Bonfring International Journal of Power Systems and Integrated Circuits, Vol.

1, Special Issue, December 2011 26

ISSN 2250 1088 | 2011 Bonfring

Abstract--- Developing countries, especially the BRICS
(Brazil, Russia, India, China and South Africa) set off a
process of economic development and social inclusion,
leading to the creation of a burgeoning middle class eager
and able to purchase goods, services and facilities like electric
power with high-quality. Brazil faces now a new arrangement
of the society in economic terms, but still has problems with
culture and governance of communities in areas which were
dominated by crime, drug dealers, especially in Rio de
Janeiro. In Rio, the state government occupied these areas
with a special task force police denominated UPP (Unit of
Pacification Police). The occupation is like a war strategy, but
it is the first step of a process that should be concluded with
social inclusion. This is an opportunity to many companies,
especially the utilities to include new clients in a formal way.
But there are challenges to be solved to guarantee the
sustainability of this process. Social stratification is not
enough to address and define the behavior of these new
customers. The diversity of behavior found in this social group
impacts the utilities operations in terms of non-technical
losses increasing. In the electrical sector, the culture of non-
payment for public services elevates total losses to levels
higher than 50%. The inclusion of this new middle class is
fundamental for the reduction of the non-technical losses. To
achieve this, the utility companies face a threefold challenge:
(i) to fully include the group in economic, social and digitally
terms; (ii) to maintain them as regular customers in
compliance with the contractual obligations implied in the
electricity supply; and (iii) to educate them in energy
efficiency. Through the VI Energy Efficiency Program, created
by Change through Digital Inclusion (CDI) for The Light
Company, a Brazilian Electricity Utility operating in Rio de
Janeiro State, these new included customers can make savings
upwards of 47kWh/month, representing a 22% saving in
energy.

Keywords--- Energy Efficiency, Energy Inclusion, Digital
Inclusion, Reduction in Non-Technical Losses, Social
Inclusion


Jose Edimilson Canaes, Director of Operation, CDI - Change through
Digital Inclusion, Rio de Janeiro, Brazil. E-mail: ed.canaes@cdi.org.br,
jose.canaes@usp.br
Jose Aquiles Grimoni, Associate professor at Polytechnic School, USP -
University of Sao Paulo, Sao Paulo, Brazil. E-mail: aquiles@pea.usp.br line
I. INTRODUCTION
HERE is a clear development of the economy in the
emerging countries like Brazil where a new "C" class is
eager for consumption of products and services. The present
economic class stratification in Brazil has a diamond shape.
This trend has been very fast as shown in Figure 1.



Figure 1: Economic Class Stratification in Brazil Source
The emerging Middle Class is the most relevant change in
economic stratification in Brazil, with the highest growth. The
future is popular: for each A or B individual, there are 9
from the C, D, or E Class (as the study made by [1]).
This is a great commercial opportunity in a scenario of poor
life standards. In Brazil, it is quite usual to have slums and
rich areas living almost without boundaries. But in fact they
are divided by virtual frontiers which are very difficult to
cross. The Figure 2 shows two photos of these areas, one in
Sao Paulo another in Rio de Janeiro, where rich and poor
people are living very close.


Figure 2: Two Examples of Social Situation in Latin America.
Slum Area in cities in Brazil, one in the Neighborhood of
Morumbi in Sao Paulo and other in the neighborhood of
Ipanema in Rio de Janeiro Photo: AES ELETROPAULO and
CDI NICK

Sustainable Programs for Inclusion of Low Income
Customers and Energy Efficiency Education
Jose Edimilson Canaes and Jose Aquiles Grimoni
T
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ISSN 2250 1088 | 2011 Bonfring
It is necessary to establish a new way of doing business,
from to sell to the poor to mutual value creation. It does
mean: physical presence in the community; partnership with
local institution; mutual value creation and co-creation with
community.
It is important to note that although the modification of
social stratification is quick, customs and culture of
informality still dominate much of society. Brazil is a huge
country here the way of soil occupation changes the behavior
of its society. The culture of non-payment permeates society
and reaches all economic classes. The fiscal costs and non-
technical losses of utilities companies raise the cost of the
electricity for the consumer. The price paid for the electric
power in Brazil for domestic purpose is one of the most
expensive in the world as shown in Table 1.
Table 1: The Domestic Electricity Price

SOURCE: Revista do BNDES (National Development Bank) ,
Rio De Janeiro, V. 14, N. 29, P. 435-474.
The issue of non-technical losses has several origins.
ALMEIDA et al. [2] did a study of the lifecycle of the defaults
in payment of consumed energy in Coelba, the electricity
utility of Bahia State in Brazil. Table 2 presents the main
causes of non-technical losses in the city of Salvador, the
capital of the state. The lifecycle can be simplified by the
following flow: fraud discovery with energy cutting ->
renegotiation -> reconnection -> consumption above payment
ability -> bad debt -> cut (after the legal period given by law)
-> theft -> fraud discovery and the lifecycle starts again.
The reasons for the culture of non-payment are diverse, but
the question of capacity payment of energy bills is the
predominant factor for the emerging classes, but not the only
one. Other problem is, for example, the challenge of
formalization. Many cities have areas dominated by crime,
like drug trafficking or militias (gangs formed by former
policemen) that control the small local businesses.
The question of understanding of energy uses, its cost and
relations with the utility companies includes for one side the
capacity of understanding of mathematical/physical concept
and on the other side the understanding of concepts of
citizenship in terms of rights and duties. The included
costumers need to understand the basics the energy
consumption and its cost impacts on their domestic budget.
According to [3], most people has a vague idea of how much
energy they consume and how much they could save in terms
of energy and money with simple changes in their day-by-day
activities and behaviors. These questions and concepts are
vague in poor communities or in the recently formalized
communities. Often people who live in these areas receive the
first home address with the electricity bill.
Usually, the municipality does not give address to people
who live in not formal areas. The people living in these areas
use a common address like the address of the Community
Center. But to formalize the electricity access, the utility
company is required to provide an address and this address is
the baseline for the exercise of citizenship, to help in the
process of employment, or even accessing the banking system
for credit.
Table 2: Non-Technical Losses in the City Of Salvador,
2004/2005



SOURCE:Almeida in [2]
II. THE PRESSURE TO DECREASE NON-TECHNICAL LOSSES
The process of formalization and regulatory pressures are
forcing the electricity utilities to reduce non-technical losses.
In the Brazilian electricity system, regulation by incentives is
also called "Price Cap" where National Agency of Electric
Energy (ANEEL) sets a ceiling for the rate that is adjusted for
inflation as a discounted index predetermined productivity
gain. The Agency is no longer recognizing the non-technical
loss, leading company's costs and consequently lowering their
profits.
The process of inclusion of client is part of the energy
efficiency programs. The Brazilian electricity utilities use the
fund that it contributes to the regulatory agency, to sponsor
this kind of project.
Normally, Efficiency Programs have a number of social
responsibility actions that are performed without linkages not
only between the utility companies but also without
coordination with local governments or NGOs. Although
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many of these programs are aimed to the base of the pyramid,
the utilities companies usually do not understand the potential
of these clients that are involved in the programs. Often the
disarticulation of the actions does not guarantee the inclusion
of customers with sustainability. This inclusion must be
accompanied by social inclusion with income-generating
actions and citizenship.
AES Eletropaulo Company, the electricity utility of Sao
Paulo city, in its report [4] One Step for Citizenship says
that Historically, utility companies have learned to expect
low or negative returns in providing services to low-income
people. Added to that, company managers have little
knowledge about the community's attempts to overcome
problems associated to the slums (land tenure issues, for
example, or the highly transitional nature of their inhabitants,
the sensation of being excluded from society and their
initiative to take the law into their own hands - as is the case
of illegal connections to the electricity distribution networks
In this same report, AES Eletropaulo Company presents
the results of energy efficiency program at the slum
community of Paraisopolis where the costumers
formalization aimed to integrate them in a more
comprehensive way. Another important program was
developed with Light Company, the utility of Rio de Janeiro,
where the NGO CDI (Change through Digital Inclusion)
developed a program to teach energy efficiency with digital
inclusion.
Founded in 1995, Change through Digital Inclusion (CDI)
uses technology as a medium to fight poverty, stimulate
entrepreneurship and create a new generation of change
agents [5]. Through its 821 CDI Community Centers in
Brazil and abroad (CDI operates in 13 countries including the
UK), the organization transforms lives and strengthens low-
income communities by empowering people with information
and communication technology.
Most CDI Community Centers are located in low-income
communities in both rural and urban areas. There are also
centers in prisons, institutions for the physically or mentally
disabled, indigenous and river-based communities, and
juvenile detention centers. The centers offer ITC courses,
employment programs and Internet Cyber Cafes for research,
to use online government services or for business use. In 2009,
CDI created for Light Rio de Janeiros utility company- a
tailored educational program addressing the sustainable use of
electricity. The program was implemented in CDI Community
Centers in Rio de Janeiro, located in many of the citys
poorest neighborhoods. The main goal of the Light Project
was to develop solutions for the sustainable inclusion and
formalization of non-paying users of the electricity network.
The creation of sustainable energy efficiency programs is,
for most Brazilian utilities, a new experience. The traditionally
programs are implemented in the form of short projects in
each community. One of the most important issues is to
perform actions to guarantee that new electrical energy
customers have the ability to pay for their consumption, while
maintaining a good quality of life and ensuring that their
consumption is environmentally sustainable.
This paper presents the Light Energy Efficiency Project;
lays out its contribution to scholars and technicians; describes
the main issues Brazilian electricity utilities face in low-
income communities and the methodology used by CDI to
develop and implement the project; in addition to discussing
the results obtained by the project.
III. LIGHT AND AES ELETROPAULO PROJECTS
The Light Company supplies electricity to around 6
million customers, while suffering from commercial losses of
around 40% in low voltage distribution, a level which it
desperately needs to decrease. The losses are mainly due to
non-official connections to its networks and fraudulent
practices in low-income areas, in particular in communities
dominated by drug trafficking, where the government has only
limited access.
AES Eletropaulo Company operates in the richest area of
Brazil, the city of Sao Paulo. In the Paraisopolis project, AES
Eletropaulo with the International Copper Association (ICA)
and the United Nations Agency for International Development
(USAID) launched the Slum Electrification and Loss
Reduction. The program was tested in two cities in two
countries (Sao Paulo, in Brazil, and Mumbai, in India). The
purpose was to evaluate sustainable and widely replicable
approaches for increasing access to electricity services for
low-income urban residents.
IV. CONTRIBUTIONS OF THE PAPER
The principle contribution of this paper is to demonstrate
the potential for integrating sustainability and energy
efficiency lessons into inclusion programs for new electricity
customers. The program was focused on empowering
customers through digital inclusion and activities to integrate
education and income generation.
Evaluations carried out during the Light Energy Efficiency
Project demonstrate that there is great potential for integrating
social actions with the technical activities of energy efficiency
programs. The awareness of a society based on concepts of
rights and duties can be created by empowering new
customers with opportunities for social and economic
integration. Such programs have the potential to definitively
break the culture of non-payment and, moreover the continued
social exclusion of these people.
V. SOCIAL-DIGITAL INCLUSION ENABLING ELECTRICAL
INCLUSION
CDIs educational programs are divided into seven
activities designed to improve understanding of energy
efficiency and to generate actions in the communities based on
the concepts of citizenship. The seven activities are:
Digital inclusion through informal courses where the
topic of energy efficiency is discussed as a cross-
cutting theme;
Community outreach through workshops, lectures,
and training courses for managers;
Providing a space for online activities in the
communities, where residents can research, access
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data on Internet and enter onto the online Energy
Efficiency Portal;
Actions to increase employability and stimulate
entrepreneurship;
The creation of an online Energy Efficiency Portal to
enable communication and the dissemination of the
better practices;
Holding events on energy efficiency in the
communities;
The creation and distribution of newsletters on energy
efficiency.
Digital inclusion is well recognized as a key generator of
social and economic development. According to the UN, the
installation of an Internet access point leads to an average rise
of 1% in the GNP of a previously unconnected area. Digital
inclusion has the potential to generate social inclusion,
increasing the compliance of electricity consumers by
improving their economic stability through better jobs and
entrepreneurship, while creating increased awareness and
ability to fulfill their rights and duties as citizens.
In Brazil and particularly in Rio de Janeiro, full inclusion
is normally attained when the new customer receives their
electricity bill at their new home address, something largely
unthinkable before the start of the ongoing pacification of the
citys favelas. The pacification program was initiated in 2008
and signifies an important step forward in improving the
socio-economic conditions of thousands of the citys poorest
residents.
VI. THE CULTURE OF NON-PAYMENT WORSENS DEFAULT
Most of Brazils electricity utilities endure high levels of
default derived from the non-payment culture prevalent in
major cities and even in rural areas. There are a variety of
reasons that account for the existence and growth of the
culture of non-payment in Brazil, which can vary from factors
in other countries that also experience widespread non-
payment of public utilities.
In South Africa the culture of non-payment flourished as a
form of protest against apartheid and has continued since the
end of the regime. This ongoing trend can in part be attributed
to the continuing economic segregation of the country.
In Brazil and particularly in the city of Rio de Janeiro,
non-payment in most instances is a result of non-official
connections to the electricity network. Such illegal
connections predominantly occur in low-income communities
controlled by drug trafficking rings. In such areas a technical
problem in the network takes on average, 10 times more to be
repaired than the normal standards. These poor conditions
encourage customers to find alternative sources of electricity
supply; in other words, a non-official connection to the
electricity network. In this sense, for the full inclusion (social,
electrical and digital) of low-income consumers, in particular
those living in areas formerly controlled by drug traffickers,
programs must have a far larger scope than ordinary customer
relations management. It is necessary to offer services that
transform excluded people into citizens with full rights and
responsibilities.

In addition, the cultural complexity of Brazilian society
generates other incidences of non-payment. Inspections
conducted by Brazilian electricity utilities have identified that
many residents of wealthy neighborhoods are employing
various strategies to avoid paying electricity bills, from non-
official connections to meter interference. According to these
findings, non-payment behavior extends from the low-income
communities dominated by drug dealers to the wealthy areas.
When addressing these issues in the favelas (slum areas) of
Rio de Janeiro, it is important to note the changes brought on
by the pacification process. This process entails the return of
state-funded services to these historically neglected
communities; such as policing, mail, electricity, water, public
transport and garbage collection. In many cases the state had
previously been unable to enter the areas due to their
domination by drug gangs, before the installation of Police
Pacification Units.
For the electricity utilities the main challenges relating to
these changes are (i) legalizing or/and regularizing the meters
and networks; (2) eliminating the non-payment culture
imbedded in these new customers through the installation of
special fraud-prevention equipment developed by the energy
industry; and (iii) educating residents on energy efficiency and
implementing energy efficiency programs, in most cases
funded through the regulatory contribution and the utilitys
own resources.
While most of the energy efficiency programs focus on
customers at the base of the social pyramid, utilities often fail
to understand the characteristics and needs of these new
customers.
Furthermore, the actions taken as part of these programs
usually lack sustainability, i.e. they lack the coordination,
range and depth of implementation needed to maintain the
synergies necessary to transform the behavior of these new
customers.
VII. THE MAIN COMPONENTS OF AES ELETROPAULOS
PROJECT
Aiming at ensuring a wide approach for the solutions, the
main components of AES Eletropaulos project were:
Assessment Framework created with the aid of a
data base to measure the socio-economic and financial
impacts of the pilot;
Actions to Educate, Communicate and Raise
Awareness focusing on engaging members of this
community in the electrification program and educate
consumers in energy-efficient practices;
Technological Development improvements in the
distribution system, including the installation of
meters and new anti-theft technologies, in addition to
implementing public lighting to replace inefficient
light bulbs and at improving safety in low-income
communities;
Energy Efficiency Measures assisting regularized
consumers to manage the efficient use of electric
power by implementing:
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Average investments and revenues per client is
showed in the table 3.
VIII. ELECTRICITY LOSSES
Total Losses of electrical power are the sum of
Technical and Commercial Losses. Studies by the
Institute Ascende Brasil [6], [7] indicate that energy theft and
non-payment of electricity bills generates losses of around
US$4 billion every year in Brazil. Non-technical losses are
also becoming a important issue globally, given the trend for
increased technical losses, predominantly in developing
countries.
Table 3: Results of the Eletropaulo Project



Source: ELETROPAULO [6]
IX. ECOSYSTEM FOR THE INCLUSION OF NEW CUSTOMERS
The transformation of electric energy users into integrated
and sustainable customers is a demand that goes beyond the
purely technical and requires the involvement of other
stakeholders [8]. The stakeholders should take part in a set of
actions for achieving sustainability, forming a network where
the synergies of an integrated program improve the
sustainability of the process of formalization and the
integration of new customers. The correct identification of
these stakeholders and with the right alignment of resources is
a difficult issue for most energy utilities. The activities
required to integrate these new customers should begin in poor
and marginalized communities, pass through different
stakeholders from investors but also partnerships with
government and civil entities. Local NGOs are often in a
strong position to carry out these actions, since they will
normally benefit from an ongoing and positive relationship
with the community and its leaders.
X. METHODOLOGY
CDI methodology is designed to empower students with
the tools they need to effect real changes in their lives and
communities: Digital Literacy + Civic Education +
Entrepreneurship. Most of the activities are conducted in CDI
Community Centers, which are founded on three principles:
that they are self-managed, that they are self-sustainable, and
that they implement CDIs educational approach. This unique
approach stipulates that by the end of each four-month course,
students will have used technology as the main tool to initiate,
plan, and implement a social action project. The project will
tackle an issue facing the students lives or communities that
has been collectively identified and decided on by the group.
The CDI Light programs seek to unite two areas; (i)
technical training aimed at changing energy consumption
behavior and, (ii) increased social awareness through the
exploration of the environmental & social implications of the
action and the consumers relationship with the electricity
company. The focus of this training is to stimulate positive
behavior change and to improve relations between the supplier
and its new customers.
The educational methodology is to promote social change
and not just to have computer skills. CDI developed the 5-step
Methodology and going through the 5-steps the students are
mobilized to better understand and improve their everyday
realities. The Figure 3 shows the three principles of the
methodology.



Figure 3: Pedagogic Methodology Developed by CDI
Change through Digital Applied in its Courses
XI. DISCUSSION
The project reached 17,295 people through a variety of
activities, including IT courses, film-showings and other
events, all addressing the theme of energy efficiency as
showed in [9]. As a result of the program, there were over
205,000 accesses to the Internet in the CDI Community
Centers, 384 people gained employment, 45 entrepreneurs
received coaching and 3,367 people were referred for formal
employment. The workshops reached communities in the
process of pacification and regularization. In total, 99 events
were held addressing the topic of energy efficiency, over
32,000 online newsletters were sent out and an online portal
on energy efficiency was created: www.energiasocial.org.br.
An evaluation of 1,161 participants who took part in
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educational activities as part of the project showed that each
student saved on average 47kWh per month after the course.
The evaluation was based on 7% of all project participants.
The Table 4 shows the total of the investment and the price of
each kWh consumption avoided.

Table-4: Summary of the Results Of Cdis Energy Efficiency
Program



A second evaluation focused on the question of increasing
the students income level. This evaluation was conducted
through interviews with 100 students from three centers. It
found that 40% of them increased their earnings from US$
576.00 to US$ 4,000.00 within a year of the project
XII. CONCLUSIONS
The results of the projects demonstrate that there is an
opportunity to bring Energy Efficiency Programs closer to the
consumer, to empower and inspire customers as citizens and
thereby ensure the long-term sustainability of their inclusion.
The two examples, Paraisopolis Project (with the AES
Eletropaulo Company) and Energy Efficiency Project of CDI
(with the Light Company) are using the new concepts (Figure
4) to include customers and giving them opportunities to
change their lives. The technology used, in these cases, allows
the total control of the energy consumption of the customer,
including connection and disconnection made at the central
station. But to have customers that control their consumption
and capacity of payment and good quality of life requires a
new approach of interactions with these clients. The new
approach is focus in the construction a better future not only a
good present. The construction of the future of the utility
company passes by the construction of the future of their
customers.
















Figure 4: New approach of the inclusion of new customers
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