Prepaid Meters in Electricity: A Cost–Benefit Analysis

Abstract

Prepayment meters have been widely adopted by utilities in different countries. Yet its practice, they are still controversial. This chapter uses social cost-benefit analysis to assess the adoption of prepaid electricity meters within a local community. The analysis highlights how the role of tariffs, the cost of start-up investment and the socio-economic characteristics of the population affect system performance. Simulation exercises are used to examine the sensitivity of results to change in some distinctive elements of policy implementation. The chapter also summarizes the results of a survey conducted among local electricity users. Results indicate that prepaid meters lead to an increase in welfare. They also indicate that the advantages of the system are linked to a reduction of arrears in accounts receivable, and operational and financial costs on the part of the service provider, as well as to a better allocation of resources for the consumer. However, survey evidence suggests that the main argument against prepayment relates to the possibility of self-disconnection by low income consumers.Los sistemas de comercialización prepago de servicios públicos constituyen una solución innovadora al problema de facilitar las posibilidades de pago de los usuarios. A pesar de su amplia difusión, el uso de estos sistemas es aún controvertido. Este trabajo contribuye a ese debate porque emplea un análisis costo-beneficio para examinar la adopción del sistema prepago de energía en una comunidad. Los resultados resaltan la potencialidad del sistema prepago de energía como herramienta tendiente a incrementar el bienestar social y permite identificar sus consecuencias para cada uno de los grupos afectados. Los resultados también destacan el papel de los descuentos en las tarifas, el costo de la inversión inicial y las características socioeconómicas de la población, por lo que contribuyen a la definición de las políticas regulatorias que afectan la adopción de mecanismos de prepago.

‘We Live on Estimates': Everyday Practices of Prepaid Electricity and the Urban Condition in Maputo, Mozambique

“…Hence, the potential for growing demand and network roll-out is the highest there, especially following ongoing calls for improved energy access and security among lower-income populations. Moreover, there is strong support for prepayment of utility services among economists and development and energy specialists, who claim that the technology can benefit the energy poor (Estache et al, 2002;Tewari and Shah, 2003;Casarin and Nicollier, 2008). 4 The case of Mozambique thus exemplifies a larger emerging trend: in Africa alone at least 43 countries have adopted prepayment for electricity and/or water provision.…”

A Prepaid Smart Metering Scheme Based on WiMAX Prepaid Accounting Model

“…Smart card based solid-state energy meters have already been introduced in many parts of the world-especially in the developing countries [1]. Almost all the prepaid energy meters available today are based on smart cards.…”

Prepaid Electricity Plan and Electricity Consumption Behavior

“…In light of the benefits discussed above to both utility companies and to consumers, it is natural to hypothesize that prepaid programs lead to a net gain of welfare. Consistent with this conjecture, Casarin and Nicollier () conduct a cost–benefit analysis of the adoption of prepaid meters in a local community in Argentina and find that prepaid programs lead to an increase in welfare.…”