Installation of smart meters likely to be first step to privatize power sector

Kochi: The central government's instruction to install smart meters is the first step to privatization the power distribution sector. The Electricity (Amendment) Bill, which seeks complete privatization, could not be introduced in the Lok Sabha this time due to ongoing protests from the opposition.

By introducing smart meters the central government is looking forward to bringing in the change for the future. However, it is not clear in the notification who will bear the cost of the smart meter. According to the Electricity Act, the consumer will have to bear the cost.

The power consumption in each area is accurately calculated by smart meters. This data can be used to attract private agencies. The area that consumes the highest amount of electricity is likely to be chosen by the private agencies.

The meter can be recharged in advance just like recharging a mobile phone. With this, electricity supply will be prepaid. Transmission and distribution losses can be accurately calculated if all consumers have a smart meter.

States that have reported transmission and distribution losses of more than 25 percent in the 2019-20 fiscal year are required to install smart meters before December 2023. The states with the transmission and distribution losses less than this limit have time until March 2025 to install the device. In most states, the loss is over 24 percent. As Kerala's loss is only 9 percent, even with the introduction of smart meters, there will be no significant reduction.

Kerala had earlier tried to install smart meter as part of the central plan, but the companies requested around Rs 7,000 per meter. The project was dropped after it was learned that the subsidy from the Central Government was only Rs 1000. 

The current practice is to call for tenders through the Energy Efficiency Services Limited, set up by the Central Government and to be offered to the states. This method is followed since the rate of tender called by each state turned out to be quite high. In the last tender called through the central agency, Larsen & Toubro was willing to provide smart meter for Rs 2,722.