New keypad prepayent system allows expanded tariff structures
Prepayment metering installations enjoy unprecedented success. The option of prepayment is convenient both for first time users of electricity (or other commodities) and for established communities which in general do not struggle with budgetary constraints or with the socio-political acceptance of public services.
In addition, prepayment allows the service provider to reduce costs and improve cash flows. With an increasing variety of sales channels, it becomes easier to use every day.
Adding TOU tariffs to prepayment systems
When compared to conventional non-prepayment metering systems, the traditional prepayment meter used in South Africa has one limitation. The credit in the meter is stored in energy units (that is, in kWh) while the electricity tariff resides in the vending system or at the point of sale. At the moment this in itself is not a significant issue; almost all South African residential customers use a flat tariff, where the price of electricity does not depend on the time it is being used or on the amount of electricity already used in any one billing period.
Two years ago, however, Eskom began investigating the possible implementation of time-of-use (TOU) tariffs for residential customers, thus following a world-wide trend which encourages consumer participation in the conservation of energy. We expect, therefore, that sooner or later these tariff structures will become available to the average South African household, similar to the situation in many European countries.
Unfortunately the introduction of TOU tariffs will be difficult with conventional kWh prepayment meters. With TOU, electricity cannot be sold in energy units, as the price of these units depends on the time of the day they are consumed. This, of course, cannot easily be predicted at the time the sale takes place.
Selling credit in currency units
The way to overcome this problem is to sell the credit in currency units. The transfer of this credit into the meter will similarly be in currency units. As a consequence the meter then needs to incorporate the tariffs and make the necessary calculations whenever energy is used.
Having the tariff information resident in the meter leads to a number of questions.
- What happens when tariffs change? (as they may do regularly, if only to increase the price)
- How does the meter know the correct time, and from when to implement the new tariff?
- What about holidays, weekends and leap years?
The inability of a conventional kWh prepayment metering system to register differences has already been mentioned. One solution to the above questions would therefore be simply to ignore any new tariffs for users of prepayment electricity. Obviously this will generate some unhappiness amongst consumers, as they cannot freely combine their preferences in terms of tariffs and mode of payment. Thus, given that Eskom has already stated that it intends to offer consumers a flexible combination of tariff and metering/payment options, an alternative solution to the implementation of prepayment TOU is required.
There are, of course, other prepayment systems which provide the means to handle TOU tariffs. Most of these systems use a token like a SmartCard, a SmartKey or some other physical token capable of storing relatively large amounts of data.
With these tokens tariff information and other data is downloaded to the meter whenever the customer enters the token into the meter to get the latest credit purchase transferred. However, these options come at a price premium as far as the cost of both meter and token, the special card readers/writers and the continuing operation of the system are concerned. In addition such systems pose maintenance problems relating to the physical opening in the meter and the fact that the tokens themselves are susceptible to electro-magnetic and electrostatic influences.
Unfortunately this type of physical token system does not readily allow remote vending, such as by telephone or over the Internet. Remote vending is an inherent benefit of the numeric transfer technique provided by keypad systems.
The best of both worlds
Arguably the best and most appropriate way for all the parties involved would be to combine the advantages of a keypad prepayment system, with its low operational cost, high level of convenience and customer acceptance, with a system solution providing the flexibility and power to have TOU tariffs in the meter.
This solution exists. The technology behind it is called CUTS.
The Cashpower Universal Transfer Specification (CUTS) sometimes referred to as Currency Transfer Specification, is designed to support a wide range of TOU and stepped tariffs, together with fixed charges on a monthly or weekly basis.
It is a system and meter data transfer specification which encompasses the complete chain from vending to tariff management. It can in theory be used with any kind of token, but is specifically designed to be used with and complement the special advantages of keypad prepayment meters.
First of all, in a CUTS system the credit is transferred in currency units rather than energy units. It caters for the wide variations between international currencies by making use of the concept of a Unified Currency Unit (UCU) which is encrypted in the 20 digit transfer number. Simple conversion factors on both sides ensure that the same credit is used in the meter, in the local currency, as was purchased at the vending point.
The UCU also allows for easy scaling of rates, when a tariff is increased or decreased on an overall percentage basis.
The second significant difference is that the tariff resides in the prepayment meter. CUTS meters are fitted with real time clock modules, so they will always have the exact date and time available for deducting credit at the relevant tariff and at the right time. This makes the meters extremely flexible and facilitates the use of stepped or TOU tariffs, as defined by the supply authority.
If we only consider TOU capability, then a prepayment metering system that utilises CUTS can handle up to 16 different TOU rates. These rates can be assigned to a maximum of 16 switching times per week, combined with a grouping of weekdays. The ‘Homeflex’ tariff as designed and currently tested by Eskom can easily be accommodated with these features. A usual TOU tariff using peak, off-peak and weekend rates, with two peak time zones for every day from Monday to Friday, would only use six switching times.
CUTS additionally accommodates four seasons per year and up to 32 holidays, which can also use any of the 16 rates.
Another element of the tariffs is fixed charges, which are commonly applied in conventional supply contracts. In a CUTS system the fixed or ‘standing’ charges are also part of the tariff in the meter. At the time of tariff definition the fixed charges can be defined to be monthly or weekly, and an interval of between 1 and 255 minutes can be defined for the actual debiting by the meter.
This means that the fixed charges are distributed evenly over the billing period and are not deducted as a lump sum up front (which is possible as an option). There are thus no sudden surprises for the consumer.
The CUTS system also offers features which are typically only available from SmartCard operated systems. These include emergency credit (which is always available but restricted in its amount) and friendly credit (which is unlimited in its amount but only available during times when consumers cannot buy credit, e.g. night times or weekends).
Tariff changes are simple
However, the significant difference between a CUTS prepayment system and any other existing keypad prepayment metering system lies in the fact that all this tariff information can be changed in the meter without using any additional equipment.
The encrypted numbers that carry the credit into the meter are also used for the transport of tariff updates or changes. Whenever a consumer buys credit for his meter, he receives a voucher that looks very similar to a voucher issued for a normal STS kWh meter. The main difference visible to the consumer is the fact that no kWh total is printed on the voucher. Instead there is a currency value, because the credit is transferred in currency units.
In addition to the monetary credit value, every token carries a certain amount of tariff information. In fact every voucher or 20 digit transfer number should be viewed as a tariff transfer mechanism. Depending on the complexity of the tariff, more vouchers are required to effect a complete update of the tariff structure.
When a new tariff comes into effect, then each token will transport a portion of the new tariff into the meter, such as the activation date. Once the activation date arrives, the meter will automatically switch over to the new tariff.
There are additional system features which can optionally prevent the meter from working on a partial tariff, or alert the operators if the information flow is not fast enough. They also allow for additional tools to be used. These tools can include the splitting of vouchers so as to increase the transport capacity for tariff data or the application of handheld tools in urgent cases.
Notwithstanding any of the above options, CUTS meters are programmed with an initial tariff structure at the factory and are fully tested before shipping, so they can be directly installed and commissioned to operate with current tariffs.
Every prepayment system is only as good as its management. This is also true for a CUTS system, where the management of tariffs takes on an important role. For the first time, however, the inherent features of CUTS combine the convenience and sheer simplicity of keypad prepayment metering with the flexibility and operational power required for TOU tariffs and other legislated tariff structures. The system design is open for further enhancements.
CUTS offers the supply authority the same cost saving and internationally proven benefits of keypad technology, while consumers enjoy freedom of choice between the metering and billing method they prefer – without restrictions and without the need to trade benefits.
This article was taken from a paper presented at the SARPA ’98 Revenue Protection Conference