A small Centurion business that buys on average R17 000 of electricity every month got a nasty shock when notified last week it had five days to pay R1.2 million to the City of Tshwane for under-recovery of electricity cost since 2015.
The city’s service provider, Total Utilities Management Services (Tums), said in its e-mail to Productive Systems that this was due to a technical fault detected during a “field site investigation”.
It informed the company that it would do a “debit adjustment” to its prepaid electricity meter and gave the company five days to pay the R1.2 million.
The fault that caused the alleged under-recovery was outside of the company’s control and there is no suggestion that it tampered with the metering system.
According to Productive Systems MD Albert Birmingham, the company has a annual turnover of about R20 million. It designs and builds machinery for local and international clients in the packaging industry.
He says to expect a small company to cough up about 6% of annual turnover at the drop of a hat is unrealistic and could kill the company that employs about 50 people.
“We have been paying an average of R17 000 per month for electricity over the past few months. We did the costing and billed our clients on the basis of that. The city now claims an additional R42 000 per month for the past 30 months. I cannot go back to my clients in Panama, China and Australia and tell them I have undercharged them”, Birmingham says.
The problem on the company’s account seems to be the same as the one the city of Tshwane identified on that of the Agricultural Research Council (ARC), which was notified of underbilling of R30 million at the Onderstepoort Veterinary Institute in the north of Tshwane.
Moneyweb in November last year reported that Tums, which is the implementation vehicle for the city’s smart metering contract with Peu Capital Partners, admitted to over and underbilling some of the 13 000 Tshwane customers it supplied with electricity since October 2013.
The High Court in Pretoria earlier declared the contract unlawful and invalid, but suspended the order or invalidity until a just and equitable remedy was found. The court will hear arguments in this regard in October. Tums earlier stated in court papers there were only a handful of incidents of underbilling “but in almost all instances the revenue has either been collected or is in the process of being collected”.
This contradicted statements in an earlier annual report of the city that about 600 intensive users were affected. The root cause of the issue is apparently that Tums used incorrect current transformer and voltage transformer ratios, which resulted in the wrong scaling factor. These ratios are crucial to converting the reading of electricity usage into billing – using an incorrect ratio could result in material billing variances.
Tums earlier indicated that the ratios were provided by the City of Tshwane and it merely applied what was provided.
Eric Bott, director of Energy Measurement Consulting and another independent expert Moneyweb consulted, said any professional person who installed an electricity meter should know which ratios to use.
Bott and his lawyers will meet representatives of the City of Tshwane on Tuesday to discuss the adjustment to Productive System’s account. They have already assisted the company to declare a formal dispute in terms of the Municipal Systems Act, which protects a company from having its power supply disconnected, provided it keeps on paying the current account.
Bott says the city should claim the amounts under-recovered from Peu/Tums, who should have professional insurance.
According to Bott, ARC has paid a small portion of the R30 million the city claimed in relation to Onderstepoort. Negotiations between the parties are ongoing.
Birmingham told Moneyweb he was concerned about the accuracy of the City of Tshwane’s electricity metering. “If they made such a mistake earlier, how do I know they will be accurate in future?”
Bott says changing the system to have metering done by an independent party that gave both the consumer and the council access to the data, would safeguard both parties. He would install a parallel meter at Productive Systems to determine the accuracy of the city’s meter.
Moneyweb is also aware of a private individual who was informed in February that Tums would make a debit adjustment to the prepaid meter at his house for more than R61 000 due to “low consumption that was detected on your smart meter”. This relates to the period 9 August 9, 2016 to January 25, 2018.
The City of Tshwane did not respond to Moneyweb’s questions by the time of publication.