The cost of power theft

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The cost of power theft

More than 100 years have passed since Edison introduced the elements of electrical service. It is reasonable to assume that the theft of electric service began immediately, yet until recently no one could estimate the loss from theft with any certainty.

Most of the data estimating theft had been anecdotal, giving only a poor indication of true losses. Recently, however, United Energy of Australia attempted real data collection, and was able to determine that 2.16% of its meters were faulty, which represented a potential loss of $4.5 million (Australian) to the company. This research was important beyond the determination of loss: It signaled the start of the effort to quantify loss.

The Canadian Electricity Association’s Extent of Energy Diversion on Customer Premises for Canadian Utilities was intended “to statistically assess the incidence of energy diversion at several utilities across Canada.” The study found a tamper rate of 1.36%. At this rate, on total sales to residential customers in Canada in 1993 of 132,327,911 MWh at $7.25/kWh, this meant a revenue loss of $130,475,320 Canadian. For the cost of a 1.36% tamper rate to be $130 million, theft would have had to occur for an entire year, but typically theft will occur for three or four months before an irregularity is noted, or 60 to 90 days on an account that is diverting power around the meter.

The Arizona Public Service Company conducted an investigation to determine the actual dollar loss associated with each meter found to have been tampered with, rather than settle for a percentage on total revenues.

The study came up with the following results:

• Definite meter tampering – 0.72%

• Actual loss dollars – $330,148

• Actual loss revenue percentage -0.0215%

• Probable meter tampering – 1.00%

• Probable loss dollars – $7,637,131

• Probable loss revenue percentage -0.4965%

• Total actual/probable loss dollars – $7,967,279

• Total actual/probable loss revenue percentage – 0.5180%.

Of the $7.9 million actual/probable loss, $5.1 million was attributed to commercial accounts. Additionally, 6.5% of the meters in the study had some type of maintenance problem.

APS now knows the percentage of tampered meters (1.72%), and its cost ($7.9 million, 0.518% of revenues). The study provided APS with information as to the type of theft occurring, and where. This means they have tools to make informed decisions about dealing with the problem.

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