MoP issues letter to SERCs and discoms on cost reduction due to prepayment

The MoP has issued a letter to the state electricity regulatory commissions (SERCs) and state distribution utilities regarding a reduction in the cost of power due to prepayment by end consumers. The ministry has stated that post the installation of prepaid meters, consumers will be required to pay their electricity bills to utilities in advance. This would lead to a reduction in the carrying costs and working capital requirements of the utilities as well as elimination of costs related to meter reading, billing and collection. The ministry, in its letter, has suggested that electricity tariffs need to be reduced where such prepaid meters have been installed/are being installed. In this backdrop, SERCs should consider a reduction in retail tariffs for such consumers. In a separate development, the MoP has notified draft guidelines for standard bidding documents, encouraging competition in the development of transmission projects, and tariff-based competitive bidding for transmission services. The last date for submitting comments on the drafts is March 11, 2020