Sunday, 25 March 2018

THE HIDDEN EVIL POWER OF POWER THEFT

Access to affordable energy supply is a real booster in today’s competitive business landscape so to say in the developing world where businesses scramble to better position themselves against the competitors somewhere else. The cost of electricity is one of the major factors in investment decisions in the manufacturing sector. Then, comes the question of reliability of the electricity supply. Utilities, particularly those in the developing world, are constantly challenged in balancing affordability and/against reliability. In their ongoing struggle to address both cases, power theft constantly stands on their way.
Back in the days, in one of my business trips, I witnessed at first hand the impact of power theft to the utility in particular and the businesses operating there in general. In one instance of the routine inspection of the small scale industries such as grinding mills and garages, one particular customer of the utility I was serving grabbed my attention. Among the peers of the grinding mills, one of them was full of customers working the full hours of the day while the rest of them stayed empty the majority of the time. Interestingly, I found out that the end customers got special discounts in that particular grinding mill and they preferred to stick to its services despite the fact that they had to wait for a long queue and it kept me wondering how it made profit with such a higher discount far more than the others could provide. Later, in the inspection, I discovered that particular customer of the utility (grinding mill) dropped the links of the energy meter significantly reducing the way it counts the energy consumption, as a result gaining a low price advantage. Although some of the similar businesses which suffered a lot in losing their customers discovered how that particular competitor operates, they refrained from copying it realizing that it was an illegal act and for fear that someday they might be caught and lost the trust of the utility.
Putting all things together, I realized back then how dangerous power theft was both to the utility and the businesses subscribed for electricity supply from it. Such acts would cause the utility to suffer from the loss of its revenue endangering its capability not only to proactively repair the existing infrastructure but also invest on additional power networks to respond to emerging demands, and ultimately making it difficult to the utility to maintain the reliability of the overall power infrastructure. Just because the power supply is not reliable, businesses will continue to incur additional costs placing them at a price disadvantage in the competitive global market, and the vicious cycle goes on and on and on.
Moreover, given the fact that the cost of electricity is part of the larger portion of the overall cost of the manufacturing businesses, it has the potential to skew the overall competitive business environment if power theft is allowed to be part of the game, in the end leading to the unwanted monopoly.
So, the danger, I think, is clear but the solution is not so easy. From my own experience, utilities do have multiple options but I suggest three to protect their revenue and the way their customers do business eliminating power theft. First, they need to understand the impact power theft would play not just on the utility but also on the overall business environment. Next, they need to strengthen their internalcapabilities to monitor their power infrastructures and enforce the rules and code of conducts (push for legislations if the existing ones are not responsive) on the electricity users. Finally, they need to experiment and adopt the technology solutions those would work for them to be able respond to power theft concerns in real time in the long run.

First published on Ethiopian Energy and Power Business Portal, EEP bp.