Every year, utilities lose $101.2 billion globally due to non-technical losses such as electricity theft, fraud, and billing errors, according to Northeast Group.
A study by the World Bank states that utility companies in developing countries often face significant quasi-fiscal deficits.
These deficits arise from the difference between the expected revenue of an efficient electricity sector, which covers operational and capital costs, and the actual cash collected by the utilities.
Among those deficits is bill collection losses, an issue that many Indian utilities have tackled after incorporating new meter reading methods. Jump to the case study.
Non-technical losses, also known as commercial losses, refer to all the electricity consumed but not billed.
They commonly result from external factors outside of the power system and primarily involve electricity theft, customer non-payment, and mistakes in accounting and record keeping.
Basically, they are the opposite of technical losses due to inefficiencies and actions unrelated to the actual distribution of electricity.
Electricity theft occurs due to non-payment, billing errors, and energy theft. Billing errors can occur either unintentionally or intentionally.
It encompasses both the absence of records where fraud or losses are not being recorded or documented, as well as potential faults in record-keeping practices such as mistakes in meter reading, data entry errors, or insufficient documentation of inspections and maintenance work.
Inadequate record-keeping can hinder the detection and prevention of NTLs and make it challenging to identify and address issues effectively.
In the utility business, some losses are inevitable. However, it is crucial for utilities to actively minimise these losses to avoid burdening society with increased tariffs or government subsidies, and to maintain revenue for essential grid improvements that benefit shareholders.
Here are four reasons why addressing non-technical losses is important:
Addressing non-technical losses (NTLs) is crucial for utilities to ensure financial sustainability, cost control, workforce empowerment, and improved service quality. By minimising NTLs, utilities can maintain revenue, cover operational costs, allocate resources effectively, and operate more efficiently.
This empowers the utility workforce, enhances service delivery, and improves customer satisfaction.
Blicker, an AI-powered meter reading software that utilises computer vision technology, embarked on an interesting case study when approached by its first Indian utility client. The client's main concern was combating electricity theft and billing errors, which were causing significant non-technical losses in meter reading for many utility companies in India. They needed a solution that could empower their workforce to reduce mistakes and fraud.
With Blicker, meter readers simply need to locate the meter and capture it through a quick photograph. The AI-powered software swiftly captures the necessary data in seconds. This was especially beneficial in India, where meters are often placed in challenging locations. Blicker's software is designed to read meters in any condition, including when they are positioned upside down.
In India, customers rely on meter readers to obtain their readings, and Blicker's solution empowers these meter readers by simplifying their tasks. They can now capture accurate data with ease. While the solution has significantly reduced fraud, it's important to note that fraud can still occur. Blicker addresses this by implementing verification measures after capturing the meter.
Some customers may deliberately try to overwrite the captured reading with a different number, while others might input readings from someone else's house. However, Blicker's comprehensive data portal allows for tracking and detection of such fraudulent activities.
Moreover, Blicker's software highlights any mistakes in meter readings, enabling customers to maintain accurate records of their losses. This transparency enhances monitoring and management of non-technical losses.
While fraud remains a potential challenge, Blicker's data-driven approach and advanced technology empower utility companies to proactively address and track such occurrences, leading to a reduction in non-technical losses and improved operational efficiency!