ZESCO improves performance — ERB
BY GILBERT KAIMANAONE of the considerations for the Energy Regulation Board (ERB) to allow ZESCO to review its tariffs under the Multi Year Tariff Framework (MYTF) is the performance of the power company on set Key Performance Indicators (KPIs).
The ERB evaluates ZESCO’s performance on the KPIs on a quarterly basis, in order to monitor the company’s progress in improving efficiency and quality of service to customers in the context of the MYTF.
The principle of the MYTF is for ZESCO to implement self-enforcing incentives in the form of KPIs embedded in the migration to cost reflective tariffs, and are meant to, among other issues, address areas of concern such as quality of service and institutional efficiency.
Areas of focus under KPIs are metering: cash management, staff productivity, quality of service supply and reduction of system losses.
In this article, we focus on a review of ZESCO’s performance on the KPIs in the first three quarters of 2009, whose scores were released recently by ERB.
According to ERB, the third quarter scores show that ZESCO’s performance has improved by 37 per cent in the first quarter and 75 per cent in the third quarter of 2009, albeit it achieved 86.59 per cent in the second quarter.
For the particular KPIs between January and September 2009, the ERB observed as follows:
1. Metering:
Under the customer metering KPI, the ERB notes that ZESCO performance has improved.
The total backlog of unmetered customers has progressively reduced from 29 per cent of its total customers in the first quarter to 21 per cent in the second and 17 per cent in the third quarter.
Meter installation was scaled up, as approximately 31,715 prepaid meters have been installed in Lusaka and the northern division, including 17,277 credit meters installed in the Copperbelt, Lusaka, northern and southern divisions.
This reduced the backlog of unmetered customers to 62,244 at the end of September 2009 against a target of 52,799 customers.
ZESCO is also required to meter all new customers within 30 days of connection. But between January and September 2009, ZESCO connected 25,004 customers, out of whom only 5,382 or 22 per cent were metered, while 19,622 newly connected customers remained unmetered.
2. Connection Time
There was an improvement with regard to the time taken to connect new customers as ZESCO recorded a reduction to 62 days and 56 days for the second and third quarters respectively, from a high of 85 days in March 2009.
This was still below the target of 56 and 51 days for the respective quarters.
However, the average number of days it takes to issue a quotation for potential customers increased to 48 days in the third quarter from 45 days in second and 39 days in the first. This was against a target of 33 days for the third quarter.
3. Cash Management:
The goal of this KPI is to reduce the amount of money ZESCO is owed by customers, known as total receivables, to less than 17 per cent of total turnover by 2010 from 45.37 per cent in December 2007. This was expected to reduce by 4.6 per cent between April and September.
However, total receivables increased by 6.9 per cent during the same period, ending the second and third quarters at 63 per cent and 68 per cent against targets of 31.6 per cent and 29.3 per cent respectively.
Further, ZESCO should reduce trade receivables to not more than 17 per cent of turnover by 2010, with a quarterly target reduction by 2.05 per cent. In 2009, it was required to reduce these from 32.1 per cent to 30 per cent in the second quarter and to 27.98 per cent in the third.
The ERB says ZESCO failed to meet this target during the second quarter as receivables increased by 0.91 per cent.
But ZESCO improved in the third quarter and met the target, as it reduced its receivables by 4.67 per cent.
Trade receivables for the entire period were 36 per cent, failing short of the target of 27.98 per cent.
ZESCO also failed to reduce debtor days in the first and second quarters, as these increased from 145 to 149 days respectively, against the set targets of 115, 107 days.
But it improved in the third quarter, reducing debtor days by 17 days to 132, though this was still below the quarter target of 99 days. The target is to reduce debtor days to 60 by March 2011.
4. Staff Productivity:
This KPI measures the number of customers serviced by each ZESCO employee.
The customer-employee ratio targets for the first, second and third quarters were 78, 81 and 84.
The company achieved 82, 85 and 78 respectively.
The reduction in the third quarter was due to an increase by 437 in the number of staff, who were attached to various projects on temporary basis.
5. Quality of Service:
This KPI measures improvements in quality of service. Unplanned outages per customer were expected not to exceed 33 hours, 29 hours and 25 hours in the respective quarters in 2009.
ZESCO marked a resounding performance, as the KPI recorded 38.2 hours, 25.6 hours and 13 hours respectively for the quarters under review.
Generally there was an overall reduction of 24.60 hours in average customer hours lost against a target of 7.91hours.
6. System losses:
During the period under review, transmission losses of power on high voltage lines of 330kv and 66kv, were above the 3 per cent target at an average of 3.88 per cent and 4.6 per cent for the second and third quarters respectively, but the target was to maintain this at less than 3 percent.
But ZESCO performed well on distribution losses, which is energy lost during distribution on 66kv and below lines.
This was recorded at 17 per cent and 15 per cent in the second and third quarters, and going by the target monthly reduction by 0.14 per cent. ZESCO would surpass the target of 14 per cent by 2011.
From the performance of ZESCO on the KPIs, it is expected that the next time that ERB would be announcing the scores there would be improvements on nearly all the KPIs.
[Times of Zambia]
