The Ministry of Power (MoP) has asked the state and UT (Union Territory) governments to request the state electricity regulatory commissions (SERC) to consider reducing the retail power tariff to consumers who purchase power through prepayment meters.

It also states that the necessary changes in the relevant regulations, orders, or mechanism to reduce the power tariff in case of advance payments or prepayments by the consumers, should be implemented six months from the time of issuance of the letter.

According to the letter issued by the MoP, with the availability of prepayment meters, consumers can pay in advance for the electricity consumed by them to the distribution companies (DISCOMs).

“In cases of prepayments, the carrying costs will come down, leading to reduced requirement of working capital for the distribution companies. Further, this will also eliminate the associated costs involved in meter reading, billing, and collection. Therefore, where prepayment meters are installed or being installed, the electricity tariff per unit for the consumer should reduce,” the letter states.

Prepayment meters are being provided to the end consumers by the distribution companies.

In November 2019, Mercom reported that the Ministry of Power advised the SERCs to establish the reduction of generation or transmission tariffs in cases of full or advance payments by the DISCOMs. The ministry had also suggested that the retail tariff for the consumers should also be reduced in case the DISCOMs pay the tariff in advance.

Previously, it was reported that the MoP had issued procedural guidelines for the scheduling of power to the distribution companies in case of non-maintenance of the line of credit under the payment security mechanism.