File photo: Mint
File photo: Mint

Budget 2020: Smart meters to plug leaks in supply, revenue

  • Govt proposes shift to smart meters to help minimize human intervention in metering, billing and collection
  • The smart meters will give consumers the freedom to choose the supplier and rate as per their requirements

NEW DELHI : Finance minister Nirmala Sitharaman on Saturday urged states and Union territories to replace conventional electricity meters with prepaid smart meters in three years, with the aim of cutting distribution losses and setting the stage for separating the carriage and content operations of power distribution companies (discoms).

Carriage refers to the distribution aspect and content to power.

India’s average aggregate technical and commercial (AT&C) losses are at 21.4%, pushing up the dues of discoms to power generating companies to 72,938 crore at the end of November. Smart meters minimize human intervention in metering, billing and collection, and help reduce theft by identifying loss pockets.

“I urge all the states and Union territories to replace conventional energy meters by prepaid smart meters in the next three years. Also, this would give consumers the freedom to choose the supplier and rate as per their requirements," the finance minister said.

Smart meters require a two-way communication network, control centre equipment, and software applications for near real-time gathering and transfer of energy usage information. India’s proposed distribution reform scheme—tentatively named Atal Distribution System Improvement Yojana (Aditya) to cut electricity losses below 12%—starts with smart meters. The 2.86-trillion scheme in the works aims to ensure continuous power supply, involves adopting models such as privatizing state-run discoms and having multiple supply, network and distribution franchisees.

Experts welcomed the move. “Providing choice to a customer would mean segregation of wires and content. If we start the process in all earnest, some utilities can realistically do it in three to five years. Similar is the case of implementing smart meters in three years, possible for select areas and customers," said Sambitosh Mohapatra, partner, power and utilities at PwC India.

“The focus on bringing down commercial losses in distribution companies by mandating prepaid meters, coupled with consumers having the choice of suppliers will surely resolve long-term viability issues of the power sector and lead to a vibrant electricity market," said Sanjeev Aggarwal, founder and chief executive officer, Amplus Energy Solutions.

The budget also extended the corporate tax rate of 15% to new domestic electricity generation companies, and provided for around 22,000 crore to the power and renewable energy sector in 2020-21. This is aimed at helping India’s power generation plans amid attempts by the Andhra Pradesh government to renegotiate clean energy tariffs.

“Taking electricity to every household has been a major achievement. However, the distribution sector, particularly discoms, are under financial stress. The ministry intends to promote smart metering. Further measure to reform discoms would be taken," the minister said.

The minister also said the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM KUSUM) will be expanded to provide 2 million more farmers with stand-alone solar pumps. Under the scheme, surplus electricity generated by farmers will be bought by state discoms to help boost the country’s emerging green economy.

The earlier plan, announced in February 2018 budget, envisaged covering around 1.75 million off-grid agricultural solar pumps. In addition, 1.5 million farmers will get help to shift to solar power pumps from grid-connected pump sets. It is estimated that of the 30 million agricultural pumps in India, a third are fuelled by diesel.

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