Implications of residential electricity theft, detection and enforcement: Corruption of consumers and agents

Abstract

This paper analyses the economic impact of residential electricity theft. Theft and corruption are common in electricity distribution systems worldwide. Electricity theft form part of the revenue protection objectives in the electricity sector. The paper examines the processes adopted for prevention of residential electricity theft in the Sedibeng District Municipality (SDM). Electricity theft in this paper is considered as any kind of fraudulent use of electricity. The irregularities in electricity sector mainly stems from the socio-political structure and institutional governance of the operating utilities. Residential electricity theft occurs wherein consumers (client) and utility employees (agents) collude for their respective gains, thereby causing loss to the utility/government (principal). Consumers dishonesty inhibit the utility from receiving the full price of the power it sold, which harms the financial health of local distribution companies and franchises, creating deleterious effects on future investments in the power sector and local economic growth. Besides examining detection and enforcement processes, this paper argues that corruption not only stifles growth, it also perpetuates or deepens inequality, as the few amass power and wealth at the expense of the many. To this extent, the paper hopes to unpack the anatomy of electricity theft through analyses of pertinent literature and interview survey results from the Vereeniging branch of the SDM.