In a bold move aimed at reducing power theft and cutting meter reading costs, Kenya Power has announced a three-year plan to phase out postpaid meters in rural areas. This reform is not just about cost-saving but marks a strategic shift toward improving revenue collection and plugging leaks in the system.
According to the utility’s latest annual report, all rural customers currently on postpaid meters will be required to migrate to prepaid options. Additionally, the existing postpaid meters in rural areas will be retrofitted to prepaid meters over the next three years. The end goal is to transition all customers, including those in rural areas, to smart metering in the long run.
Kenya Power, which boasts approximately 2.1 million postpaid customers and 6.8 million prepaid customers, acknowledges that most postpaid customers are large power consumers. However, the revenue breakdown tells an interesting story: 63 percent of the utility’s earnings, equivalent to Sh120.18 billion, come from postpaid customers, while prepaid customers contribute 37 percent.
Despite this revenue distribution, the company’s recent net loss of Sh3.19 billion in the year to June 2023 has prompted a reevaluation of its metering system. In the words of the utility, “The electricity meter is the cash register and thus a critical component to the success of our business.”
The shift to prepaid meters not only allows Kenya Power to collect revenue upfront but also addresses the challenges posed by postpaid customers facing increasing electricity prices. The utility has been grappling with defaults, as some customers take years before their meters are read. This delay, coupled with the struggle to cover all customers with meter readers, has led to the contentious practice of estimating monthly consumption, resulting in complaints of inflated bills.
The move to prepaid meters aligns with the utility’s broader strategy to reduce power defaults and lower the expenses associated with maintaining a large team of meter readers. Kenya Power has recently implemented an advanced Meter Data Management System to enhance monitoring and analytic capabilities. This system, according to the company, helps enforce restrictions on unauthorized meter movements, addressing tracking challenges encountered with traditional manual methods.
As part of the metering plan, Kenya Power aims to have all large power customers on smart meters by December 2024. Additionally, domestic and SME customers consuming more than 200 units will be metered on Advanced Metering Infrastructure within the next three years. The utility also plans to install smart meters for all new connections falling under these categories.