India Markets closed

Prepaid electricity meters: Early results leave more to be desired

Anupam Chatterjee
Prepaid electricity meter,  electricity meter, economy news, discom, Prepaid electricity, power bill, 

Prepaid electricity meters were touted to be a major tool to aid the efforts of distribution entities (discoms) to cut pilferage. While a
clutch of states has tried rolling out this practice, early results such as those from Rajasthan show that it is easier said than done. In its initial phase, prepaid meters have failed to achieve the desired result of restricting under-recoveries from state government departments in Rajasthan, sources from the state energy department told FE. This is because discoms in the state are practically not being able to cut the power supply of government departments even if they fail to recharge them when required.

The sources said there have been instances of prepaid meters getting removed from various public buildings that house courts and health centres due to the inability of the system to adapt to the new payment processes. This has happened in spite of discoms offering 5% discount on power bills for using prepaid meters.

According to a senior official of one of the Rajasthan discoms, "there was a total lack of communication on the new modes of payments" and "funds were not disbursed to the (government) departments on time for paying bills in advance".

Prepaid meters have been envisaged as one of the ways to turn around discoms by reducing their gap between the cost of power supply and revenue realised by ensuring timely payments from bulk consumers such as local civic bodies and state government departments.
Bihar, Maharashtra, Karnataka and West Bengal too are among the states that have started installing prepaid electricity meters at public facilities.

Citing "rising outstanding from the government departments to discoms " as one of the major roadblocks to discom reforms, Union power minister RK Singh told FE last month that "nobody went to disconnect power supply to the government offices," adding that "if we install the prepaid meter system, supply will be automatically be disconnected to defaulting consumers". The minister said that "this particular problem has largely been addressed in Bihar" where the pre-paid metering system was recently implemented.

The power ministry wants all meters across the country to be 'smart prepaid' by the end of FY22. The draft version of the proposed amendments to the tariff policy says electricity supply shall shift from "a postpaid basis to prepaid basis" within three years and "accordingly, the meters will be smart meter in a prepaid mode for bigger consumers and simple pre-paid meter for smaller consumers".

However, in a meeting of a committee on delayed payment cycles of discoms held in August, the Maharashtra discom had opposed this idea, citing "huge capital expenditure" and "large manufacturing capacity" requirements. "We are already investing a lot on smart meters and the mandate of prepaid meters would mean wastage of this money," a senior official from a major discom told FE on conditions of anonymity.

On a pan-India basis, dues from these state-government entities to the discoms have been pegged at a whopping Rs 41,000 crore at May end, which is about 85% of the amount that discoms owed to power generators at that time.

Discoms' financial losses stood at Rs 28,369 crore at the end of FY19, up 88.6% year-on-year, reversing the declining trend since the UDAY scheme for these entities' revival was launched in November 2015. According to the data furnished by 28 states/Union territories, discoms lost Rs 0.27 for every unit of electricity supplied (ACS-ARR gap) in FY19 and their aggregate technical and commercial (AT&C) losses - electricity units lost on account of pilferage - stood at 18.2% at the end of FY19.