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Prospectus: Meter Reading Processes

and Revenue Protection for Medium

Voltage and Big Clients supplied by

Low Voltage Customers USAID Sector Reform and Utility Commercialization

(SRUC)

September 2017

This publication was produced for review by the United States Agency for International Development (USAID). It was prepared by Deloitte Consulting LLP (“Deloitte”) under a contract between Deloitte and USAID. This document does not necessarily reflect the views of USAID or the

United States Government. Information provided by USAID and third parties may have been used in the preparation of this document, but was not

independently verified by Deloitte in Mozambique. The document may be provided to third parties for informational purposes only and shall not be relied upon by third parties as a specific professional advice or recommendation. Neither Deloitte nor its affiliates or related entities shall be

responsible for any loss whatsoever sustained by any party who relies on any information included in this document.

October 2017

This publication was produced for review by the United States Agency for International Development (USAID). It was prepared by Deloitte

Consulting LLP (“Deloitte”) under a contract between Deloitte and USAID. This document does not necessarily reflect the views of USAID or the United States Government. Information provided by USAID and third parties may have been used in the preparation of this document, but was not

independently verified by Deloitte in Mozambique. The document may be provided to third parties for informational purposes only and shall not be

relied upon by third parties as a specific professional advice or recommendation. Neither Deloitte nor its affiliates or related entities shall be responsible for any loss whatsoever sustained by any party who relies on any information included in this document.

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Table of Contents

1 Introduction and Background ............................................................ 4

2 Strategic Alignment ......................................................................... 5

3 Current state assessment ................................................................. 6

4 Problem Statement .......................................................................... 9

4.1 Strategy and Governance ............................................................ 9

4.2 Processes ................................................................................ 10

4.3 People .................................................................................... 11

4.4 System ................................................................................... 11

5 Solution Guidelines ........................................................................ 12

6 Project Key Objectives ................................................................... 12

7 Description of the Potential Deliverables ........................................... 13

7.1 Deliverable #1: AMR Rollout Procedures ...................................... 13

7.2 Deliverable #2: MCC Organizational Structure ............................. 13

7.3 Deliverable #3: People Development ......................................... 14

7.4 Deliverable #4: Design a Commercial Unit ................................... 15

7.5 Deliverable #5: Field Audit of all MV and BCLV Installations ........... 15

8 Overall Project Benefits .................................................................. 15

9 Cost-Benefit Analysis ..................................................................... 16

9.1 Cost Reference ......................................................................... 17

9.2 Basic Parameters...................................................................... 18

9.3 Inputs ..................................................................................... 18

9.4 Outputs ................................................................................... 19

9.5 Results .................................................................................... 19

10 Execution Plan ............................................................................ 22

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Glossary

ASC Customer Service Area (Área de Serviço ao Cliente) AMR

BCLV CMS

CT EDM

Automatic Meter Reading

Big Client Supplied by Low Voltage Customer Management System

Current Transformer Electricidade de Moçambique

HV KPI

L&G

High Voltage Key Performance Indicators

Legacy Landis & Gyr LV Low Voltage

MCC MDM

Meter Control Center Meter Data Management System

MV Medium Voltage

PERIP

PT SRUC

USAID

World Bank’s Power Efficiency and Reliability Improvement Project

Power transformer Sector Reform Utility Commercialization

U.S. Agency for International Development

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1 Introduction and Background

Electricidade de Moçambique (EDM), Mozambique’s state-owned national power utility, is undergoing a large-scale transformation program that aims to

make the company financial viable and operationally sustainable. To this end, EDM’s current Board of Directors has initiated this fundamental and

comprehensive transformation of the organization with a clear vision and a number of clearly defined strategic objectives.

In support of this strategy, the USAID Sector Reform and Utility

Commercialization Program (SRUC) Task Order and its implementing partner, Deloitte, assisted EDM to develop a Commercial Metering & Loss Reduction

Strategy (hereafter “The Strategic Roadmap”) in late 2016. This Strategic Roadmap identified ten initiatives along the meter-to-cash value chain that

could reduce commercial losses, improve the operational efficiency of the

company’s revenue cycle, and enhance service delivery to its customers. From there, USAID and its implementing partner, the Deloitte Team (the Team),

are developing a series of prospectuses to provide more detail on high priority initiatives for the company.

The Team held a prioritization workshop with the EDM Chief Operating Officer

established the following priorities for selecting four prospectus topics: The initiative must address immediate pain points and generate short

term revenue; Leverage the World Bank’s Power Efficiency and Reliability Improvement

Project (PERIP) program with a specific focus on supporting EDM capacity building;

Improve customer’s experience; Provide a clear separation between direct infrastructure support and

technical assistance from consulting services; and

Align EDM objectives with donor priorities.

This prospectus, Meter Reading Processes and Revenue Protection for Medium Voltage (MV) and Big Clients supplied by Low Voltage (BCLV) Customers, is

focused on reducing losses and generating revenue from these particular customer segments, which it explains in detail, in order to showcase potential

partnership opportunities with the international donor community in Mozambique.

The Team developed this initiative in conjunction with three other prospectus,

which are also being shared with the development community. One of those prospectuses is focused on a longer-term vision for loss reduction and more

effective commercial losses management. The other two prospectuses focus on operational efficiency through effective management of fieldwork and

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better management of customer and ethics complaints (which indirectly contribute to losses management).

This prospectus is structured as follows. It begins with the strategic alignment

of this project within EDM’s larger transformation. It then provides a more detailed discussion of the problem, key project objectives, and description of

the associated activities and deliverables. It then concludes with a cost benefit analysis and an execution plan.

2 Strategic Alignment

Under the company’s broader transformation goals, this particular project supports several key EDM strategic priorities. It is focused on improving the

management and operation of its smart metering program for MV and BCLV customers, which is particularly important given its planned rollout to an

additional 10,000 customers.

First, it helps ensure EDM’s financial sustainability through tangible reduction in its energy losses. This project will be critical to helping the company meet

its goal of reducing losses from 22 percent to 16 percent in the next three years. By automating its metering processes, EDM will be to better manage

and control the meter-to-cash value chain, optimize its operational costs, improve staff productivity, and protect revenue for its critical customer

segment. Smart metering technology will provide a significant amount of data, which can allow for improved identification, monitoring, and

management of losses.

Second, it helps ensure that EDM is better serving its customers. By

streamlining its metering, billing, and collection processes, MV and BCLV customers will see improved customer service, better quality of power, and a

quicker resolution of metering or other issues. This is particularly important for industrial and large commercial clients, since they are typically

instrumental to the local economy.

Third, it will prepare EDM for the transformation of the country’s energy regulatory environment. Forthcoming policies and regulations will call for new

services and a more complex tariff structure. In order to comply with a new regulatory structure, EDM needs to have efficient and agile business

processes, documented procedures, and tightened, transparent operations for

government regulators.

Forth, it promotes a sustained development of human capital. This initiative focuses on developing the EDM capabilities, staff skills, and internal knowledge

to ensure sustainability in managing losses.

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Finally, this specific project supports the company’s recently established

comprehensive metering strategy, namely by:

Enhancing the viability of its existing smart metering programs– EDM has standardized its metering specification and deployment

processes and would like to avoid duplication across related metering projects. As such, the Team has designed this prospectus to

complement the World Bank’s PERIP program, which funds the rollout of 10,000 smart meters, by focusing on the gaps in the PERIP program,

namely the key supporting EDM capabilities such as governance, people, and processes, required to create a centralized smart metering and

revenue management operation. These are critical for EDM to realize the value from this technology.

Quick time to value - EDM’s corporate metering strategy requires projects that unlock quick value for the company by 2018. This project

is key to this goal, as it provides a significant and quick return by

focusing on the high-value customer segment—where small interventions can have a significant impact on the business.

3 Current state assessment

Under these high-level priorities, EDM has embarked on a smart metering rollout program. As part of this effort, EDM must ensure correct meter

readings and bill and collect accordingly. This program intends to focus its metering revenue recovery interventions according to the 80/20 principle

(whereby its focus is on 20 percent of the customers who are responsible for 80 percent of its revenues). The figure below illustrates the EDM customer

segments and their corresponding revenues.

f

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This smart metering program began in 2016 and targeted the high-voltage (HV) and medium-voltage (MV) clients. To-date, 3,000 meters have been

installed. Nevertheless, the end-to-end business process is still not operational, as it is depends on the completion of a system integration

between its backend systems, specifically, the Meter Data Management system (MDM) and the Commercial Management system (CMS). At the date

of this report, this integration was in progress, but not yet completed.

This project will automate the meter reading process, institutionalize remote

meter readings (using 3G communications), and improve data quality through

the integration of the MDM with the CMS.

Historically, EDM has had a variety of smart meter manufacturers. However, they recently underwent a specification standardization process that resulted

in the consolidation of their smart meters to fewer manufacturers, namely, 3,000 Clo and 2,000 legacy Landis & Gyr (L&G) meters (shown in the image

below). This standardization process is a result of a company-wide metering

policy – aligned to DLMS COSEM standard1 – that aims to enforce standards for which types of meters the company can purchase going forward. This new

policy requires that all future smart meters be integrated into the incumbent MDM. If the meter is not compatible with the MDM (as was the case with the

2,000 legacy L&G meters), the company mandated that new metering

protocols be developed so that these meters can be included in the system.

1 DLMS/COSEM sets the rules, based on existing standards for data exchange, for communication

between energy meters. “Device Language Message Specification” (DLMS) is a suite of standards that facilitates communication between entities. “Companion Specification for Energy Metering” (COSEM) sets the rules, based on existing standards, for data exchange with energy meters. Established by the International Electrotechnical Commission (IEC).

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In parallel, EDM has secured funding from the World Bank to continue with

the rollout of another 10,000 smart meters, under its new “Big Client supplied

by Low Voltage” (BCLV) rollout program.

EDM has envisioned a Metering Control Centre (MCC) structure, to be housed within its distribution department, to help execute these smart metering

rollout projects as well as to oversee the associated operations. EDM has defined the concept, which illustrated below for each of its 16 customer service

areas, but its structure is not yet operational.

Maputo Province Chókwe Xai-Xai InhambaneMaputo City

Beira Chimoio Tete Quelimane Mocuba

Nampula Angoche Nacala Lichinga Cuamba Pemba

The first smart meter rollout described above highlighted lessons learned and capability gaps in the required competencies and processes for the rollout of

a large number of meters, particularly for such a valuable customer segment. It also demonstrated a deficiency in the capabilities required to effectively run

its smart meter operations. EDM must address these gaps to ensure it realizes the targeted return on its investment, which has not yet materialized after the

rollout of the initial 3,000 smart meters.

These issues have resulted in an inability to monitor, bill, and track

consumption adequately, which, in turn, creates significant revenue losses

and opportunities for improved revenue collection.

Legend:

Operational Team MCC Command Client Service Area

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4 Problem Statement

Given these challenges and the company’s current state, this prospectus

focuses on improving EDM’s people, processes, and systems associated with its smart metering rollout for its large clients as well as establishing a

foundation to support its new smart metering operational structure.

The analysis of EDM’s current challenges across the meter-to-cash value chain for this high-value customer segment included several meetings with the EDM

metering department, distribution department, and the commercial division, as well as with the project team currently involved in the rollout of the first

smart meter initiative.

Furthermore, the Team consulted detailed revenue data from EDM’s audited

financial statements for the period from 2013 to 2017 to understand the

impact of the problem in the high-value customer segment.

This analysis highlighted challenges and improvements categorized below in

terms of governance, operations, processes, and systems.

4.1 Strategy and Governance

A significant opportunity exists to increase strategic focus and orientation toward revenue management for the MV and BCLV customers. A clearly

defined operating model and a structured approach to the installation of smart meters is required for EDM to efficiently operate the MCC. This will be critical

to avoid a negative impact on revenue from the broader rollout.

Issue Description

Revenue

management lacks

strategic focus

EDM does not focus its revenue management efforts per

customer segment, so the same process is used for a MV/BCLV customer and a residential customer. This results

in the high-value customers not receiving tailored, adequate attention.

Lack of commercial interventions and policies defined for a high-value customer (MV and BCLV segments).

Lack of detailed reporting and limited understanding of operational and revenue-tracking reports for the MV/BCLV

segment. No geographic mapping of losses to facilitate targeted

interventions aligned to the relevant customer service

department.

Lack of EDM is creating a dedicated team within the MCC, to work

on collecting smart meter readings from the MV and BCLV

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Issue Description

detailed

operating model for

MCC

customers. This integrated team will be assembled from

the various divisions (distribution, metering, telecommunications, and commercial) to centralize

accountability of the end-to-end meter-to-cash process

and to provide analytical capability. EDM has not defined the detailed model to ensure the

optimal operations of the MCC. This should include well-defined processes/procedures, associated governance

structures, guidance on how this unit will function in-line with the rest of the organization, indicators and reports the

unit should produce, and detailed job profiles. EDM must define the appropriate structure of the MCC and

roles of the teams for an optimized performance. EDM must define key performance indicators (KPIs), which

will govern the effective operation of smart metering and the oversight of the meter to cash value chain. The

objective of these KPIs is to ensure reduced losses, improved customer service, and improved effectiveness in

the rollout of smart meters.

EDM has not yet defined the human resources that will be part of the MCC who have a specialization in automatic

meter reading (AMR) and revenue protection.

Lack of regularized

customer classification,

based on consumption

A significant number of customers are in the incorrect tariff

class and paying incorrect fixed demand charges given their current consumption levels. For example, current EDM

policy states that an LV customer that consumes above 32 kVA two months in a row should move to the commercial

tariff level. Similarly, a client consuming less than 32 kVA two months in a row should move to a less expensive

residential tariff classification.

4.2 Processes

The performance of MCC is strongly dependent on the successful

implementation of the supporting operating model.

Issue Description

High performance

MCC is strongly dependent on

the operating

Even though EDM already installed more than 3,000 smart meters, there is a lack of commissioning processes

to ensure that equipment is working properly. Operational processes and procedures of MCC have not

yet been defined at a task level.

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Issue Description

model

implementation

The work execution process between the MCC and

regional field teams is unclear. Where it is not possible to collect automatic readings,

EDM utilizes manual readings. This creates a backlog of paper and data-capture errors and result in billing losses.

Incorrect metering configuration, such as incorrect Current Transformer (CT) ratios, incorrect metering

constant, and incorrect tariff classification. Lack of a dashboard and work plan to follow up the MV

and BCLV segment’s revenue and consumption. Lack of knowledge and analysis of the root causes of

losses in these segments.

No technical audit to validate whether the data captured on CMS corresponds with the real values found in the

field. Leading practice recommends that utilities undertake these audits every two years.

Limited EDM

capabilities to oversee the

larger smart

meter roll-out

EDM does not have structured processes to audit the rollout and installation of smart meters to mitigate the

impacts on revenue.

4.3 People

EDM must address many key challenges at the human capital level to ensure that the team is prepared to leverage fully the benefits of AMR.

Issue Description

Limited

skilled resources to

operate an

MCC

Staff are not familiar and experienced at using AMR, and

detailed references for MCC processes and procedures do not yet exist.

Lack of experienced staff or specialists in loss reduction

strategies, specifically for the MV and BCLV segments.

Poor

accountability

EDM has not defined yet roles and responsibilities of the

teams that will support the high-value customers. No staff performance indicators exists.

4.4 System

EDM has a long history of challenges related to its deployment of technology solutions and system integrations.

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Issue Description

Robust telecoms

Several telecommunication issues occurred during the

most recent AMR implementation, such as SIM card issues and GPRS/3G signal problems (mCel, Vodacom, and

Movitel).

Use

technology to improve

operational processes

Limited process automation. Issues with the interface between MDM with CMS.

Challenges in ensuring a functioning system integration between the smart meters, the MDM, and the CMS has

resulted in manual readings for some clients despite the existence of an automated meter-reading solution.

Limited scalability of the solution as EDM is unsure the architecture can support a significant load of metering

data, which the company expects from the increased rollout of smart meters. This will require a robust

telecommunications network and more expansive

infrastructure.

5 Solution Guidelines

To overcome these identified problems and challenges, EDM is considering an

integrated solution that builds on the activities below.

Address existing process issues related to the installation of the first 3,000 smart meters and minimize the associated revenue leakage.

Create a smart-metering rollout project management office and

associated structures to support the rollout of the planned 10,000 new smart meters.

Design the detailed MCC operating model to support the management of the entire meter-to-cash-value chain for HV, MV, and BCLV

customers. This includes: ­ Organizational structure and associated governance for all EDM

divisions and between its centralized and decentralized functions; ­ Processes and associated procedures for the various MCC

responsibilities and functions; and ­ Definition of KPIs and responsibilities for the MCC team and

associated reporting structure.

6 Project Key Objectives

The meter reading processes and revenue protection for the MV and BCLV

project aligns to the guiding principles EDM is using to prioritize its

transformation projects (e.g., operational criticality, strategic fit, financial

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impact, technical feasibility, and implementation simplicity). Within those principles, it targets the following objectives:

Develop comprehensive AMR rollout procedures (Note: this is not the

focus of PERIP, which is primarily focused on metering infrastructure); Design and deploy an MCC organizational structure aligned with

international best practices; Evaluate the knowledge and culture gaps and develop EDM’s staff;

Design a commercial unit to manage the MV and BCLV markets; and Audit MV and BCLV installations in the field.

This operational solution will specifically cover customers from the MV and

BCLV segments.

7 Description of the Potential Deliverables

Given these project objectives, EDM defined the following five activities and

deliverables aligned to each objective above.

7.1 Deliverable #1: AMR Rollout Procedures

Develop the AMR rollout procedures by undertaking the following activities:

o Establish a proper program governance structure to mitigate the

delivery risks. Given this is a new capability for EDM, it will be necessary to prepare an effective change management program to

help the company adopt the new technologies. o Design a structured program that addresses all the elements of an

AMR rollout.

o Develop procedures targeting operational excellence. o Create a data management team that will verify the quality of the

collected readings and billing data. o Organize field teams for an audit and consider rollout commissioning

procedures to ensure new installations are effectively implemented across the whole value chain. The field audit should cover correct

meter readings, correct billing and collection, work-order management, issue tracking, and end-to-end resolution processes.

7.2 Deliverable #2: MCC Organizational Structure

EDM must design the detailed operating model for the MCC organizational structure, which EDM has conceptualized but not implemented in detail. The

detailed model must address EDM’s current metering challenges and enable it to scale its rollout of smart meters and their related operations. Activities

should include:

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o Define a full operating model for this unit to establish:

­ Its mandate, business processes, and governance for coordination

with the other EDM business units;

­ The technology tools for each business unit; and

­ The organizational structure for corresponding roles and

responsibilities.

o Design an intelligence team within the MCC responsible for its operations. This team should be able to evaluate the following issues

and undertake related improvement opportunities:

­ Running AMR applications, such as meter data management and

the meter manufacturer automatic update software;

­ Analyzing processing exceptions and issues presented by clients;

­ Analyzing significant billing variations caused by meter reading

issues;

­ Requesting field investigations for meters that EDM suspects are

damaged and/or malfunctioning; and

­ Monitoring network communications and investigating issues as

they arise.

o Create operational teams in each of the 16 customer service areas

(ASCs) fully dedicated to receiving instructions from the MCC.

o Align tasks and define responsibilities for each of the ASC operational

teams.

o Define monthly KPIs and reports on the identified issues in the metering

system as well as the measures that can resolve these issues. o Develop a telecommunication strategy that will cover alternative

solutions for remote reading when telecommunication issues occur

between the meters and MDM, including the following:

­ Procedures for manual readings;

­ Technical recommendations to support system overloads; and

­ Alternatives for remote reading in areas with poor GPRS/3G

signal, etc.

7.3 Deliverable #3: People Development

Evaluate the knowledge and culture gaps targeting the following activities:

o Execute a training program for changing the current cultural values and addressing the technical gaps of the MCC team.

o Develop training programs to help EDM staff with techniques for revenue protection.

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7.4 Deliverable #4: Design a Commercial Unit

Design a commercial unit in EDM’s commercial division to manage the MV and

BCLV segments. This unit differs from the operational and engineering focus of the MCC unit because it would be more focused on the commercial aspects

of managing the customer. It should have the following responsibilities:

o Revenue assurance;

o Market growth projection; and o Negotiations with customers (tariff, contract, delinquency, etc.) and

reception of customer complaints.

7.5 Deliverable #5: Field Audit of all MV and BCLV Installations

Implement a field audit to guarantee that new and existing installations are

effectively and correctly billed to every MV and BCLV customer and to secure

data quality. The field audit should cover the following:

o Correctness of meter readings; o Identification of customers with incorrect CT and power transformer (PT)

ratios, incorrect metering constants, and incorrect tariff classifications; o Correct billing and collection;

o Work-order management; and

o Issue tracking and end-to-end resolution processes.

8 Overall Project Benefits

The expected qualitative and quantitative benefits resulting from the revenue

protection program for MV and BCLV customers project are described in detail below.

Benefit type Summary Description

Quantitative

Avoided revenue losses from the rollout of the 10,000

new smart meters, funded as part of the PERIP program, through strengthening of internal capabilities.

Reduced revenue losses from measurement problems,

lack of remedial actions, and an absence of internal alarms due to improved operational processes,

accountability, and reporting. Reduce operational costs associated with supporting

the MV customer base; this includes reduced headcount and reduced costs of subcontractors.

Avoided revenue losses resulting from poor AMR meter rollout processes that create incorrect customer data,

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Benefit type Summary Description

incorrect billing data, and significant losses of staff time

to correct customer billing information.

Qualitative Confidence that consumption readings and customer

billing is done on time and with correct CT ratios and tariff classifications.

Optimized control, governance, and visibility into the new MCC structure and associated operations.

Improved processes and management. Improved control and accountability for the teams

managing the MV and BCLV segments. Readiness for a larger-scale implementation of AMR,

which will cover more customers. Create capacity within EDM staff to operate MCC.

9 Cost-Benefit Analysis

Based on available data, the Team conducted a cost-benefit analysis by modeling the main financial benefit the project generates compared to

estimated benchmark costs.

The calculation of the financial benefit from the revenue protection program

for MV and BCLV customers follows leading cost-benefit modeling practice. The Team derived it by utilizing the following structure:

1. Estimate a basic cost reference given the project’s design components;

2. Adjust for basic parameters, such as exchange rate and inflation; 3. Calculate the inputs, using financial or operational data from EDM (such

as number of clients, billed revenue, or average response time); 4. Calculate the outputs; and

5. Generate the total results (quantified financial value of modeled benefits).

This process is further detailed in the following sub-sections. While multiple

qualitative and quantitative benefits exist, data availability limits the set of quantifiable benefits that the Team can model.

Given that, the Team only quantitatively modeled the avoided revenue leakage from underestimated power consumption during the

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replacement of old meters with new AMR meters as the primary benefit from the project. Given the Team’s international experience working with utilities

that have carried out these estimations, while overestimating power consumption is a possibility, they are much likelier to underestimate this

amount since the consequences of overbilling customers can be serious due to regulatory and legal implications as well as customer relationship risks.

9.1 Cost Reference

Based on similar previous EDM projects, the estimated total cost for this

project is approximately US $450,000. This considers the associated fieldwork, technical assistance, and training programs.

The Team used the following cost structure to arrive at this estimation:

Cost of physical assets required (such as IT systems, software, devices,

and equipment). Cost of enabling human assets (such as staff training, professional

standards, and certifications). Cost of technical assistance (such as project management, designing

processes and systems, verification, and implementation assurance).

Category Details Cost

($ 000s)

Cost

Percentage

Field Work Field audit of all MV and

BCLV installations 150 33%

Human Asset People development 60 13%

Technical Assistance

AMR rollout procedures Organizational structure

Design a commercial unit

240 53%

Total 450 100%

The figure below illustrates the breakdown of cost by main categories.

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9.2 Basic Parameters

The following basic assumptions are included in the calculations.

Basic Parameters Values

MZN/USD exchange rate 60

Months in a year 12

Hours in a month 720

9.3 Inputs

By the end of 2016, EDM had a total of 6,761 MV and the remaining meters

from the 10,000 procured will be used to include the biggest BCLV clients. The plan to roll out AMR meters extended to these customers (at a minimum).

Inputs Values

Average monthly revenue billed (MV + BCLV) (MZN) 300,496,392

Number of MV + BCLV customers 6,761

Total number of clients affected (10% of total, assumption)

676

Duration of mismatch between actual consumption and

estimated consumption for affected customers (Assumption)

1 month

34%

13%

53%

Revenue protection for MV and BCLV segment

Field work Human Assets Technical Assitance

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Power utilities typically resort to billing on the basis of estimated consumption, (rather than actual readings) as old meters are being replaced by new ones.

International examples from Brazil and other more developed markets

indicate that consumption from approximately 10 percent of clients is likely to be underestimated (and, therefore, result in revenue leakage) when the

rollout program lacks explicitly embedded and continuous revenue protection measures. In the case of Eskom (South Africa’s national utility), the

percentage of clients was higher and, thus, so was the total amount of revenue leakage.

While EDM can potentially prorate the duration of the mismatch between the

client’s actual consumption and the utility-estimated consumption for that 10 percent of clients with underestimated bills, a safe assumption, based on

international leading practice and previous experience with utility companies

undertaking similar operational improvements, is that it can affect an average of one month’s worth of power per year.

9.4 Outputs

Considering these assumptions and based on EDM’s reports, the benefits calculation had the following outputs:

Benefit Calculation Outputs Values

Calculated year revenue billed (MV and BCLV) (MZN) 3,605,954,904

Revenue billed per customer per month (MV & BCLV)

(USD) $ 740.8

Average revenue billed per customer is simply total revenue billed per customer for the MV and BCLV segment.

9.5 Results

Result Calculation Steps2 Values

Total revenue leak avoided over a year (USD) =

(a) x (b) x (c) $500,827

(a) Revenue billed per customer in 1 month (MV

& BCLV) (USD)

$740.80

(b) Total number of clients affected 6,761

2 Please note numbers have been rounded to one or zero decimals to ease illustration.

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Result Calculation Steps2 Values

(c) Percentage of client negatively affected by AMR roll-out (assumption)

10%

From this cost-benefit analysis, the Team estimates that EDM is likely to lose approximately $500,827 a year rolling out AMR meters in the absence of a

revenue protection program.

Given that, this project will require an estimated 10.8 months for financial benefits to compensate for its costs (i.e. the pay-back period).

The graph below displays the cost-benefit analysis for revenue protection for

the MV and BCLV segments considering the estimated benefit of $500,827 for one year. The analysis covers the 12 months from the start of the project.

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Graph 1: Cumulative Benefit Schedule Revenue Protection for the MV and BCLV Segments (USD) (Undiscounted)

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cumulative Benefits $41,736 $83,471 $125,207 $166,942 $208,678 $250,414 $292,149 $333,885 $375,620 $417,356 $459,091 $500,827

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

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10 Execution Plan

The successful implementation of the revenue protection program for MV

and BCLV customers builds on the five key milestones outlined above and requires close collaboration with EDM. EDM’s active participation is one of

the key factors for success, and long-term sustainability, of the project. EDM should verify their commitment from the outset and dedicated a specific

project manager to oversee the effort from the EDM side.

The Team estimates a one-year period of performance for this project. The potential project calendar below illustrates the different phases of the project

over that period.

Estimated duration (In Months)

M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M12

AMR Roll-Out Procedures

MCC Organizational Structure

People Development

Design a Commercial Unit

Field Audit of all MV and BCLV

installations

Illustrative

Activity Name