Business bats for Pre-paid Meters

“It costs Rs 2 lac to set up a small scale industry, whereas the cost of an electrical connection is as much as Rs 5 lac,” lamented M.G. Prabhakar, an industrialist and expert on electricity management, at an Interaction Meet organised earlier this week by Karnataka Small Scale Industries Association (KASSIA) on Prepaid Meters for electricity.

The gathering of small scale industrialists made a strong case for introducing prepaid meters in lieu of the existing system of postpaid meters.

M.C.R. Shetty, President, KASSIA informed the gathering that Chief Guest S.D. Ukkali, Technical Member, KERC had just returned from a foreign study visit to assess the usage of prepaid meters and electricity charges. Currently, the subject had a lot of relevance for the industry, especially the small scale entrepreneurs, and so Ukkali’s inputs would be of special interest to the gathering, he noted.

Addressing the gathering, Ukkali said the system of prepaid meters, tried and tested successfully in South Africa and the UK, would benefit both consumers and suppliers. It would also reduce power thefts and help save power by enabling the consumer to keep a tab on how much power was being consumed, he pointed out. Elaborating on how the system works, he explained: “This is a system wherein you can purchase certain units of electricity by paying for the same at a vending machine. You can then transfer this electricity to the meter at your house and use it. When the energy paid for is used, it automatically gets disconnected. A provision can be made to indicate when the power on your meter is on the verge of getting used up, so that you can recharge it,” he explained.

Advantages of Prepaid meters

Recently, Bescom had launched prepaid meters in Bangalore with much fanfare. The advantages of prepaid meters are many. The suppliers do not incur any expenditure for collection of bills and meter reading, and consumers do not have to make any security deposit. It helps the consumer to know his power consumption pattern and pave the way for conservation of energy by promoting responsible power consumption. Prepaid meters also mitigate financial risk for the power utilities as they get payment for the service in advance, unlike the present system where it receives payment only after 30-45 days of service. Besides, there is scope for planning the demand for power in advance.

However, Ukkali expressed his inability to accede to the industry’s demands for adopting prepaid meters as the issued was embroiled in legal dispute and also due to the high cost of installation of prepaid meters. He appealed to KASSIA to give a representation to the Government to take a re-look on the issue.

On complaints about malfunctioning of meters and erratic power supply, Ukkali responded, “Electricity is like Oxygen. You take it for granted when it is there, but recognize its value only in its absence.”

Sri Naikwadi, former MD, Gescom and an expert on power related issues, elaborated on the advantages of prepaid meters. He also pointed out that as per Section 47, Sub Section (5) of the Act, “a distribution licensee shall not be entitled to require security in pursuance of Clause A of Sub-Section (1) if the person requiring the supply is prepared to take the supply through a prepaid meter”.

In its Memorandum presented to KERC, KASSIA called for reducing the cross-subsidy so that for each class of consumer, the cost will be within +/- 20% of the cost of supply of power, i.e. as contemplated in the National Electricity Policy notified in 2006.

M.C.R. Shetty demanded that a formula for a reasonable allowance based on the actual expenditure incurred for supply of power needs to be worked out in order to make the recovery process user-friendly. “The present regulation provides for recovery at a fixed level whether or not the licensee incurs such an expense. This has proved to be an impediment for establishment of small scale industry due to the fact that very large amounts are required to be deposited with the licensee even though there is no actual expense incurred in providing supply to that particular installation. The reasonable charge would be to make an estimate of the expenses to be incurred by supply companies and provide for recovery of such expenses plus reasonable supervisory charges,” the Memorandum states.

Aravind N. Burji, VP, KASSIA also clarified that 90% of the defaults on power bills was due to government officials and not industrialists, as was wrongly believed.

Anomaly in power connection
The power situation in Karnataka has long been a sore point with the small scale industrialists. Sri Shetty pointed out a glaring anomaly where an industrialist shifting from one place to another is required to apply afresh for a fresh power connection, each time he shifts his factory. With the security deposit for a power connection costing a few lacs, it was a severe burden on the industrialists, he complained.

Security deposit reduced
Recently, the Karnataka Electricity Regulatory Commission (KERC), bowing to industry demands, had reduced the security deposit from 3 mmd to 2 mmd. Following the reduction in the security deposit, as per KERC order dated 01.09.07 and gazetted by the Govt on Sep 10, 2007, the excess amount of security deposit was to be returned to the consumer in 12 monthly instalments. As such, by now (November), the resulting excess amount of security deposit lying with the supplier pertaining to 2 months should have been refunded to the consumer or adjusted against his/her outstanding electricity bill for 2 months. All those consumers who had not been thus refunded the excess security deposit should take up the issue with the appropriate authorities, said KASSIA.

Secure Meters CEO Sri Sridhar Sangameshwar gave a Power Point Presentation on prepaid meters. The company which has implemented the prepaid system in Delhi, Simla and West Bengal, has been given a Letter of Acceptance by Bescom, to implement the prepaid system in Bangalore.