Effects of Prepaid Meter Program in Relation to Energy Losses and Profitability: A Case Study of UMEME Limited

Abstract

The study was aimed at establishing the effects of Prepaid Meter Program in relation to energy losses and profitability of Umeme Limited and whether this system affected revenue collection costs of the Company. The researcher used a case study to assess the effect of Prepaid Meters on the company’s revenue costs. Secondary data used was obtained from the company’s Management Accounts and Financial Statements since prepaid meters were installed (2009) to the end of financial year 2015/16. A combination of observation and issueing of quetionnaires was used to gather data from the company’s databases and from a sample size of 50 staff members of Umeme though only 80% responcent to the questions. Statistical packages for social science (SPSS) were used as an aid to analysis. By use of chi square, the study anticipated an observable relationship between these variables. The study established that with more installation of the number of automated meters revenue collection costs reduced and profitability increased by about 12% from he previous amount of collections. The study established chisquare p-values as 0.023 and 0.012 respectively which confirmed the fact that reduction in energy losses and efficient revenue collection are significantly related to the increase in profitability of Umeme limited. A Mean Square Error of 8.82 was obtained based on forecasted values of supplied prepaid meters. It was revealed that the prepaid meter supply will continually rise to be able to meet the demand of the customer. The study concluded that the use of Prepaid Meters has reduced revenue collection costs for Umeme Ltd. It further recommends that Umeme Ltd should convert more post paid meters to prepaid meters, as it will enhance its revenue collection capabilities at the same time reduce costs associated with collection.