ABSTRACT

The primary purpose of the study is to establish the paid meter’s effectiveness in revenue assortment at African nation Power. African nation Power introduced paid meters to minimize numerous challenges they were encountering with the post-paid system including inefficient observation of consumption, wrong meter reading, ineffective revenue assortment, and inefficient energy use. African nation Power’s electricity revenue is either prepaid or prepaid generated. Sales generated on the prepaid system exposes the corporate to credit risk besides attracting further assortment prices which may be eradicated if prepaid charge system is adopted. However, the installation project was caught up to handle crucial problems like client education, supplying and faulty meters. This semiconductor diode to regular complains, and even shoppers questioned the image of the corporate. The defrayment system had numerous shortcomings like faulty gadgets, poor client data on the way to use the new technology and confusing billings. This analysis can assist in seeking out whether or not the paid metering system has boosted revenue assortment at African nation Power. It’s expected that African nation Power can improve on its revenue assortment skills also as scale back prices related to the collection. The study is guided by the following objectives: One is to see the results of assortment prices, 2 to see the results of responsibility, and 3 to research the results of flexibility on paid electricity on the revenue assortment at KPLC. A case study is utilized when deciding on the effectiveness of a paid meter system on the company’s revenue assortment potency. Descriptive analysis style is adopted during this study. The target population is 240 KPLC staff grounded with paid charge system data that had been born-again from post-paid to the prepaid metering system. The sample size is calculated mistreatment Yamen’s formula, wherever by the sample size is 124 respondents. The study can use proportional sampling procedure. Each descriptive and inferential statistics are dole out on frequencies, percent, mean and regressions analysis employing a multiple statistical regression model to ascertain the connection between the results of paid charge system and also the revenue assortment at KPLC in Kiambu County. The analyzed information is given in the form of charts and frequency tables.

 

 

 

 

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

KPLC was stabled by the govt. Of Kenya in mid-1970. Since 1975 once it was started, KPLC has been on the post-free technique of grouping revenue, a system that permits customers to get pleasure from the services and repay at the tip of the month when reading the meters, invoicing and bills sent. KPLC may be a public sector among several alternative sectors in Kenya, and it’s approved to distribute electrical power on behalf of the Kenyan government throughout the Republic of Kenya. For a protracted amount of your time, Kenya power has remained a monopoly in the distribution of the facility on-grid across the country. The govt. is that the major investor, dominant regarding fifty-one of belongings. The company’s shares are commercialism on the NSE and are thus a compulsory demand by law to publish and unleash annual monetary statements to the general public and alternative stakeholders (Ontomwa, 2014). The challenges of the post-free system have exposed the corporate to risks of serious debts and revenue assortment connected prices like meter reading costs, disconnection and reconnection prices, estimation of bills or readings not taken, and meter tempering (KPLC, 2009). This semiconductor diode to the institution of the debt assortment department with a fund allocation for hiring workers and exploitation shrunken debt collectors WHO earn a commission. These prices might have a direct impact on the financial performance of the corporate (Mwaura, 2010).

Adopting trendy technology will affect business either absolutely or negatively in its operations moreover as however, a corporation manages revenue assortment prices. For a corporation to possess a reliable monetary stand correct management of revenues and expenses is of preponderating importance. Therefore, the human resource department has added to recruit economic personnel within the running of a company WHO can bring on the required originality in the approaching business is steered. In keeping with (Brigham et al.,2005) for any trendy business entity to achieve success, many factors contribute to that includes; talented workers, long-run investment value, originality, financial responsibility, correct use of business resources, management value and most quality of merchandise and services. Stephen et al. (1999) argued that structure strategy on sales, money assortment, and its cash disbursement to support its business operations is sometimes expedited by the adequate cash on the market from the revenue collection. Therefore, if the corporation is the ability in revenue compilation, then fair administration of operational overheads becomes important in any business. The large holding of current assets like money might strengthen the liquidity state of business and prevent risk, however, might cut back overall profitableness.

According to connected researches, Safaricom and Airtel firms were the primary organizations to implement the paid system once it was comparatively new in Kenya before moving to alternative sectors of the economy. In these two corporations, you acquire airtime before utilization. Variety of studies are wiped out Kenya to demonstrate the effectuality of like an appointment. Fewer have additionally been wiped out the developed countries, leading to the variations in economic levels of technology and cultural inclinations (Ontomwa, 2014). However, none of the studies has been done on the impact of paid meters on revenue assortment potency at KPLC. Kenya power has many operational activities principally in O& M and cesium departments that need immense money outlay to support them. Thus acceptable operational ways, consummate techniques and a high level of revenue assortment efficiencies are required to boost on its bottom line as (Mwaura, 2010) argues.

1.1.1 Kenya Power and Lighting Company

Kenya Power and Lighting Company (KPLC) is an open utility enterprise ordered and authorized by the Kenyan government to be the sole merchant of electric power in Kenya. The legislature of Kenya holds a larger part of offers controlling over half of its shareholding. KPLC is required by law to distribute its budgetary records every year for the general population and different partners since it is cited with Nairobi Security Exchange. Kenya Power depends intensely on Hydro control vitality and enhancements it with geo-warm to create electric power. KPLC buys vitality from KenGen which is the main organization that is responsible for producing power, and pitches the equivalent to the general population. As indicated by (KPLC, 2013), amid extreme dry spell conditions when water levels in the dams radically drop, it swings to Independent Power Producers (IPPs) that utilization fuel to create power and pitch it to the Kenya Power. The organization has ten locales, and they include Nairobi North, Nairobi South, Nairobi West, Coast, Central Rift, North Rift, Mount Kenya, North Eastern, West Kenya, and South Nyanza. They all work agreeably towards a similar objective and offer natural qualities which incorporate; client first, filling in as One group, being energetic, practicing trustworthiness and greatness in conveying administrations to their clients. (KPLC Company Profile, May 2017).

In its Company Profile, KPLC has built up a client association arrangement that encourages productive association of clients to the matrix at a reasonable expense. Kenya Power has an important focus of associating one million new clients to the framework every year for the following five years. This is by its business development system to goad the nation’s advancement. Ontomwa, 2014 in his examination discoveries noticed that KPLC has received both designing and monetary administrations whereby the organization has broadly grasped innovation for key reasons, for example, improving operational proficiency and being tuned in to the cutting edge business condition and furthermore increase focused edge in the business world just as serving its client in a superior way (Stima News, July-September 2010).

In a time of over four decades, KPLC has been on post-paid strategy for gathering income presenting it to chance administration and costs identified with continues accumulation proficiency. These dangers and expenses incorporate; obligation the executives and income gathering division with a cost focus, detachment and reconnection costs, overdue debts and absence of non-installment for remarkable sums, meter altering cases and meter perusing costs. In any case, in spite of these enormous difficulties the framework was involved in enabling clients to profit by the administration ahead of time and pay after charging has been done and charges dispatched to the clients. Sadly, as per (KPLC, 2013) Kenya Power has battled with numerous difficulties like evaluated charges raising various grumblings from the clients. This is because some meter readers are unfit to peruse every one of their meters in their schedule due to gated mixes or they are essentially apathetic and in this way end up assessing to accomplish their set target. This ends up harming the clear picture of the organization concerning proficiency and capacity to convey great client administration. (Ontomwa, 2014).

(Ontomwa,2014), in his examination noticed that the beginning of present-day innovation constrained the organization to set out on paid ahead of time metering program on a pilot premise amid the underlying years with the expectation that income gathering would increment. This is because few overheads associated with income gathering were likewise expected to diminish or be disposed of inside and out. After fruitful guiding in Nairobi County with around 174,000 meters, the organization began retrofitting prepaid meters in different pieces of the nation amid. (Obura, et al., 2012), in his exploration demonstrated that Kenya Power embraced innovation both in metering and in client administration since 2009, with the point of improving administration conveyance, eliminating activity costs just as diminishing business misfortunes related with client defaults. The undertaking was assessed to cost the organization 5.8 billion shillings and focused on 520,000 clients countrywide. It is presently a long time since the undertaking started and as yet proceeding.

1.1.2 Post-paid Electricity request

Internationally, an outsized variety of consumers like postpaid meters to a post-free meter system. In line with Chartwell, (2003), for example, utility reports say, ”In the U.K., that contains a long tradition of providing postpaid metering as AN choice to any client a % of its customers signs up to prepaid system”. The report additionally indicates that ”Northern Eire Electricity that contains a new, customer-friendly payment system has inflated payment entry to twenty-five percent” (Energy Watch, 2005). At Arizona’s Salt stream Project, over 50,000 customers (about 50 percent) are on post-paid meters in line with Chartwell, (2008). In Ontario, Woodstock Hydro reports participation by 25% of residential customers (Oracle, 2009). Ariel and Luciana (2009), indicated that the technology of payment was at first developed in the African nation within the late 1980s with the aim of supply power to an enormous variety of low financial gain earners and geographically isolated voters. At first, the system was back-geared towards minimizing difficulties arising from uneven incomes, and to beat the specified restricted infrastructural development to dispatch and receive bills (Ontomwa, 2014).

According to Gomez & Contreras (2003), payment may be a system whereby the client pays for a product or service before exploitation it. This can be a special sort of meter which may be put in in an exceedingly family and tiny micro-enterprises (SMEs). In post-paid meter the corporate is in an exceedingly higher position record and analyze active energy customers additionally as their demand, thus creating it easier to set up for what to get from the generating company, that’s Kengen or the IPPs if want be. Ontomwa,(2014) notes that the payment meters’ system in either electricity, water or piped gas has been projected as an inspired resolution meant at facilitating affordability and reduction in utility expenses over the years. This methodology needs users to pay beforehand to profit from merchandise or services before use. This means, customers, seize credit and so use the service till the credit is exhausted Tewari & Tushaar;, (2003). Traditionally, payment meter systems have had a nasty name of feat folks quite virtually ‘in the dark’, however measures have currently been placed in situ to ensure ‘black-outs’ solely happens from time to time that it’s perceived safe to try to, therefore, as an example, once the outlets are open and you’ll be able to nip dead set purchase a lot of credit Hangzhou, (2012).

Among the essential roles of business is creating investment selections and it’s judicious they place into thought the other current assets for growth additionally as finances to accumulate new machines which can match into or move with new technology. Mclaney, (2009), urges that a mutual increase within the level of operations mean a requirement for larger levels of money. Each of the developed and developing countries looks to own embraced the system of the post-paid request.

In Africa, as declared on top of, the African nation was the primary country to adopt the system of the post-paid request. They aimed to provide power to an enormous variety of low-income earners and geographically detached voters with the new technology.

1.1.3 Revenue assortment

An electricity power industry’s traditional business activities involve sales of electricity to its customers, and it incurs expenses associated with debt assortment, meter reading, request and dispatch of bills prices, disconnection and reconnection prices among others. In line with Casarin & Nicollier, (2008) among native electricity users indicate that payment ends up in client interests and reduce of debts in money records. There’s also a discount of operational and money prices on the part of service suppliers additionally as the higher allocation of and coming up with of resources for the buyer. Similarly, Mwaura (2010) argues that in Rwanda regarding electricity payment request system shows that revenue rose in the bike from US$ 261,000 in 1996 to US$ twenty two.9M in 2008. Alternatively, associated advantages discovered embrace inflated and timely revenue assortment and improved service delivery to electricity users. The assortment of revenue will either be done manually or through technology. Manual revenue assortment will have many body prices related to it. For example; risk of unhealthy debts, monthly request prices, revenue assortment prices, etc. of these operational prices has an on the spot impact on a firm’s operational profits.

Strategic introduction of technology in revenue assortment is certain to eliminate some operational prices, and this successively might cause money flows and improved revenue collection levels. Therefore, revenues that accrue to any organization involve acquisition of some costs that are in nature operational. Such prices are also high or low looking on the amount of technology in use in an exceedingly given organization. This additionally contains a direct impact on a firm’s earnings (Obura et al., 2012).

Gitman, (1986), argues that the majority of organizations attempt their best to use solely the available technology to hurry up money assortment being a significant component of assets. An exploration conducted on the way to speed up money assortment on all-large organizations within the United Kingdom showed that organization used safe-deposit box systems to hasten the method however over 1/2 tiny, medium enterprises avoided it because of connected high operating prices. The analysis additionally indicated that to collect resources conjointly to be used, over a simple fraction of all large businesses use concentration banking, with wire and facility transfers and cheques being the principal suggests that of moving cash from one bank to a different.

1.1.4 Prepaid Billing and Revenue Collection

All inclusive, bi-sectorial of both developed and third world developing countries income accumulation is without a doubt the vocation of organizations. It is of the quintessence that power utilities find a way to keep up enduring money moves through proceeded and upgraded charge presentment and installment. Convenient bill presentment and accumulation of installment thereof depicts the effectiveness of the utility in using its massive interest in resources. In this way, the more the income gathering is produced the high the odds that the organization is prevailing with regards to taking care of its operational expense as (Brealey et al., 2006) contended.

As indicated by Rajan (2002), reports that many nations universally are actualizing changes and rebuilding in the power supply industry to guarantee sound money related and operational execution. These change estimates go for facilitating the monetary weight on the Government of Ghana and guaranteeing the operational and money related proficiency of the organization with regards to Ghana, (Ahene, et al.,2005) note that, throughout the years, the Electricity Company of Ghana has additionally embraced a few changes activities including rebuilding and corporatization. Nonetheless, because of an objectionable income exhibition of the organization, the reality remains that the administration still needs to spend intensely on power sponsorship. For example, in 2012 alone, the administration burned through 179.7 million Ghanaian in purchaser sponsorships for water and power, a move that adequately suspended the quarterly rate change formula1, which is frequently connected by the Public Utility Regulatory Commission PURC; B&FT, (2013).

The Electricity Company of Ghana is unfit to raise genuinely necessary income to meet its operational expense due chiefly to negative bill installment conduct of its clients. The compounding income circumstance has even as of late compelled the organization’s endeavors in financing speculations through corporate securities B&FT, (2013). Although the legislature is spending colossal totals of cash in sponsoring the expense of utility devoured by the general population (particularly, poor people) through social square duty framework Boakye and Nyieku, (2010), the organization still stays unfit to meet its income accumulation target. Indeed, even minor increments in levies to improve income circumstance have dependably brought about client disappointment and modern distress.

Any business needs to actualize sound money related techniques in gathering incomes. Money related soundness involves proficiency and adequacy in the running of an association’s incomes and expenses. Legitimate administration of operational expenses in any association is basic since it will include fitness in income accumulation productivity just as limiting expenses related to income collection (Brigham et al., 2005).

Then again, prepaid charging framework is a decent administration to the client and for the benefit of the organization in light of the fact. Therefore, there are sure costs that will be maintained a strategic distance from for charging ahead of time for a given administration or great since this is where an administration or a decent is expended in the wake of paying for it. A precedent is costs related with terrible obligations which may prompt expanded dimensions of income just as cut down some operational expenses for a given association Ogujor and Otosowie, (2010). Income gathering components generally rely upon associations the executives’ systems and capacities Gitman, (1986).

1.2 Statement of the Problem

Internationally, a large portion of intensity age organizations has been endeavoring to improve their financial position throughout the years. There have been instances of intensity robbery and delinquency of month to month bills. One of the significant enhancements went for fixing income spillages is progressing from conventional post-paid meters to prepaid meters and eventually programmed Meter Reading. The prepayment metering framework gives a viable and productive income the executives. This advantages the supply organization through ensured installment for power conveyed, with diminished income gathering costs and propelled money accumulation, while in the meantime empowering clients to get ready for their power utilization (KPLC, 2012).

An examination done by (KPLC, 2013) demonstrated that Tanzania Electric Supply Company was owed over Sh330 billion by foundations and people in unpaid for power because of the absence of income accumulation. Further, because of post-paid the overseeing executive of TANESCO said that singular clients and private foundations owed the organization 104bn shillings as at sixteenth Jan 2014. A study by Ogujor and Otosowie (2010) in Nigeria uncovers that presentation of the prepaid meters expands income accumulation. The investigation additionally uncovers that the presentation of prepaid meters lessens income age since it is consistent quality based.

Kenya Power and Lighting Company acquainted paid ahead of time metering with improving clients satisfaction(KPLC, 2013) this was vital in checking various difficulties related with the postpaid power metering framework, related of being accused of a lot of client grumblings (KPLC,2009).To add on this, vitality arrangement organizations are unfit to keep the trail of the changing interest for local buyers as some face issues of being invoiced for bills that have just been paid just as poor dependability of power arrangement. Credit deals open an element to credit chance and pull in extra costs which should be killed if the prepaid charging framework was received. Also, power clients face issues of being charged for what that have just been paid. A business element can embrace a paid ahead of time metering arrangement of gathering income to improve its income gathering abilities as dispose of some income accumulation costs. Execution of prepaid charging framework in income accumulation will, at last, observe the business move to a prepaid framework where the customer base will be required to buy power ahead of time (Obura et al., 2012). Therefore, costs related to income gathering are required to be consolidated or dispensed with out and out.

An investigation by Gitman, (1986) demonstrated that some business elements stay away from a given arrangement of gathering income because of connected high working expenses. Nearby examinations done included Sathyamoorthi and Mburu, (2014), the investigation looked to research the clients’ discernment, and the hierarchical job in dealing with the change from post-paid to prepaid models and the discoveries uncover that KPLC’s improved administration conveyance empowered clients’ to purchase power at moderate costs. The administration conveyance empowered them to purchase token units and ‘sambaza’ it to a companion, they can spending plan and control their power utilization on the month to month premise, they are content with the greater part of the administrations given in prepaid stage. Accessible experimental examinations have not evaluated the impacts of the prepaid meter on income gathering at KPLC. Along these lines, the exploration question for this investigation will be; what is the impact of prepaid meters on income gathering at KPLC?

1.3 Objectives of the Study

1.3.1 General Objectives

To learn the impact of prepaid meters on income accumulation at Kenya Power and Lighting Company.

1.3.2 Specific Objectives

To decide the impact of prepaid meters accumulation costs on the income gathering at Kenya Power.

To decide the impact of prepaid meters consistent quality on the income accumulation at Kenya Power.

To research the impact of prepaid meter adaptability on the income accumulation at Kenya Power.

1.4 Research Questions

What is the impact of prepaid meters accumulation costs on the income gathering at KPLC?

What is the impact of prepaid meters consistent quality on the income accumulation at Kenya Power?

What is the impact of prepaid meters adaptability on the income gathering at Kenya Power?

1.5 Justification of the Research

Kenya brags of a dynamic open segment in which regions establish a noteworthy part under the Constitution of Kenya 2010 that accommodates the reverted dimensions of administration. With extra information and reinforced frameworks for prepaid administrations and income gathering adequately, Kiambu County will show its enormous potential and impact worth replication by different areas. This investigation will create more information on income accumulation productivity because of execution of prepaid administrations among the open division in the regions and further use proof based gathering expenses and precision charging framework by the open segment with the principle point of fortifying by and large administration endeavors. The discoveries will likewise feature consistent quality and adaptability subsequently to manage the required activities, adequacy, and effectiveness on income gathering. The extra learning will give the establishment to future examinations and investigation by researchers in the progressing journey for viable prepaid frameworks in all areas.

 

1.6 Scope and Limitations of the Study

The investigation tends to the point ‘the impacts of prepaid meters on income accumulation in Kiambu County. The examination is restricted to looking at the job of KPLC as the main power creating an organization in Kenya. Because of money related and time imperatives, the investigation won’t achieve all partners in Kenya Power and Lighting Company in Kenya; anyway, the analyst will guarantee utilization of an agent test to find out a summed up point of view on the factors under examination.

1.7 Significance of the Study

This investigation learns the impacts of prepaid meters on income accumulation in KPLC in Kiambu County to decide the state, holes, difficulties, openings and tentative arrangements. The examination discoveries educated proposals for accumulations cost, dependability and adaptability in the income gathering proficiency going for the usage of prepaid meters by KPLC as a reason for, by and large, unmistakable open division development and improvement for the power producing organizations all inclusive. The investigation likewise gives a stage to future examinations and furthermore fill in as a wellspring of reference for scientists in the field of income gathering through prepaid framework by open and also private part in Kiambu County.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

This chapter primarily can cowl the theoretical and empirical review of this study. It supports the literature behind the paid meter system and therefore the role it plays in the implementation of the general public sector comes through correct versatile, reliable and assortment prices on revenue collection potency. It additionally offers background on however paid systems acts as a modulator of those freelance variables.

2.2 Theoretical Review

2.2.1 Technology Acceptance Theory

The Technology Acceptance development was developed by Davis (1989) and based its arguments on the fact that perceived usefulness and perceived simple use are relevant aspects for laptop acceptance behaviors. In line with (Igbaria et al., 1997), this technology is on the fact that perceived use and perceived simple use are relevant aspects for laptop acceptance behaviors. Therefore, this theory is often applied within the perspective to the other technological improvement in the context of perception and satisfactoriness, whereby the system use is generally determined by a person’s angle towards the system.

A data systems theory suggests their call regarding however and once they can use it. (Lu et al., 2004) argues that, paid meters assumes perceived quality or the degree to that an individual believes that employing a specific system would be freed from the influence of pre-existing external variables like security considerations, convenience as a primary determinant for the adoption of a replacement technology. Most of the researchers use this theoretical model as a result of it explains; however users come back to accept and use technology simply. Therefore, perceived simple use could have an on the spot impact on perceived quality and each confirm the consumer’s angle to the utilization of paid meter system. Additionally, convenience in use of paid meters is also as a result of the potency achieved through the adoption of recent technology. As a result, this ends up in activity and actual use of the system. This study will assume that maybe the derived convenience and potency derived from adopting a replacement technology on paid meters which will be the idea of reducing all prices associated to demand and provider of electricity and impact completely on the gain. Therefore, this theory is incredibly necessary to the study since African country Power aimed toward rising its services from manual means of things to digitalization method that is post-free to paid models. This technology is convenient and economical that within the longer finish reduces all prices associated with providing and demanding of electricity by African country Power and more bring profit to the management and provides direct perception quality on customers’ satisfaction by use of the new technology.

2.2.2 Expectancy Disconfirmation Theory

The Expectancy Disconfirmation Theory (EDT) was developed by Joseph Oliver (2007), and in line with Joseph Oliver (2010), theory of expectancy disconfirmation implies that buyers buy merchandise and services with pre-purchase prospect concerning the expected performance and therefore the expectation level is employed as a typical against that the merchandise or service is judged. That is, once the merchandise or service has been consumed, the results are compared aboard expectations. dynasty & Cheung (2002) in theory determine expectancy as an essential characteristic within the perceived value of post-paid metering, that completely influences consumers’ enthusiasm to use post-paid metering. Wan, Luk & Chow (2005) make sure that expectancy encompasses a major impact on customers’ adoption of post-paid metering in (Hong Kong. Lee et al., 2005) notice that buyers acknowledge expectancy to be Associate in the Nursing key determinant of intent to accept post-paid metering services. Likewise, Yu & Lo (2007) ascertain that perceived expectancy considerably influences consumers’ actual behavior to post-paid metering. Therefore, this theory is critical to the current study as a result of its concerning pre-purchase expectation and in line with the post-paid meters system that is either advantage to each the African country Power. Likewise, Kenya Power purchasers or for disadvantage once examination between the post and prepaid system, which means what is the result of putt the charging system in situ.

2.2.3 Value-Percept inequality Theory

This theory was originally developed by John Locke (2007), and it asserts that customer’s fulfillment or chafe could be a poignant reaction triggered by a cognitive-evaluative method within which the perceptions of our beliefs a couple of condition, deed or object are compared to one’s wishes, wants, desires and values. Customers seek the realization of values, i.e., the responsibleness and accessibility of post-paid metering system of electricity, and so, these events are merely tested against the degree to that they meet the customer’s values. The merchandise or service could gift a lot of-of Associate in Nursing attribute or result than what’s most well-liked, this has no impact on happiness unless this facet causes a blockage within the realization of another worth (Ontomwa, 2014). The smaller the inequality between percepts of the thing, action, or condition, and one’s values a lot of favorable the analysis and therefore the larger the generation of positive impact related to attainment of the goal, i.e., satisfaction as John Locke (2009), argues. Conversely, the larger the value-percept inequality, the less favorable the analysis, the less the generation of positive impact, and therefore the larger the generation of negative impact connected with real disappointment (Griffin & Hauser; 2006). The importance of this theory to the study is that it will attain values on analysis of many challenges facing African country Power whereas mistreatment post-free charge system that has not been reliable and accessible to most of the electricity customers. This analysis is putting a lot of stress on the post-paid charge that according to the research is looked as if it would be more reliable and accessible.

2.2.4 Cognitive Dissonance Theory

The development of cognitive dissonance theory originally declared by Festinger (1957) has been quickly adopted by client behavior study describing it as a psychologically uncomfortable state of affairs arising from the survival of different relations on either dissonant or non-fitting among cognitive basics. The speculation of psychological feature dissonance proposes that individuals have a psychological feature force to cut back discord by dynamic their attitudes, beliefs, and behaviors, or by justifying or rationalizing them. in keeping with (Kenya Power Annual Report, 2009), most customers particularly those living in the rented house wherever meter sharing is common are whiny that since they began victimization the paid meter, they pay over usual. They feel that the paid meter run quickly and that they pay to double the maximum amount as what they accustomed spend on the post-paid meter. Several customers believe that this money and carry system has created life a touch tough since they forever should take into account it on daily lives in contrast to the paid wherever they might settle in elements.

Therefore, Festinger, (1957) argues that cognitive dissonance theory is a painful feeling caused by holding two conflicting concepts at the same time and therefore, unconcealed high analytic power in explaining the state of discomfort consumers are frequently in once they created a buying deal. Customer’s satisfaction in power provide by African country Power within the use of the paid metering system is additionally supported the psychological feature dissonance theory. There was a perception by the customers that the paid metering system would be reliable and value effectively. The speculation assumed that the customers’ expectations were high within the effectiveness of the paid metering system particularly as a result of they thought it might be cheaper than the previous metering system. Thus, in keeping with this theory, it’s necessary to possess a reliable and value effective charge system since the paid system gave most satisfaction as compared to the post- paid system. Similarly, the African country power could improve revenue assortment because of providing quality services to the shopper and reciprocally more sales and revenue further.

2.3 Empirical Review

2.3.1 Prepaid Meters Collection Costs and Revenue Collection

Globally, exact research exists on the utilization of prepaid meters in power free market activity with an exceptional spotlight on income gathering of the providing organizations. As indicated by Shah and Tewari (2003) prepaid framework has different monetary fortunes to the influence provider and clients. The points of view of Chandler (2005) trust that prepaid framework results in blended money related fortunes to vitality supplier and purchasers. From the vitality suppliers see for example since the installment is made other utilization prepayment frameworks, this may result in a reduction in metering, charging and separation and reconnection cost bringing about a huge improvement in income gathering and a decrease in working capital. From the client’s perspective, the control of vitality to use in prepaid framework may result in better comprehension of how much power they are expending and all the more significantly in spending the executives. An investigation done by Dadzie (2012) on mindfulness and worthiness by the purchasers on the utilization of prepaid meter in Accra Ghana, the primary point of this examination was to improve client agreeableness by deciding the dimension of the adequacy of prepaid meters. The analyst examined the variables clients consider preceding tolerating the utilization of prepaid meters and decide the boarding procedure in advancing prepaid use and reasoned that one of the significant discoveries in the investigation is that clients think about a general number of elements before tolerating the utilization of prepaid meter. One of these variables is charging precision. Likewise, the examination demonstrated that there used to be installment alternatives accessible to clients with a standard credit meter other than basically paying bills falling behind financially. Even though the measure of the prepayments under these choices smooth’s the client’s installments, it isn’t straightforwardly associated with power utilization. These installment alternatives did not give the equivalent immediate connection between power utilization choices and the subsequent recurrence and measure of prepayment. Prepayment meters likewise changed the relationship that existed among clients and power retailers, with clients accepting more noteworthy accountability for dealing with their very own power utilization. Dadzie (2012) proposed that to improve client worthiness on the utilization of prepaid meters; the administration ought to consider improving strength and access to prepaid meter distributing focuses. An examination directed by the Allen Consulting Group (2009) on the qualities of prepayment meters that differentiate them from the typical credit meters, showed one of a kind attributes that clients are required to pay for power before utilization. Once more, the prepayment framework included clients all the more effective in their power supplies. These attributes of prepayment meters have essential ramifications on power for private clients. Pamela and Salihu, (2010) led an examination assessing the result of ICT on advancement concentrating on prepaid power charging. The pair underscored the degree to which the prepaid power framework added to upgrading individuals’ opportunity to take an interest being developed exercises and after that inferred a few ramifications on financial advancement. An examination directed by Nicollier and Casarin, (2008) a study among neighborhood power clients found an improvement in welfare through utilization of prepaid meter framework. Also, the examination builds up additional advantages of the prepaid framework which incorporate; decrease of extraordinary sums, operational and money related expenses on the Kenya Power Company and improved distribution of assets for the customer. (Estache, et al. 2000) infer that one preferred standpoint of the prepaid framework is expanding hierarchical gathering costs precision which would prompt lower levies and improve the net revenues.

It is clear that a few factors that influence the expense of power are past the organization’s control (Reuters, November 23, 2009). Subsequently, it is hard to direct the expense of power inside. Business Daily, (May 28, 2013) revealed that the expense of associating new clients in Kenya has tripled since it was last assessed in 2004. This has stopped potential clients and therefore diminished the organization’s benefits. It is further detailed that Kenya Power lost cash each time it associates another client albeit neglecting to interface new clients leaves duty increase as the main wellspring of pay for the organization.

Shaw, (2011) affirms that the new prepayment meters lessen debasement inside positions along these lines are progressively exact accordingly enabling buyers to depend exclusively on the strategy subsequently trust the power organizations. Since clients will pay their bills forthright, debasement regarding gathering fix to associate defaulting clients is bitten by bit finishing. The new vitality meters have the capacity of naturally disengaging purchasers once they come up short on vitality credit. Ringer, (2004) contends that the prepayment meter is increasingly precise to the buyer since it improves more control. Vitality purchasers can get along these lines control their vitality utilization. If they end up utilizing additional vitality, they can diminish their vitality utilization by choosing what to remove on.

There are some privately situated looks into that have been done on the related topic. Power Regulation of Uganda (2011) led an examination and inferred that the paid ahead of time metering framework utilized by Umeme had assumed an essential job in that it has significantly decreased misfortunes in the organization. In its misfortune decrease procedure for 2006-2009, Umeme perceived that non-specialized misfortunes would be diminished after the usage of the prepaid framework (Ontomwa, 2014). The investigation discoveries were that the charging effectiveness proportion is an essential parameter on deciding the effect of the prepaid framework examination on misfortune decrease on which Umeme execution can be observed. Another interrelated examination is done by Mwaura (2010) on power prepaid charging framework reception to diminish non-specialized vitality misfortunes in Uganda found that the prepaid framework decreased power robbery and the advantages surpass cost. Even though the examination by Mwaura contrasted Rwanda’s involvement and that of Uganda, the discoveries showed that non-specialized misfortunes and money related misfortunes, for example, income accumulation misfortunes including awful obligations were decreased. Ontomwa (2014) directed an examination on the impact of prepaid charging framework and income accumulation costs and reasoned that there is a decrease of income gathering costs and further prescribes that Kenya Power should change over more meters into paid ahead of time, as it will improve its income gathering abilities in the meantime lessen costs related with accumulation.

Moki (2012) directed an examination on the connection between prepaid power charging and working capital administration at Kenya Power Company somewhere in the range of 2009 and 2012. The investigation was performed on three years information and built up that both negative and positive connection between prepaid charging framework and working capital administration exists and that prepaid charging framework has an extensive negative association with the normal accumulation time frame. The normal installment time frame and money transformation cycle were found to have a negative however non-critical association with the prepaid charging framework. His general and hypothetical desire for a positive non-noteworthy relationship concerning stock turnover in days brought struggle his with experimental discoveries. The investigator decided that this framework ought to be presented as a method for income accumulation or obligation the board until an impressive number is accomplished and when the relationship with other working capital components, for example, money change cycle and normal installment period culminate.

The greater part of the areas presented prepaid power charging framework with the point of expanding power vitality association with low salary family units and to enhance income accumulation. In spite of clear destinations concerning the presentation of prepaid electric charging, there are no clear rules on whether the equivalent has ever been accomplished, and if not, reasons given, and this likewise applies to Kenya Power Company. Barsky, (2010) expressed that utilization of post-paid power meters in nations like South Africa in the time of more than two may point to conceivable difficulties, henceforth the selection of prepaid meters and subsequently Rogers (2005) in his view, vanquishes with Barsky that the framework, in general, ought to be financially savvy to encourage organization on a vast volume.

 

The part of gathering cost is generally a positive relationship to the specialist since prepaid framework can affect the Kenya control monetary feasibility by diminishing working expenses for the utility, forthright money accumulation, decrease in client objections, odd hour grievances, disappointment rate of meters which is a practical and simple approach to begin and scale in a territory deal.

2.3.2 Prepaid Meter Reliability and Revenue Collection

Prepaid meter reliability means maintaining adequate resources to supply customers with an around-the-clock way to obtain electricity at the correct voltage and frequency. Additionally, it’s a gauge of the potential of an electricity network, to withstand the unexpected or unanticipated losses in something component that may be due to natural or human-made events. According to Bateson (2011), the reliability of power supply can be defined as the capacity to meet the electricity needs of customers even if unexpected equipment fails or other conditions reduce the total amount of available power supply. Reliability also involves a quick response to power outages. Besterfield et al. (2010) argued that providing reliable electricity supply is however extremely tough and requires continuous control of 1000s of generators. Ireland (2007) established that the energy source is deemed reliable when it generates electrical output and meets demand even at peak time. However, all energy sources have weaknesses and strengths, and therefore electricity utility companies have to have different resources of energy to boost electricity reliability. One of the major challenges faced by Kenya Power is not enough reliability of electricity supply that has led to looking energy mixture combination of alternate energy sources such as wind, gas, solar, nuclear, coal and hydro. According to (Kenya Power Annual Report, 2013) electricity industry in Kenya relies mainly on renewable energy sources like hydro, oil and geothermal power, it’s in the process of replacing overhead lines in the central business districts and environs with underground cables to improve on the electricity reliability on the customers. Additionally, underground cables are less vulnerable to faults due to strong winds, heavy rains, and fallen trees. Kenya Power can be in the process of building new substations to bring power nearer to the client (KPLC, 2014). Based on the empirical studies above there’s a poor relationship on providing reliable electricity as Kenya power energy resources have weakness and strengths. But on the other hand, Kenya power is improving on renewable energy sources to provide reliable electricity to its customers.

2.3.3 Prepaid Meter Flexibility and Revenue Collection

According to Stoner (2009), prepaid electricity metering was applied in South Africa in the mid-1980s to supply electric capacity to low income areas at a fair ration. Driven by a concern for universal service in utilities, firms and regulators are motivated to spot technological and regulatory options directed at encouraging access and which makes it easier for consumers to cover their services. Prepaid electricity system requires the consumers to use energy only if they’ve credit in the electricity account and the supply automatically disconnects when such credit is exhausted. At the convention, the customer tops up to enjoy the service.

In 2009, the Kenya power launched on a pilot basis pre-paid electricity meters for domestic users within the Nairobi area and Kisumu town with an initial connection to 24,000 households (Ogujor, 2007). The flexible prepaid billing system is beneficial both to the customer and to the company because certain costs such as costs related to bad debts can be avoided by paying in advance. This will result in a growth in quantities of revenue along with the lowering of some operational costs for certain organization Otosowie, (2010). As earlier stated by the researcher and from related studies, revenue collection methods in any organization largely are dependent upon its management’s strategies and capabilities. These studies are proving positive relationship to the researcher since the provision of flexible electricity in the prepaid meter system by Kenya power provide good services to the customer and also for the great of KPLC.

2.4 Conceptual Framework

This part will represent the comprehension of the researcher on how the particular variables in this study relate with each other. Thus, it identifies the mandatory variables in the research investigation. A conceptual framework is the researcher’s “map” in pursuing the research on the independent variables like the numerous ramifications of prepaid electricity meters on revenue collection at Kenya Power and Lighting Company.

2.5 Summary of Literature Reviewed and Gaps

The idea of a prepaid system is relatively new in Kenya, and also this includes the prepaid electricity meters. Several studies have already been carried out in a mention of prepaid meter system, but from the overview of local literature, little has been done in Kenya showing the results of prepaid meters system on revenue collection. Ontomwa, (2014) notes that a lot of global and local literature has concentrated on the qualitative aspects of prepayment, such as opinion and perceptions of the prepaid users and acceptability of the prepaid system, but the quantitative aspects of prepaid billing system have not been adequately explored. To the best of my knowledge, no such work has been done regarding the effect of prepaid meter system on revenue collection, and henceforth, no such research has been done on the effect of prepaid electricity meter system on revenue collection, at all. Therefore, this study seeks to determine the effect of prepaid electricity meters on revenue collection at Kenya Power and Lighting Company and disclose the connection that could exist between these parameters.

 

 

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter will cover the research design, the populace study, sample procedures, sampling procedure and data collection instruments, sources of data, data collection procedure and data analysis procedure. The chapter also gives an in-depth analysis or methods applied in the research work.

3.2 Research Design

Cooper and Schindler (2014) define research design as a blueprint for the collection, measurement, and analysis of data. It might also refer to the master plan, organization and structure of investigation intended for obtaining relevant answers to research questions or simply just a construction guiding analysis of data collected from the field (Otieno, 2018). In a nutshell, the research design or plan constitutes the master program of the research and comprises an outline of what the researcher will do from the onset of the writing of the research questions or specific objectives to the last analysis of data”.The descriptive research design is likely to be employed in this study. The descriptive research approach contains purely describing their state of affairs or things as they are and is mainly formalized with the substantial structure or research questions to be answered. Descriptive studies in various researches are used to describe phenomena related to a subject population or to lay an estimated proportion of the populace that has certain characteristics Cooper & Schindler, (2014). The attempts in descriptive approach are to explain characteristics of an event or situation or either a group of elements in a population thereby describing a certain state of affairs as fully and as carefully as you possibly can Thapa, (2013). A descriptive study as utilized by an investigator is carefully made for ensuring a very comprehensive description of the specific situation and can either involve the collection and analysis of qualitative information or quantitative data. The study will gather quantitative data from Kenya Power and Lightning Company employees working at customer support department, Kiambu County, Kenya. The reason being quantitative data is always number-based and usually less in-depth but more breadth of information across cutting a sizable number of cases. It sticks out as more objective than qualitative since it provides observed ramifications of an application on an issue or condition. The researcher is guaranteed to get fixed responses, and various statistical tests in the analysis are possible with the utilization of quantitative data (Ekanem, 2010).

3.3 Targeted Population

The researcher is targeting a population of 240 KPLC employees employed in the consumer service department, Kiambu County. According to (David, 2017) a writer of Statistics Solutions, population refers to the broader number of people whom the researcher intends to generalize the outcome of the study. Otieno, (2018) in his study defines population an all-inclusive number of the events, people or things of interest that the researcher wishes to examine in virtually any study and to encompass all the weather about that your researcher wishes or is enthusiastic about making some inferences predicated on sample statistics. The population may also mean a group comprising or covering some potential measurements or including not only those cases being observed but also the potentially observable ones. Thus, it remains the entire number of certain individuals of interest, events or objects bearing distinct and common observable characteristic or set of men and women, well-defined elements, events or services, Kithae, (2012), Sekaran & Bougie, (2013).

3.4 Sampling Design

Sampling as a process mainly involves predetermining the number of observations to be obtained from an identified population. It may also be referred to as the process through which a somewhat few individual object or event is selected, identified and analyzed. The desire to of sampling is to get awareness about some features, qualities or attributes of the vast population based on the characteristics of the identified sample. An example size of 124 will undoubtedly be preferred to a targeted population of size 240 due to the lower costs and the likelihood of greater speed of data collection in a certain timeframe (Mugenda & Mugenda, 2010). The probability sampling employed in the research will undoubtedly be stratified random sampling since the population from that your samples will undoubtedly be picked don’t constitute a homogeneous assemblage, you will see different kinds of the electricity billing system. Stratified random sampling will undoubtedly be preferred because it provides data to analyze a group of KPLC employees working at customer services from different KPLC regions at Kiambu County, facilitates the use of different methods in strata thereby enabling the researcher to comfortably and easily control sample size in the strata (Kithae, 2012).

The analysis uses proportionate stratified random sampling because of advantages such as greater statistical efficiency, easier to hold out and capable of providing a self-weighting sample, and therefore the population means could be approximated by simply calculating the mean of most entire sample cases. A larger precision will make certain that this sort of sampling technique is a representative sample.

3.5 Data Collection Methods

The analysis will adopt a cross-sectional survey structure in collecting data from respondents in the field. (Wanjora, 2010; Cooper & Schindler, 2014). A self-administered questionnaire will soon be used to collect data. The structure of the questionnaire will comprise of open and closed questions because it is a simple method for the response to provide information. Sekaran & Bougie (2013), asserts that the questionnaire is a pre-formulated written group of questions to which respondents record their responses.

3.6 Validity and Reliability Tests

Sample questionnaire will soon be put through piloting test a few weeks before administration. By Cooper and Schindler (2014),; “pilot testing is mainly conducted to greatly help the researcher detect any weakness in design and instrumentation along with providing proxy data for the choice of probability sample”.Approximately, fifteen copies of printed questionnaires will directly be sent to the few KPLC regions in Nairobi County for pilot testing fourteen days before the particular data collection time. When the pilot test is soon done, it will see that the respondents were sensitive to a duration questionnaire and growth related questions about the three variables of the study were not quite clear. A modification/correction will soon be done. After the pilot test, and questionnaire instrument modification, copies of the questionnaire will be used to the region of study and will soon be distributed right to the KPLC customers using the prepaid system. Sekaran & Bougie (2013), argue that the key advantage of the personally administered questionnaire is that the researcher or sometimes a person in the study team can gather all completed responses within the shortest time possible and any query or doubt arising from respondent can be clarified immediately. The researcher uses Cronbach Alpha (α) to try the validity of the study instrument. To assess the validity of the information collection instruments an interior consistency technique using Cronbach’s alpha will soon be applied. By George & Mallery, (2003) Cronbach’s alpha of 0.7 or above is reliable. To try the reliability of the study instruments, test re-test technique will soon be used.

3.8 Diagnostic Tests

Diagnostic tests will be conducted, and after that regression analysis will be performed. These will be conducted to test perhaps the data collected respected the assumptions of regression analysis. The tests which are performed include tests for multicollinearity and normality of residuals.

3.8.1 Multicollinearity Test

In statistics, multicollinearity also called collinearity is a phenomenon in which predictor variable in a multiple regression model can be linearly predicted from the other with an amazing level of accuracy. Multicollinearity commonly occurs when you will find high correlations between several predictor variables. This means, one predictor variable can be utilized to predict the other creating redundant information and skewing the results in a regression model. Examples include; person’s weight and height, year of manufacture and sale of a vehicle or degree of education and the annual income. Multicollinearity will be calculated and detected by using correlation coefficients for many sets of the predictor variable. If the correlation coefficient r is strictly +1 or -1, that is called perfect multicollinearity, if r is close to or exactly -1 or +1, one of many variables should be removed from the model whenever that is possible. Therefore, before the regression analysis is conducted, the multicollinearity of the variables will be tested.

3.8.2 Normal P-P Plot

The normal probability plot, by (Chambers et al., 1983) is a visual technique for assessing whether a data set is approximately normally distributed. The data are plotted against a theoretical normal distribution in this way that the points should form an estimated straight line. The P-P plots are vastly used to gauge the skewness of a distribution. After the regression model is run, the normality of errors will be tested if the research will apply the Normal P-P plot of regression standardized residual.