based on the 30 minutes of highest use during the month. It is a significant component of the electricity cost of commercial and industrial users.

Msimanga and Fourie blamed meter tampering and said the meters are not compliant. The city is also investigating the cost of the under-reading.

Tshwane MMC for infrastructure Darryl Moss, said the PEU meters are not able to measure peak demand and rather estimates it. As a result, he said, it is uncertain what large users’ peak demand is.

A senior Tshwane official told Moneyweb, 600 large users were affected by the “professional theft” that he maintained was perpetrated by PEU when the meters were installed.

AfriSake court case

It is curious that the city made no mention of this issue in its court filings in response to the application by business grouping AfriSake to the have the city’s contract with PEU set aside.

The new DA-led administration recently withdrew the previous ANC-led administration’s opposition to the application. The parties will be in the North Gauteng High court on March 24 to argue some preliminary issues.

In response to questions from Moneyweb about the allegation of “professional theft” PEU paints a totally different picture, stating that the city never addressed it with the company or TUMS.

PEU response

According to PEU the “physical CT and VT devices remain the sole responsibility of the CoT (Tshwane) and do not fall within the ambit of our contract with the CoT. In accordance with the contracted provisions, the CoT is also responsible for providing the values of CT and VT ratios to TUMS, maintaining the integrity of this data and providing any ratio changes to TUMS”.

The company explains that the meters simply cannot under read. It says to prevent tampering and as agreed with the city, the CT and VT ratios are set within the back-end system “located within a highly secure state-of-the-art data centre”. The application that manages the CT and VT ratios is restricted, password protected and auditable, PEU says.

“We can confirm that there has been no unauthorised amendments or changes to the CT and VT ratios on our system. TUMS is not aware of – and has had no communication from the City of Tshwane about – a variance in CT/ VT ratios affecting 600 large power users.

“Any statement or insinuation that the CT and VT ratio on a TUMS smart meter can be altered at the meter is absolutely incorrect, perpetuates misinformation and is a disingenuous deflection of the issues causing the losses,” the company states.

PEU said its system contains key Siemens products and the system specification and mode of operation was considered and approved by CoT at the time of installation.

“The smart meters deployed are operating in prepaid mode whereby a customer has to pay in advance ahead of consumption of electricity. The smart meters are SABS approved and have been accredited by Eskom. The TUMS smart meters are by no means dumb and allow for inter alia 15 minute interval reads, remote disconnection, integration with a customer interface unit and have bi-directional communication capabilities.”

Demand charges are calculated based on actual meter readings, PEU states. “In line with industry practice the determination of the provisional demand charges on a prepaid basis is projected in advance based on historic usage patterns by the customer. At the end of the month, the demand charge is adjusted to reflect the calculated maximum demand charge for the month based on actual consumption over the month. This methodology was pre-approved by the city and is working well.”

The company denies the absence of early detection features and says in addition it uses operational analytics to identify potential irregularities and address it together with the city.

PEU points out that it is paid on a commission basis and any loss of revenue to the city would result in a loss of revenue for itself as well. “TUMS rejects any view that any of our actions are a deliberate ploy to manipulate data to our own advantage.”

Read PEU’s full response here: Moneyweb 9 feb 2016 TUMS Team (2).

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