The power ministry has asked states to nudge their power regulators to reduce electricity retail tariff for prepaid consumers, saying prepayment metres will help discoms reduce associated expenses incurred on meter reading, billing and collection.
The government aims to make all electricity meters smart prepaid ones in three years starting from April 1, 2019, in a bid to cut transmission and distribution losses.
A power ministry order stated that "states may request the State Electricity Regulatory Commission (SERC) to consider reduction in power retail tariff to consumers for power purchased through prepayment metres".
The order also stated that necessary changes in the relevant regulations or orders or mechanism to reduce cost of power in case of advance payments or prepayments by any entity or consumers, should be implemented within six months of issuance of this letter (on January 16, 2020).
The ministry explained in the order that in case of prepayment, the carrying costs will come down, leading to reduced requirement of working capital for discoms.
It also said the prepayment will eliminate associated costs involved in meter reading, billing and collection and, thus, the electricity tariff per unit should come down.
The government had earlier placed on record that the move towards smart meters is a pro-poor step as consumers need not pay the whole month's bill in one go, they can pay as per their requirements.
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