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Utilities specialists slash property giant’s electricity costs

Tuesday, June 12, 2007

Although ApexHi Properties Limited has increased its portfolio between June 2004 and June 2007 from 237 buildings worth R3 billion to 421 buildings worth R8 billion, the net cost of electricity to the property giant has remained almost unchanged.

This achievement is thanks to Rural Maintenance (Pty) Ltd, initially contracted to manage the utilities of some 89 buildings for a period of two years, in order to correctly identify the users of electricity in the various buildings and to bill them appropriately, according to ApexHi MD David Rice.

So impressed was ApexHi with the electricity cost savings produced, that it has extended the contract by outsourcing the management of its entire R120-million per annum electricity bill to the Rural specialists for a period of 10 years.

Rural director Chris Bosch said the company has invested some R22 million in equipment in the ApexHi portfolio in the past two years to ensure that users of electricity are identified and billed correctly. The investment has enabled Rural to account for 99,91% of electricity consumption in ApexHi buildings compared to the industry average of accounting for only 50% of kWh consumed.

“We as yet have to find buildings where accurate wiring diagrams are available; therefore, we have to conduct physical on-site audits, tracing wires and switching off circuit breakers to accurately identify the electricity flows. The fact that we can then accurately bill the user of such consumption results in the users — whether the landlord or the tenant — being able to manage their own electricity consumption, as they know exactly what the cost of each off-take point is,” Bosch told Rode Online.

He explained that the billing done by Rural is no longer a single line item as has been the case in the past, but details all the off-take points. This enables the tenant and the landlord alike to switch off and manage each point of supply.

The systems Rural installed in ApexHi buildings include on-line remote meters that enable users to check on local suppliers’ accounts and highlight problems such as faulty equipment and inaccurate municipal readings or tariffs.

“Our billings have also increased in accuracy. We have decreased utility bill amendments from 600 per month to under 200 per month, and our intention is to bring it down further to 100 amendments per month across the ApexHi portfolio,” said Bosch.

“At ApexHi they are now totally aware of what the real costs are. Should the market ever turn for the worse with occupancies falling, ApexHi will be well geared to negotiate aggressive rentals without running the risk of paying for services that it cannot control.”

Bosch has been appalled by the extent to which many building-management companies neglect the management of electricity consumption.

“The end result is that the landlord ultimately foots the bill for everyone, which leads to an increase in rental charges to cover the operating costs. In our model, the complete electricity consumption flow is totally transparent and users are known – which results in the correct users being billed.”

According to Bosch, Rural’s consumption information has also highlighted discrepancies in conventional management methodologies, resulting in it actually performing a non-intended audit function.

Rural is part of the Resource Management Integration Group (Pty) Ltd (Remig) that has specialised in utility operations on the African continent since 1993, and currently has ongoing operations in South Africa, Namibia and Mozambique. According to Bosch, they have in the past also provided extensive services in Nigeria and Uganda.

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