Transforming Electricity Consumers into Customers: Case Study of a Slum Electrification and Loss Reduction Project in São Paulo

In late 2006, the U.S. Agency for International Development, the International Copper Association, and AES Eletropaulo, an electricity distribution company, embarked as partners on an ambitious project in São Paulo, Brazil to test their integrated approach to slum electrification and loss reduction. This approach aims to solve a large-scale and long-term problem of electricity losses from theft and non-payment in slums while bringing more reliable and safer electricity service to its residents as well as helping them to reduce their electricity consumption dramatically to affordable levels.

After the first year of operation in the slum selected as the pilot area (called Paraisópolis and described in Box ES-1), results show a rapid payback for the distribution company of less than 1.4 years and the transformation of non-paying or illegal electricity consumers into paying customers while providing ancillary benefits to the community and society at large. This case study documents what was done and the results obtained and suggests how the approach might be replicated in other slums in Brazil as well as many other countries with similar problems.