From Postpaid to Prepaid Meters: How Our Estate Moved Utilities to a Third-Party Vendor and Protected Cash Flow

Why Our Sectional Title Estate Moved Its Utilities to a Third-Party Vendor

Managing utilities in a sectional title estate is never simple. When the body corporate holds the bulk accounts with Eskom and the City of Johannesburg, it pays for the whole estate's consumption up front, whether or not every owner has paid for what they use. Our estate in Fourways moved electricity, water and sanitation to a third-party utility vendor, so that each owner pays for their own consumption and the body corporate no longer carries those bulk accounts.

Here is how we did it, and what changed.

Step 1: Choosing the Right Utility Vendor

The first step was meeting with service providers and comparing quotes. Not all prepaid providers are equal. Many increase the unit rate or add hidden charges on top of Eskom's standard tariff. After careful evaluation, we chose Alpha Metering (Pty) Ltd because they charged the same Eskom rate per unit, with only a modest water service fee billed directly to the unit owner. Ask every provider for its full fee schedule and standard terms in writing before you decide.

Trustees followed the usual compliance and verification process, ensuring the provider met all requirements before moving forward.

Step 2: Special General Meeting (SGM)

Converting to prepaid meters required a special resolution. The Sectional Titles Schemes Management Act (STSMA s1, definition of "special resolution") requires at least 75%, calculated both in value and in number, of the votes of the members represented at the meeting. Once approved, Alpha Metering was appointed to begin installation.

Before you put a resolution to owners, check the prescribed management rules on pre-payment meters:

• PMR 29(4): a body corporate may install pre-payment meters on the authority of a special resolution, but all members and occupiers must be given at least 60 days' notice of the proposed resolution, with details of all costs and the estimated effect on the cost of the services over the next three years.
• PMR 29(5)(a): the body corporate is responsible for ensuring the system does not infringe the constitutional rights of occupiers to access basic services.

Step 3: Installation of Prepaid Meters

Alpha Metering's team went above and beyond during installation. Working on meter boxes that were over 20 years old, they ensured everything was completed to the highest standard.

What stood out most was the personal touch:

• They handed over keypads to every resident, assisting with the first load.
• They stayed late into the evenings so that everyone, including those who work long hours, could collect their keypad.
• They took special care with our elderly residents, patiently walking them through each step and making sure they felt comfortable using the new system.

From a resident's perspective, the transition felt seamless, even though the technical work behind the scenes was complex.

Step 4: Moving Water and Sanitation to the Vendor

The next step was moving water and sanitation (previously billed by the City of Johannesburg) to Alpha Metering. This change relieved the estate of the monthly burden of bulk municipal bills.

• Owners now pay deposits and are billed directly by Alpha Metering.
• Alpha Metering handles payments to the municipality.
• Cash flow strain and administrative overhead for the body corporate were reduced.

Why the Move Itself Protects Cash Flow

Under the old arrangement, the body corporate paid the bulk electricity and water accounts from the levy pool. Whenever an owner paid late, or not at all, the shortfall was funded by everyone else.

• Electricity: owners buy credit before they use it, so the body corporate is no longer exposed to unpaid consumption.
• Water and sanitation: owners are billed directly, with a deposit held by the vendor, so the body corporate no longer funds those bulk bills. The credit risk moves to the vendor.
• Administration: trustees and the managing agent no longer reconcile and chase utility consumption.

We have not put a rand value on this for the post, so read it as our estate's experience rather than a guaranteed saving. When you compare vendors, ask how each manages the credit risk it takes on, including what happens when an owner falls behind with the vendor.

A Separate and Contested Question: Using Prepaid Purchases to Recover Levy Arrears

Some schemes go a step further. They amend their conduct rules so that, once an owner is in arrears with levies, a fixed percentage of each prepaid electricity purchase is applied to the levy arrears. This is separate from moving utilities to a vendor. You get the cash flow benefit above without it, and it is contested, so we set out what we found rather than recommend it.

Where the law stands

• We found no court judgment, and no published CSOS adjudication order, that decides directly whether a body corporate may apply a percentage of each prepaid purchase to levy arrears. This was our position as at 4 November 2026.
• The closest authority concerns cutting or reducing a member's supply to force payment, and it is mostly against schemes. The cases below are analogous, not direct.
• CSOS adjudication orders bind only the parties to them. They are not precedent for other schemes.

• Queensgate Body Corporate v Claesen [1998] ZAGPHC 1: a Johannesburg full bench held that a house rule allowing electricity to be cut for levy arrears was contrary to the common law and amounted to spoliation.
• Niehaus v High Meadow Grove Body Corporate [2018] ZAGPJHC 712: reducing a unit's electricity supply, rather than cutting it off, was treated as spoliation and supply was restored.
• Lion Ridge Body Corporate v Alexander [2022] ZAGPJHC 666: the court found that neither the Sectional Titles Schemes Management Act nor the prescribed rules empower a body corporate to interfere with a member's utility supply. Such relief engages constitutional rights and is incompetent unless a pleaded rule or agreement authorises it.
• Body Corporate of Balboa Park v Skeyi [2024] ZAGPJHC 361: following Lion Ridge, withholding vital services to force payment of levies was held not to be reasonably necessary, and a general catch-all conduct rule did not supply the power. Applying Zikalala v Body Corporate, Selma Court (KwaZulu-Natal), the court also held that a body corporate cannot sanction an act outside its powers by passing a resolution.
• Body Corporate The Straight v Katisi [2025] ZAGPJHC 2: the most favourable recent decision for schemes. Disconnection was authorised by court order on a tacit agreement that went undisputed because the owner did not attend the hearing, and only until the electricity charges were paid, not the levy arrears.

The Community Schemes Ombud Service has also published a training presentation, Arrear Levies and Unlawful Practices (3 February 2023). It lists loading a prepaid meter so that arrears must be paid before services can be bought among unlawful practices. It is not binding, but it shows how the regulator frames the issue.

If a scheme still wants a rule

• A conduct rule must be reasonable and apply equally to all owners (STSMA s10(3)). A rule that gives owners in arrears much less electricity for the same payment invites challenge.
• The notice and agenda must specify the proposed resolution and its wording. Check STSMA s6(2), PMR 15(3)(b) and PMR 17(7)(b).
• Avoid open-ended trustee discretion over the percentage. Fix it in the rule.
• CSOS approval of a rule (STSMA s10(5)) is a step in the process. We found no court decision saying it makes an otherwise unlawful rule lawful.
• Take advice from a sectional title legal specialist before you adopt any such rule.

Safer routes to recover arrears

• Obtain an order for payment, from CSOS (CSOS Act s39(1)(e)) or a court, and enforce it.
• Agree a written payment arrangement with the owner, which the owner signs voluntarily.

The Outcome

• Cash flow protected: the body corporate no longer funds bulk electricity and water bills for owners who have not paid.
• Reduced admin: trustees focus on governance, not on reconciling utility accounts.
• Owner accountability: every owner pays for the utilities they consume.

Personal Recommendation

Based on our estate's experience, I can personally recommend Alpha Metering (Pty) Ltd. Their professionalism, care for residents, and commitment to making the process smooth, especially for our elderly community members, made all the difference. This recommendation is about their service. It is separate from the arrears question above.

This is not a legal advisory blog post. Always check the relevant legislation or consult a sectional title legal specialist.