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Tshwane, TUMS agree to part ways

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Peu Capital Partners, its project company Total Utilities Management Services (TUMS) and the City of Tshwane (CoT) have agreed in principle to terminate the CoT smart meter project as of 30 June 2015.
The CoT and TUMS have been in discussions for some time to explore options which included, among others, early mutual termination of the contract in a way that delivers a satisfactory resolution for all parties. The CoT has confirmed that TUMS has met its obligations under the Master Services Agreement (MSA), however the continuation of the MSA under the current legal circumstances is sub-optimal for both parties.

The CoT has decided to acquire the installed smart meter system together with all installed meters in order for the CoT to continue benefiting from the prepaid smart metering project and to ensure continuity of service to its customers. This includes all the meter related hardware and software including the vending and collections systems. In terms of the agreement reached, the CoT will appoint an independent valuer shortly in order to value the system as a basis for the parties agreeing the price and to facilitate the finalising of the termination agreement.

TUMS chief operating officer Paul Renshall comments: “While both prepaid metering and smart metering are not new concepts in themselves, the combination of the two to create a prepaid smart metering platform in conjunction with an innovative off balance sheet funded solution was a world first. The TUMS system is established, robust and fully operational, having vended almost R5-billion of electricity during the CoT’s current financial year.

“The CoT has benefited from receiving this money upfront. Supported by the TUMS smart meter system the CoT electricity debtors’ book has reduced significantly. To our knowledge no other party has successfully implemented a funded prepaid smart meter project of this scale or secured municipal revenue to this extent anywhere in the world.”

As this is a technically complex project, the CoT has also requested that TUMS provides ongoing support, including city employee training on the system, for a handover period of six months running from 1 July 2015 to 31 December 2015.

The CoT will acquire the smart meter system by the end of this handover period.

During this time, TUMS has also agreed that it will reduce its management fee from 19,5 cents to 9,5 cents for every R1 vended through the system in view of the CoT intention to purchase the system. The difference between the original service fee and it is envisaged that the reduced service fee will be held in some escrow account for the benefit of the CoT and subject to fulfilment of the terms and conditions of the termination agreement.