Free-payment meters as a tool for water demand management in Johannesburg

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Conference: Metering, Billing/CRM Africa 2007
Location: Cape Town, South Africa
Presenter: Kathy Eales
Abstract: Presented by Kathy Eales at Metering, Billing/CRM Africa 2007

As Gauteng moves into an era of growing water scarcity, household metering is becoming an increasingly important tool in water demand management.

If current trends continue, by 2014 Gauteng will not have enough water to meet its needs.  The implications for economic development and water pricing are huge.  It is imperative that all users improve water use efficiency, to defer construction of a major new dam; a new dam could mean that water tariffs double.

Joburg currently has a Non-Revenue Water ratio of 31.3%, with 147-million kls of water ‘lost’ in the year to March 2007, through a combination of physical losses (leaks) and commercial losses (inaccurate billing, illegal connections, etc).  The biggest single cause of NRW in Joburg is deemed consumption, where users are charged a fixed rate for an assumed volume of unmetered usage – but in fact use far more.  In Soweto, unmetered users are charged a monthly fixed rate for 20 kls of deemed consumption;  average consumption is 66 kls.

Joburg Water has a comprehensive NRW reduction programme in place.   In metered areas, NRV is 15.3%, with an even split between physical and commercial losses.  In non-metered areas with deemed consumption, NRW is 70.1% – with commercial losses accounting for 80.5% of the total.  Soweto is the biggest area with deemed consumption, and is the focus of Operation Gcin’amanzi (‘Save Water’).
 
This R700-m programme addresses network rehabilitation and upgrading, leak repair, installation of ‘free-payment’ meters and a programme of user education to promote understanding of the need for water conservation.  To date, 69 000 ‘free-payment’ meters have been installed, at no cost to local users, and the impact on water consumption has been dramatic.  Average consumption per stand has fallen over 80% to 10.5 kls per month.  To date, over 44 million kilolitres have been saved, with a cost saving of over R126-million.  Total income from water sales is R17.4-million.  Note that the financial benefit  savings achieved through reduced bulk purchases far outweighs income from water sales.

The project has prompted controversy, with opposition groups maintaining that poor people should not have to pay for basic water.  However, the ‘free-payment’ meters automatically dispense 6 free kls at the start of each month, and just over half of all Soweto users manage on this amount and do not purchase additional water.  Moreover, the tariff is highly subsidised, with average purchases reflecting less than a third of the cost.  Users say water is now more affordable, because they can buy it in small increments, and City research shows no negative impacts on health or hygiene.

While some users object to paying for water, user responses to free-payment metering are generally very positive.  They say they prefer to buy water on a ‘pay as you go’ basis, rather than receiving a large bill after the event.

Joburg now plans to extend free-payment metering to other areas, to help households manage their service bills, and to promote better accountability for water usage.
Joburg’s experience shows that metering and payment is not just about improving revenue and financial sustainability;  volumetric tariffing provides a significant economic incentive to use water efficiently, and helps alert users to on-property leaks.