There has long been a drive for municipalities to convert properties from post- to prepaid power. The last time Stats SA measured the installation of prepaid meters was in 2022, stating that some 79,9% of SA households were using the prepaid system, and 12,1% utilised conventional post-paid meters. It’s a remarkable penetration rate and one of the best in the world, designed to provide consumers with greater control over their electricity usage and spend.
Whilst prepaid (insert link to other article) has been effective in assisting municipalities and Eskom to reduce the risk of defaulting accounts and their operating costs, it has not entirely been the game-changer consumers hoped it would be. For example, the perception that prepaid is cheaper than conventional post-paid meters proved not to be true, and budgeting ahead for monthly electricity purchases requires a much deeper understanding of municipal tariff blocks and the cost brackets in which households buy their power.
Ben Lindeque, who is the Co-Founder & Business Architect of Prepaid24, an online platform that for 16 years has been specialising in the sale of prepaid electricity, airtime, and data, says that these issues have driven the increasing need for “smart” meters, a revolutionary delivery system for households using or wanting prepaid power. “There are three meter systems available to South Africans, two of which are considered ‘smart’, and the third is the existing Standard Transfer System (STS) meter, also sometimes referred to as a ‘dumb’ meter.”
Lindeque outlines the features of the three options:
1. Normal Analogue STS Meter – (Dumb Meter) - kWh
The unit of measurement on the meter is kilowatt-hours (kWh).
It is not connected to any external data source, meaning it only registers and counts the number of kWh you have bought, regardless of what you paid.
Tokens are generated by the STS protocol. “Tokens” refer to the 20-digit codes you receive after purchasing prepaid power units.
Most municipal and estate residents buy electricity on block/step tariffs.
The idea behind block tariffs is to incentivise consumers to use less electricity, by making units more expensive as you progressively buy more units during a calendar month.
While the reasoning behind these tariffs make sense (as they try to alleviate pressure from our national grid), they have proven to be very tough for electricity consumers to understand, with countless myths doing the rounds on when the “cheapest time to buy electricity” actually is.
Although high-consumption residents end up paying more for their units because of block tariffs, residents are still not incentivised to consume electricity during periods of high energy availability or to reduce consumption when the grid is under pressure.
When residents choose to consume their electricity units makes no financial difference – because their units are already paid for. This situation contributes to added strain on the national electricity grid, with most people still using power during peak times.
There is no communication or alerts sent to residents; they must check their meters to monitor electricity unit levels.
Tokens are generated by the STS protocol and supplied to vendors, who then issue them to residents.
Token codes must be physically entered into the meter.
No live data can be provided to residents because the meter is completely self-contained and isolated.
More than 90% of meters in South Africa – both municipal and in private estates – are of this type.
Recently, there have been reports of significant fraud within the STS protocol, costing Eskom millions of Rands, which further makes a case for the newer, smart models.
2. Smart Meter - kWh
The meter also operates on kWh.
It is connected to an external data source.
Tokens can be generated by the STS protocol, with an encrypted signal that can be sent directly to the meter to top up its kWh credit.
As with the analogue STS meter, municipal and estate residents buy electricity on block/step tariffs for these smart meters too. The idea behind block tariffs is to incentivise consumers to use less electricity, by making units more expensive as you progressively buy more units during a calendar month.
Again, although high-kWh consumers are charged more per unit, residents are not incentivised to use electricity when it is abundantly available or to cut usage when the grid is under pressure, meaning that these meters do not alleviate any strain from the national electricity grid.
Remote communication and alerts are possible with these meters, allowing residents to track their electricity levels without physically checking the meter.
Tokens are generated by the STS or similar protocols, as specified by the manufacturer, and are not supplied to vendors.
Smart meters are topped up remotely, eliminating the need for physical tokens to be entered by the resident.
Live data can be provided to residents because the meter is not isolated – it can communicate online. This data can be made available through an app, often at a monthly subscription cost.
Less than 10% of meters in South Africa – municipal and private estates – are of this type.
These meters are less prone to STS fraud, though not immune to it.
3. Smart Meter – Currency + Time of Use (ToU)
This meter operates on a Time of Use (ToU) basis and runs on currency instead of kWh units being displayed on the meter screen.
There are no STS tokens on these meters; instead, a wallet is topped up remotely whenever an electricity top-up is made, using Rands as currency.
Balances are sent as encrypted signals directly to the meter to top it up in Rands. No physical tokens need to be entered.
The primary distinction of this type of meter is that it can employ various tariffs at different times of the day. To simplify, let's say there are three different tariffs:
R1.50 during the Off-Peak window from 20:00 – 06:00.
R2.50 during the Standard window from 09:00 – 17:00.
R4.00 during the Peak windows from 06:00 – 09:00 and from 17:00 – 20:00.
(Note: there are four consumption windows with three tariffs covering a 24-hour period.)
The logic behind this billing method is that electricity is cheapest at night when demand is lowest and electricity is most readily available, while it is most expensive during peak periods when demand is highest and the grid is under the most pressure.
This type of tariff structure encourages residents to shift some of their consumption to lower-tariff periods, as this will make the Rand balance on their meter last the longest.
These meters promote responsible electricity usage, allowing residents to benefit from lower kWh prices during off-peak hours.
Homeowners can take advantage of these meters’ protocols by switching off swimming pool pumps and geysers during peak periods. Even postponing laundry or dishwashing can lead to savings of 10-25% for conscientious consumers.
High levels of communication exist between the resident and these smart meters via apps. Alerts and consumption reports are standard, removing the need for residents to engage physically with the meter for anything.
The meter will have a wallet and may also support wallets for other utilities, such as water and gas.
Less than 1% of meters in South Africa – municipal and private estates – are of this type.
These meters are much less prone to all forms of fraud.
“It is only when we start using smart currency-based ToU meters that we can significantly save and contribute meaningfully to opening up grid capacity and energy availability in SA,” says Lindeque.
Case study
Some seven years ago, Prepaid24 developed a smart system which can communicate with municipalities’ and private estates’ billing software. It tracks arrears and current accounts, including things like levies, rates and taxes, water and fibre.
This system was taken up by the Steve Tshwete Local Municipality, which applies the following vending rule: Residents can only purchase a small amount of electricity monthly if they have outstanding accounts owed to the municipality. This rule is applied by Prepaid24’s online system, regardless of whether a dumb or smart meter is in use.
“In other words, residents must pay their rates and taxes, or make a formal payment arrangement, to continue purchasing electricity normally,” says Lindeque. “This system has resulted in a revenue collection rate of well over 90% for the municipality. A similar system has been rolled out by Elec Software – our sister company – for private estates, which ensures the payment of levies and water bills.”
Prepaid24 and Elec Software have found that the largest challenges for municipalities and estates are not necessarily energy related, but revenue related. “Any type of meter, with the assistance of their systems, can be configured to maximise revenue collection. And when everyone – not only a handful of residents – pays for services, everyone wins,” says Lindeque. Then, once revenue is secured, estates can start the process of upgrading their metering hardware, to add all the smart metering benefits as explained above.
“Smart meters are literally putting the control of energy usage and costs into the hands of residents, which will inevitably result in smarter consumption and financial savings. This is the reward for being responsible about your electricity usage. It’s the smart choice.”
