Argentinian co-ops cash in with CASHPOWER
Up until 1989, transportation, energy and communication services had been in the hands of national or provincial authorities, and only small and remote cities and towns had private distribution of electricity.
A solution evolved in the form of co-operatives that would enable regions to be self-sufficient in the supply and management of essential services. This has grown to the point where generation and supply of electricity today is almost entirely in private hands, and co-operatives are highly competitive. In order to survive, they are forced to improve their efficiency at all levels.
In 1993 CASHPOWER SUDAMERICANA, at the time a division of ARO SA, was appointed Energy Measurement’s distributor in Argentina. The company began marketing the CASHPOWER2000® prepayment meters in Argentina against a highly challenging background. Some 87% of the population was enjoying the benefits of electrification, so the introduction of a rationale for ‘meter replacement’ or ‘meter retrofit strategy’ was no easy task. CASHPOWER SUDAMERICANA had to convince distributor companies that replacing conventional meters with prepayment meters – which were much more expensive than the existing in-frastructure – was not only technically and financially possible, but overall a practical and convenient option. And this despite the fact that it was also necessary to develop different software invoicing programs, reports and special applications for the meters.
During 1992 and 1993, CASH-POWER SUDAMERICANA began an intensive marketing study to evaluate the reaction of users and utilities towards prepayment metering and prepayment systems. In this way two im-portant characteristics of the Argentinian market were established. Users stated that the only acceptable technology was the keypad technology, while utilities also identified keypad as the right technology and the way forward.
During the period 1992 to 1994, more than 20 cooperatives adopted the CASH- POWER 2000® system in Argentina, and started the process of replacing conventional meters with prepayment meters.
Towards the end of 1994, co-operatives not previously using prepayment technology began implementing it. However, they opted for a cheaper prepayment system in the form of magnetic card meters. It was not long before this was shown to be a costly mistake.
Today, in the República Argentina, there are approximately 80 co-operatives that have implemented prepayment systems using keypad technology, while only three or four are still using the magnetic card concept – and these few are in the process of changing over to keypad technology. The inherent viability of the CASH-POWER2000 keypad solution won the day, and more and more co-operatives are replacing conventional meters with prepayment meters. Installations range from 100 to 2 500 prepayment meters at the different co-operatives, and the number of meters in operation by March 2000 totalled 25 000.
CELCA IMPLEMENTS A PREPAYMENT SYSTEM
The installation by CELCA (Co-operative Electrica Limitada de Carmen de Areco) provides an interesting example of how prepayment electricity supply technology was initiated in Argentina. CELCA has over 5 000 users in the city of Carmen de Areco, which is 140km west of Buenos Aires City. CELCA is characteristic of the private distribution com-panies which have actively initiated a prepayment strategy.
In May 1996 the co-operative began to implement the advanced payment electricity system (prepaid electricity) in the province of Buenos Aires. The main reason for installing prepayment electricity meters was to find a solution for the high rate of overdue invoices. Delayed payment or non-payment of these invoices averaged nearly 26% of CELCA’s total monthly turnover at the time. From the outset consumer response was positive; surprisingly, even chronic late payers adapted well to the new system and became excellent customers of the co-operative.
The main advantages, according to users, included:
• The ability to control electric power consumption, by setting the amount and time of purchase and deciding on when and how to consume the power.
• The ability to make power purchases as many times as desired, on a 24 hour-a-day basis.
• The elimination of the traditional invoice, as well as the uncertainties regarding meter reading and actual consumption.
Main advantages for the co-operative included:
• The elimination of consumer bad debt and also of operating costs associated with power disconnection and reconnection.
• Ease of administration.
• Improved relations between the co-operative and users.
• Cost savings, which facilitated the application of optimised flat tariffs.
• Better cash flow and healthier financial forecast.
The system also allows CELCA to recover money owed to it by users in arrears. A small proportion of the money owed is collected with each electricity purchase, in monthly instalments.
The system works as follows. The user goes to the co-operative offices or the point of sale and buys electricity, the consumption of which is displayed in pesos ($) or in kWh. The system issues an invoice (according to local regulations) for the amount purchased, as well as a ‘credit transfer ticket’ with a 16-digit code.
Back at home, the user punches in the code on the meter’s customer interface keypad and a confirmation of kWh credit is displayed. The meter, in the case of the Gemini model, is installed in the same place as the conventional meter, which is simply replaced by the new unit. This has the advantage that the user’s internal distribution circuits remain unmodified, which means that the co-operative does not incur additional legal responsibilities at the customer’s premises. A bipolar wire connects it to the control unit inside the user’s home.
The system has been implemented as an alternative to a conventional metering system and can be freely selected by the co-operative associates or users. By April this year, however, applications for prepayment meters actually surpassed CELCA’s installation capacity, thus creating waiting lists, with several months elapsing before the new meters could be installed. At that time, about 35% of the co-operative’s users were already enjoying the benefits of the CASHPOWER2000 system.
POWER SALE OUTSOURCING
A highlight of the project was the opening of a point of sale in a seven day a week, 24 hours a day convenience store, making it easy for users to purchase electricity at any time, all year round, without being restricted to the regular service hours of the co-operative administration office. This approach was so successful that some 80% of electricity sales for the prepaid system now take place at the convenience store. With more than 1900 electricity prepayment meters installed, CELCA today is the leading electricity distributor in terms of the prepaid vs conventional users ratio.
The results are so encouraging that CELCA recently decided to replace all its conventional meters with CASH-POWER2000 prepayment meters. This will take place in the near future. The user report generated by the vending system for April 2000 revealed that of the 1 940 installed meters, 1 830 were single-phase and 110 were three-phase meters. According to the tariff table, 1 730 meters were used in residential applications and 210 in commercial premises.
The most significant achievement since the installation of the prepaid system has been the reduction in bad debt – from the original 26% to about 12%. This reduction continues as more and more CASHPOWER2000 meters are installed in customer premises.