In order to persuade consumers to pay electricity bills in advance, the Union power ministry has asked state electricity regulators to come up with discounted tariffs for users subscribing to prepaid meters.
Prepaid meters have been envisaged as one of the ways to turn around distribution entities (discoms) by reducing their gap between the cost of power supply and revenue realised by ensuring timely payments. “In cases of prepayment, the carrying costs will come down, leading to reduced requirement of working capital for discoms,” a notice from the power ministry sent to all state regulators said.
Additionally, large-scale roll-out of smart meters is also seen to reduce the aggregate technical and commercial losses of discoms by improving billing and collection through removal of manual intervention and reducing meter tampering by consumers. The ministry has asked the regulators to incorporate these aspects while calculating a discounted tariff rate for such users.
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 prepaid meter for smaller consumers”.
A clutch of states, including Bihar, Maharashtra, Karnataka, Rajasthan and West Bengal, are among the states that have started installing prepaid electricity meters at public facilities. The mechanism was envisaged mainly to ensure timely payments from bulk consumers such as local civic bodies and state government departments.
Mounting dues of government departments have been a long-standing cause of concern, rising from Rs 36,900 crore in FY18 to Rs 41,743 crore on a pan-India basis in October, which is about 85% of the amount that discoms owed to power generators at that time.