1 Why are municipalities/eskom changing to pre-paid smart metering?

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1 SMART METERING PLATFORM General Questions on Smart Meter Systems 1 Why are municipalities/eskom changing to pre-paid smart metering? The South African Utilities are determine to enhance on the revenue collection effort utilizing a Prepaid Metering System the CAPEX is guarantee income upfront. 2 Why is it important for an integrated common platform? (Suggests an integrated system across all municipalities ) Municipalities need metering platforms to deal with already installed meters (water and electricity) and require addressing any meter, payment method, communication and future smart grid functionalities in a step approach without replacing the common platform. An enterprise wide metering solution will reduce cost in a number of areas and will be a benefit to rollout on such a large scale like municipal / provincial wide 3 What is the difference between removing the existing meter and replacing it with another dumb meter as opposed to retrofitting the existing meter with a VTC Adaptor, MUS and back-end? A large number of already installed prepaid meters have an interface port to accommodate a communication modem (Virtual Token Control (VTC) Adapter) with a common metering platform behind the retrofit meter the dumb meter became a smart meter. There is limited benefit in replacing the existing meter with a standalone dumb meter - not connected to an intelligent back end system. 4 What is the cost difference for VTC retrofit as opposed to Rip and replace approach? Assume a prepaid meter also keep in mind the life of a meter. VTC retrofit cost 40-60% less than a smart meter. 5 Are there other meter companies that can offer the above? Yes and No Yes to utilize the smart meter, vendor companies supply an end-to-end solution that includes a minimum of: smart meter components - concentrator and a back end system (head end) with smart functionality.

2 No smart meter and smart meter components are usually vendor specific and to upgrade these meters with the vendor components for future functionalities requires a latest components. 6 What benefits does the smart meter rollout project bring to municipalities for the following? Assume a smart meter system that includes a smart meter that is connected to a two way communication infrastructure with a back end system. 6.1 Increased Revenue Connect the unconnected, trace of token sales, demand side awareness, consumption patterns, consumer centric is just a few areas to ensure an increase in revenue. 6.2 Job creation (Assume per 20,000 installations) Community and local partner involvement is a key to success to enable the municipality to create jobs to support the metering system. A General assumption is that for every meter point a potential of 70 jobs on deferent levels can be created. 6.3 Loss of income Bridging of the meter, tampering on the meter and ghost vending will be visible to the municipality the municipality need to create a vehicle to deal with these events through community involvement programs reduce losses and encourage a culture of participation. 7 What after-sales maintenance program will be put in place for problems that might occur from project? A Field Force team and involvement from the local community will assist with support and maintenance this team works closely with the municipality to support the metering system. 8 What pre-installation public participation will be engaged and by whom? T-Systems involve the community through a partner program this program creates awareness during a readiness assessment phase of a metering project. 9 Where have your solution been installed successfully?

3 The T-Systems solution has been installed with a number of utility providers in Germany, Brazil, Chez Republic, Albania T-Systems has worked with ESKOM R&D for the past 4 years to develop and localize 7 use case. T-Systems has executed a Proof of Concept with ESKOM and approved seven local use cases. T-Systems has also done a Pilot with LESEDI municipality through government agency MISA. 10 What would make us want to invest in your product? The metering platform and services provide a two way communication infrastructure for existing meters and potential smart meters, water and electricity, post or prepaid that enable the municipality for future smart grid functionalities without changing the smart meter platform. 11 Why are the smart meters at City Power and Tshwane not achieving the favourable response from the public? Both these smart meter projects did not address the customer needs (not public knowledge) in providing an awareness program with an incentive scheme to encourage consumer to the potential benefit of such a program. City of Tshwane: Expensive smart meters were installed at consumers that pay their bills regularly, the added benefits on savings and convenience are not known to the consumers. City Power: In many cases smart meters were installed with a backend system recently City Power demonstrated load limiting capability of these connected smart meters, which keeps the light on at a huge cost to the City savings to the consumer is limited. Note: The consumers do not see enough benefit in an expensive smart meter, without the convenience and ease of use focus is too much on the smart meter. 12 Do you have funding mechanisms? T-Systems provide the smart meter system as a service ( meter point per month ) and funding for capital investment can be arranged. 13 What would your offering be if no meter exists?

4 Install a low cost water and/or electricity meter on street level at a service cost per meter point integrated into a common metering platform that integrates into current business systems. Note : Low cost meters do not need intelligence because the platform will provide the intelligence to enable the municipality to plan their metering strategy for the future; example: timestamp (time of use) to enable time base tariffs as a service offering. 14 How do you integrate bulk metering? Bulk meters (Industrial Meters water and electricity) integrates into the T-Systems Platform directly ( as one of the integration scenarios ) because the meters have a standard GPRS communication modem a local communication modem is not required. 15 How do you integrate existing smart meters? Smart Meters have a communication capability either wired or wireless. The T-Systems solution is designed to integrate into an open meter communication protocols of all the known meter vendors. The T-Systems Platform integrates into more than 100 different smart meters ( water, electricity and gas ) of more than 20 different vendors. 16 Please explain, at a high-level, how smart metering technology works? And particularly the 'platform'? Different to smart meters smart metering technologies provide the components to enable a two way communication platform for capturing, transportation and provisioning of meter data to a central store. The captured data from connected meters enables the utility to implement smart grid functionalities like time of use, demand side management, outage management, load steering. 17 What are the biggest problems with SA's electricity distribution models? Municipalities provide distribution to 90% of households in South Africa that needs to collect revenues from a range of income groups. Large, small and high income households can potentially fit the bill to ESKOM. The billing challenges municipality s faces today is inaccurate billing data, meter bridging, tampering and ghost vending, mostly caused by too many standalone meter devices, unmetered and unaccounted metering. To enhance the billing process municipalities need to address these issues. 18 How does smart metering help us avoid the problem of some municipalities not passing on the tariffs paid by local citizens, to the utility?

5 The platform provides and expose auditable and accurate near real time consumption data for connected prepaid and post-paid customers. 19 How can smart metering platforms be backwards-compatible with existing prepaid meters being used in millions of households in SA already? Retrofit a (in the home area network) communication unit to the exposed port on the meters and broadcast the data to a unit for ip communication to a central store. 20 How does smart metering lead to better energy consciousness and reduced use? Smart (Meters) Metering cannot reduce electricity consumption people do consumer needs to be aware of their consumption patterns by introduction of time of use measurement - the municipality can control the usage patterns ( between peak and offpeak periods ) through price triggers in a hope to change the consumer behavior towards energy conservation. 21 How does smart metering connect with concepts like home energy storage/batteries etc (popularised recently by the Tesla Powerwall?) Related to energy storage (batteries from; solar or electrical vehicles) the stored energy serves power to the household these forms of energy would be exposed to the delivery grid through devices for these purpose a metering system would read the flow of energy on an interval cycle for billing. 22 How have other countries/states/municipalities around the world employed smart metering? What have been the benefits? In Europe municipalities utilize a smart metering system for the smart grid functions ( to make the supply grid smarter ) to determine the demand to understand the balance back to the supply, billing and time of use tariffs is not a pressing challenge related to nonpayments. 23 How does smart metering give distributors and utilities a better view ("Big Data") of consumption trends? Collections of regular interval data from the meter (or service end point) provide visibility of consumption patterns of consumer zones, areas during a day, week or year 24 How does the smart meter platform integrate into the network? Assume IT Network - The smart meter platform integrates via a communication unit into the IT network to a carrier of choice.

6 25 What are the benefits of a smart meter platform for consumers? Receive more regular, accurate bills, convenience and energy saving. 26 What are the immediate benefits for the utility? Create visibility on the demand side, enhance revenue collection controls, connected consumer. 27 How long will it take for costs to be recovered? Installation to non-technical losses affected areas will benefit the municipality from day 1 28 What is this smart metering platform and who does it benefit? The Smart Metering Platform provides a two way communication and controlling service between the smart meter and the metering back end. The platform collects, translates and stores meter readouts and meter events. The platform therefore offers future extensibility, simplified interoperability, and greater flexibility in meter choice and communication scalability. The solution benefits the Consumer, Municipalities, Eskom, Suppliers, Partners and the Country. Note : Cities (Municipalities) are unable to effectively implement Energy Policies, e.g. Inclining Block Tariffs, Free Basic Electricity and the mandatory time of use (ToU) tariffs in the large power users (>1000kWh) domain. Without this type of solutions, Municipalities are also unable to mitigate much of the $ currencies (millions) non-technical losses experienced as a result of theft, and meter tampering. Furthermore, Municipalities rely heavily on the revenue from electricity sales (on average one third of total revenue) and it is of the utmost importance to ensure a reliable and stream-lined energy service charge billing and collection process, which smart metering services can guarantee 29 What are the benefits of smart metering? Customers: Enhanced service delivery, billing based on actual consumption, automatic reading, more accurate metering values, better basis for energy efficiency measures. Municipality: Revenue Assurance (Protection), Improve Quality of Service (Improvement), Enhance Demand Side Control, Time Of Day Tariff Structures Eskom: Less cost for meter value reading and estimation, better data for network planning, less customer service cost, more efficient supplier switching. Cost covered by customers in network tariffs. Suppliers: More efficient supplier switching, better data available. Partners: Provide an SD&L program to facilitate skills transfer and procurement empowerment with local partners to deliver and support utilities on the metering promise. 30 What is Demand Side Management (DSM) or demand control and revenue assurance? Demand Side Management (DSM) : Manage/Control the demand of the consumer to ensure a balanced supply delivery. Revenue Assurance: Have visibility of the consumption from the consumers and to ensure accurate billing.

7 31 What can South Africans do to limit their power usage? During Peak Times: Reduce usage of Water Heating(Geysers), Swimming Pool Pumps, etc. Note: By limiting these appliances a 30%+ savings is possible Scenario: Assume a million household save 1kWh during Peak Period daily, a 100MW of savings is possible that means an 100MW of generation from Open Cycle Gas Generator (OCGT) can be ~R3 per kwh thus R 300k 32 Is smart metering a good solution to address SA's energy struggles? Smart Metering provides the toolset to enable management and control to support savings 33 To whom is the product/platform of smart metering targeted towards? For Consumers, Network Operator (Less cost for meter value reading and estimation, better data for network planning, less customer service cost, more efficient supplier switching. Cost covered by customers in network tariffs), Suppliers, Authorities (Better data gives fewer complaints, easier control of data, easier to control extreme situations of power rations. Some administrative costs in the implementation phase), And Partners. 34 Do you see this platform taking off in SA? Yes - because of the benefits above The platform provides an energy conservation foundation as a basis for an Open Smart Energy Eco System as a platform to increase focus on Energy Security. 35 SA is already in the process of rolling-out smart meters, will there not be an overlap? The platform will support these initiatives, because it provides a common platform for any smart meters and support water and electricity measurement and control from one single platform. Note: The platform support smart meters by providing a common communication platform to any smart meter 36 What will be some of the costs for municipalities (or relevant stakeholders) for the smart metering platform? The platform enable flexible business models (services based)