In rural electrification projects that consider the social benefits in addition to the longterm benefits, technology should be at the service of the humblest people, with the lowest incomes, in order to help them become integrated into the service of electricity until slowly energy becomes a part of their fragile structure of development.
The Peruvian state, in its main task of addressing the basic needs of the country, has for several years – and in accord with the National Plan of Rural Electrification 2006-2015 – been placing large investments into the construction of electrical infrastructure, mainly in the rural areas. By the end of the year 2015, it is expected that 93% of the population will have electricity.
However, this task of constructing thousands of kilometres of electricity networks in the rural sector, with the objective of providing service to approximately 4.8 million out of the six million people who still do not have a service, has also become a challenge for the companies and concessionaires already operating in the region. The challenge is to retain these people as customers.
Many of these new clients initially become enthusiastic and place their development hopes in these projects. However, due to the fragility or even absence of an economic system, and to the lack of knowledge concerning the rational use of energy, they cannot continue to maintain themselves as clients and fall rapidly into the category of those who have their service suspended or even have their connection definitively shut down (desertion). In the specific case of the Empresa de Administración de Infraestructura Eléctrica SA (ADINELSA), around 20% of the customers have had their service suspended.
The problem then lies in how to motivate, train, help and assist these new rural clients so that they can use electricity rationally without it affecting their already weak economy, while at the same time developing programmes that stimulate the economic growth of the community without placing too heavy a cost burden on the operating company.
More than six years ago, ADINELSA, in its task of providing for the needs of customers located in rural areas of poverty and extreme poverty while still optimising the company’s resources, implemented a pilot project with prepaid energy meters.
After successfully completing this pilot, in 2004 five definitive projects were implemented, which at present reach 6,035 customers. As a result ADINELSA has the most experience and largest deployment of prepaid equipment in Peru (Table 1)
INITIAL OBSTACLES Standards and regulation
In Peru there was no legal framework in place for the use of prepaid meters until 2005, and as a consequence there were no regulations regarding an applicable tariff.
Through the initiatives and contributions of ADINELSA, in 2005 the use of prepaid meters was included in the Act of Electrical Concessions and it was established that the regulatory organisation for Investment in Energy and Mining would be responsible for regulating the tariff. Thus in 2006, for the first time in Peru, the BT7 tariff was published for the exclusive use of prepaid electricity meters.
In the particular case of ADINELSA and considering the lack of legislation as well as the lack of a specific tariff system, at first an adjustment had to be made so that the equipment could operate in the post-payment environment. This was done through the delivery of a credit to each client equivalent to two months of consumption, ie the time it takes to suspend service due to lack of payment. In this way, none of the standards in force at that moment were infringed.
Technology and culture
Another paradigm to overcome was the issue, with regard to the capacities and abilities of the rural inhabitants, of being able to use the prepaid metering equipment, given the different transactions that they would be required to do and the fact that this constituted a change in the traditional form of sale and purchase of electricity.
After several training and explanatory campaigns on the potential benefits of the system, it was possible first to change the behaviour of the people, and subsequently to reach a level of commitment that, today, benefits both the customers and the operating company (Figure 1).
The most important lesson learned from this experience is that the technology should not be denied to people with limited economic resources or with little education. With an appropriate information and capacity building programme that reduces the length of the learning curve and is linked to their economic circumstances, families as a whole respond and in many cases it is the younger members of the family and children who take control of the transactions (Figure 2).
From 2001 the regulatory organisation established a fund for the social compensation of electricity (Fondo de Compensación Social Eléctrica, FOSE ), which in practice is a cross-subsidy from customers with the largest consumption (urban) to customers with consumption lower than 30 kWh (rural), buffering their real consumption by up to almost two thirds.
These conditions were also taken into consideration and strictly respected in order to maintain the benefits for the customers in rural areas who use prepaid meters. For this a strong and flexible commercial system was developed that allows the implementation of multiple configurations of tariffs and commercial charges and, additionally, allows integration of all customers into a common database independently of the metering system used. Consequently the system has a simple interface with each prepaid metering system, so that the management of sales requires only basic energy transfer software.
RESULTS Customer adaptability
Having experimented with both single and split meters and transfer systems using a numerical code via keyboard and intelligent electronic cards, the results, after several years of operation, are representative and very useful for decision-making in the future. Of these the split meter with a code system via keyboard entry has proven to be the most advantageous (Table 2).
The interaction between customers and the company within the context of the Peruvian culture and the geographic conditions of the country demarcate the differences, advantages, adaptability and usefulness of the technology (Table 3).
Points of sale
The legislation in force for prepaid meters in the rural sector establishes that the point of sale must service 500 to 600 customers. However, in practice this is often not feasible due to the wide dispersion in the location of the dwellings. There are small settlements consisting of between 30 to 50 families separated from each other by considerable distances and in some cases without a means of access, for which reason it is impossible to assist them in a satisfactory manner.
On the other hand, to implement and maintain new points of sale is very costly, and therefore is not justified given the limited numbers of operations.
It is thus necessary to resort to creativity and innovation in order to find and implement new alternatives with technological support that will allow these problems of scale and attention at the points of sale to be overcome.
“The prepayment system has demonstrated that it is an alternative of great assistance in rural electrification.”
The prepaid tariff
Currently, the prepaid tariff BT7 incorporates fixed monthly commercial charges, which generate debts when the customer fails to make a purchase for one or more months, and subsequently energy cannot be purchased without first covering these charges.
NEW REQUIREMENTS AND ALTERNATIVES Unique tariff
The idea is to propose a unique prepaid tariff, that includes all the variables and that is transparent and easy to apply for the customer.
Norms and standards
It is important to establish the norms and standards for the implementation of prepaid systems in Peru, so that the quality and functionality of the equipment and systems can be guaranteed and there is not a dependence on proprietary systems. A good alternative is to apply the international norms in force for prepaid systems, ie IEC 62055-51 STS (Standard Transfer Specification).
Energy system administration
The needs and demands of customers in the region, with geographic and cultural similarities, has aroused interest in innovation by the manufacturers and now there is available more complete metering equipment that can operate in three modes – post- payment, prepayment and administrator.
The administrator mode of energy is attractive, because of its capacity of behaving “intelligently” and rationing the energy purchased out in a proportional manner over the whole month, thus assisting the customer in the efficient and rational use of energy.
At ADINELSA a pilot project has been implemented in a locality with 50 clients. It is hoped that this new experience will enable us to find solutions principally to the difficulties with the points of sale, by fixing billings based on the historical and real demand of each customer – while at the same time providing flexibility in operating simultaneously as administrator and prepayment for requirements on special occasions with extra charges to the meter.
The prepayment system has demonstrated that it is an alternative of great assistance in rural electrification, and principally in the commercial operation of these systems. Proof of this is the major electrification projects that are under construction by the Ministry of Energy and Mines, such as the Santa Cruz-Chota-Bambamarca small electrical system in Cajamarca with 18,000 clients that has been designed around prepaid meters.
A programme with sufficient information and adequate training that promotes change in the behaviour and attitude of the people, added to the predisposition that all communities have towards economic development, makes these types of projects viable. It also puts technology within reach of the simplest village as a useful tool to learn about and become incorporated into the electricity service, and gradually to seek out a better level of development.
The current challenges have to do with promoting before the standards and regulatory organisations a prepaid tariff with a single charge that simplifies transactions for the rural customers, and also establishing the international standard IEC 62055-51 STS as the minimum technical specification for prepayment systems.
And finally, ADINELSA is enthusiastic about the pilot project with meters with administrator mode, as these will surely contribute to a solution, or at least a partial solution, to the difficulties experienced with the points of sale and the possibility of providing better control and assistance in the use of energy by customers.
ABOUT THE AUTHOR: Tomás Soto Sánchez joined ADINELSA in 2000 as Assistant Manager of Commercialisation and Systems. He graduated from the Universidad Nacional San Antonio Abad in Cuzco, Perú in 1992 with a degree in electrical engineering and is currently completing an Executive MBA at the Central American Institute of Business Administration (INCAE) in Costa Rica.
ABOUT THE COMPANY: ADINELSA is a state company with responsibility for the supply and distribution of electricity in rural and remote areas, as well as areas of poverty and extreme poverty, in Peru. The company began operations in 1998, and its installations include small electrical systems, distribution networks, secondary transmission lines and small central hydropower plants in 20 of the 24 regions of the country, providing service to a total of 146,500 customers.