Prepaid Smart Electricity Meters – Myths and Reality – Part 2 Why and how the consumers will be hurt by implementation of this project.


By Kamgar Ekta Committee (KEC) team of volunteers


Government spokesmen claim that the objective of installing meters is to improve the quality and reliability of power supply. They claim that smart meters will enable consumers to plan and control their power consumption and thus bring down their power bills.

On the other hand, consumers and electricity workers in different parts of the country are opposing the installation of pre-paid smart electricity meters. They are saying the real aim is to pave the way for privatisation of electricity distribution. Smart meters will help to maximize profits of corporates in the power sector at the cost of consumers.

People in villages are opposing as they fear that once smart meters are installed, all subsidies on power supply for farming will be removed.

Consumers are finding they are worse off after the installation of smart meters. In many parts of the country, power supply has been made pre-paid. They are now being forced to pay for electricity before consuming it. In a place in Bihar 13,000 consumers found their power supply disconnected due to a fault in the pre-paid smart metering system. In some other places people are complaining of delays in the restoration of power after prepaid accounts were recharged. In many places consumers are opposing the installation as it will increase their bill due to recovery of the cost of smart meters.

The prepaid smart metering scheme will ensure that the consumer pays before consuming power and the power supply is stopped automatically when the pre-paid amount is exhausted. By asking consumers pay in advance, tens of thousands of crores of rupees will be available for use of private power monopolies once the pre-paid system is enforced.

Gencos will be able to even demand Discoms to pay in advance before power is supplied to them! We should remember that about 50% of electricity generation is already in the hands of private companies!

While the objectives of the RDSS of reducing the technical and commercial losses and improving the efficiency of the electricity distribution system are desirable, the problem is that the benefit of the improvement will not accrue to power consumers. This is shown by past experience. The AT&C losses for the country have come down from around 28 percent in 2011-12 to 17 percent in 2021-22, but the power rates have risen year after year during this period. The gains of improvement have been completely cornered by the generating and distribution companies to improve their profitability.

The government is telling consumers that prepaid smart meters are good for them. They will allow consumers to plan their electricity consumption and benefit them by reducing power consumption.

The government is not telling them how it will hurt them due to which they will lose much more than any possible gain.

How smart meters will affect consumers:

  1. Payment in advance: All smart meters are expected to be pre-paid. Consumers would have to pay in advance before consuming power. This will be an additional financial burden on people. Power would get disconnected automatically when the pre-paid amount is exhausted. They will have to keep track of the consumption and recharge their meter before the balance becomes zero if they do not want power to get disconnected.
  2. ToD tariff system: Smart meter enables charging of different rates for different times of the day, known as Time of the Day (ToD) tariff system. This means dynamic pricing based on the demand – higher rate when the demand is higher and lower rate when the demand is lower. As per the government announcement, power rates will be 10-20% lower than regular rates during 8 hours when there is sunlight and 10-20% higher during peak consumption hours. The plan to implement the ToD tariff from April 2025 for all consumers has already been announced.

    The government claims that this will help consumers by reducing their power bill. They will be now be able to plan to consume more when the rate is low and reduce their consumption when the rate would be high.

    In reality, most families are not in a position to consume more power during the day time when some members of family are out on work to earn their livelihood and some are out to school/college to study. The consumption is bound to be high when everybody is at home during evening/night. So bills of consumers will actually increase instead of falling when the ToD tariff is implemented.

  3. Increase in electricity rates: The RDSS has put a number of conditions regarding fixation of power rates. All costs are to be included while deciding tariffs. No costs can be deferred. Tariffs must be revised annually; there can be no multi-year tariff. If any category of customers is to be subsidised, the subsidy amount must be given through Direct Benefit Transfer (DBT) system, as was done in the case of subsidy on LPG cylinders.

    Once all these conditions are enforced, rates will go up for most of the consumers. There will be no cross subsidisation of rates, i.e., higher rate for some customers and lower rate for poor customers. Even if the state government decides to subsidise a category of customers through the DBT, the subsidy will slowly vanish as it has happened with the LPG cylinder subsidy.

    Electricity will become unaffordable for many customers.

  4. Cost of smart meter and limited life: While consumers will not have to pay the full costs of smart meters and information and monitoring systems in the beginning, it will be recovered over the years as part of the tariff. As smart meters have a limited life of 7-10 years, the burden of their replacement will also on consumers.
  5. Complaint redressal: As the smart metering system will be managed by a private company, consumers will be at its mercy for addressing their complaints. Wherever private companies have been introduced as a franchisee for billing and collection, the experience of consumers has been very bitter.

The smart metering scheme will deprive many people of our country of electricity, a basic necessity in today’s life. Electricity will become a means of profiteering once it is fully privatised.



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