How can India Enable a Consumer-centric Smart Metering Transition?

REPORT

Enabling a Consumer-centric Smart Metering Transition in India

Insights from a Survey of Six States

20 March, 2023

Shalu Agrawal, Sunil Mani, Simran Kalra, Bharat Sharma, Kanika Balani

Suggested citation: Shalu Agrawal, Sunil Mani, Simran Kalra, Bharat Sharma, and Kanika Balani. 2023. Enabling A Consumer-Centric Smart Metering Transition in India: Insights from A Survey of Six States. New Delhi: Council on Energy, Environment and Water

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Overview

As of February 2023, power distribution companies (discoms) have deployed 5.5 million smart meters in India (NSGM 2023). Under the Revamped Distribution Sector Scheme (RDSS), the aim is to replace 250 million conventional electricity meters with smart prepaid meters by 2025-26. The rapid roll-out of smart meters could present teething issues that could risk consumer trust in the technology.

This study presents a granular assessment of consumer perceptions and experience with using smart meters, especially in the prepaid mode. The study, based on an independent survey of ~2,700 urban smart-metered households in six Indian states (Assam, Bihar, Uttar Pradesh, Haryana, Madhya Pradesh, and Rajasthan) provides recommendations to ensure a smooth transition of consumers to a new billing and payments regime through prepaid smart meters.

Key findings

Around 60 per cent of the smart meter users surveyed are satisfied with their billing and payment and would recommend prepaid smart meters to their friends and relatives.
Consumer satisfaction levels (or the lack thereof) are associated with their experience of a smooth installation process, the ability to access detailed bills, knowledge of how pending arrears are adjusted towards present/future bills, and perceived co-benefits of smart meters such as reduction in electricity theft and improved quality of supply.
Assam has the highest share of consumers who are satisfied and feel that prepaid smart meters have enabled greater control over electricity expenses. Bihar reports the highest awareness and uptake of the smart meter app (80 per cent), driven by intensive consumer engagement efforts.
The study also documents challenges faced by consumers. Due to gaps in digital literacy and limited awareness of smart meter apps, many consumers rely solely on SMS updates, which do not provide a breakup of bills. As a result, 70 per cent of consumers would like to continue receiving paper bills. Only half of the consumers were aware of smart meter mobile apps, and just 45 per cent used them.
A higher share of prepaid smart meter consumers are satisfied (63 per cent) compared to postpaid consumers (55 per cent). However, very few postpaid users are willing to switch to prepaid mode due to a lack of awareness, status quoism, and fear of disconnection.

Around 60 per cent of smart meter consumers are satisfied with the technology

Source: Authors’ analysis

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Shalu Agrawal

Senior Programme Lead

[email protected]

“With prepaid smart meters, both consumers and utilities will enter a new billing and payments regime. Our study suggests that India needs a consultative and holistic approach to ensure a smooth transition and derive the most out of a digitalised and smarter distribution grid.”

Executive Summary

In 2020, the Government of India unveiled the Revamped Distribution Sector Scheme (RDSS), focused on the financial turnaround of discoms. One of the scheme’s components aims to replace 250 million conventional electricity meters with smart prepaid meters by 2025–26. The thrust for smart meter deployment is linked to their role in helping power distribution companies (discoms) improve their billing and revenue collection efficiency, while also enabling consumers to track and manage their electricity consumption and expenses.

Smart metering in India: The need to understand consumers’ perceptions and experiences

As of February, 2023, nearly 5.5 million smart meters have been deployed in the country (NSGM 2023).1 Meeting the RDSS’s target would require deployment at a rapid scale (5.6 million smart prepaid meters per month). However, switching to universal smart metering would necessitate a change in consumer behaviour concerning the receipt and payment of electricity bills. This may involve teething issues and the risk of compromising consumer trust in the technology. A granular assessment of consumer perceptions and experience with using smart meters, especially in the prepaid mode, could be instrumental in pre-empting potential bottlenecks and ensuring the smooth transition of consumers to a new billing and payments regime.

Study objectives and methodology

To inform a consumer-centric deployment strategy for smart (prepaid) meters, we, the Council on Energy, Environment and Water (CEEW), conducted an independent survey of ~2,700 domestic consumers using smart meters (in the postpaid and prepaid modes). REC Limited (formerly Rural Electrification Corporation), the nodal agency for implementing the RDSS, facilitated the study by supporting engagements with discoms and helped in identifying areas with smart meter installations.

Our survey aimed to capture the consumer experience and perceived benefits of using smart meters, along with the challenges faced, if any. The survey was conducted between March and April 2022. It covered ~1,200 prepaid and ~1,500 postpaid consumers in six Indian states with the highest smart meter deployment – Assam, Bihar, Haryana, Madhya Pradesh (MP), Rajasthan, and Uttar Pradesh (UP) (Figure ES1). The surveyed consumers were sampled from 300 distribution feeders spread across 18 districts and 10 public discoms. We also interviewed relevant discom staff to understand their experiences with managing the new infrastructure.

Figure ES1 ~2,700 urban households from six Indian states were surveyed to assess their experience and outlook towards smart meters

Source: Authors’ analysis

Note: n_pre: the number of prepaid consumetrs surveyed in the state; n_post: the number of postpaid consumers surveyed in the state.

Findings

What do consumers like about smart (prepaid) meters?

Smooth installation experience: The first time a consumer interacts with a smart meter is during its installation, and 92 per cent of consumers in our survey report a smooth installation experience.2 Those who face difficulties (8 per cent) cite delays in meters getting connected to the discom server and incorrect wiring.
Consumers receive bills more regularly: Nearly 50 per cent of the surveyed consumers report improvements in billing regularity since switching to smart meters. This could be attributed to three factors: a change in billing frequency (e.g., from bimonthly to monthly in Rajasthan), getting bills on the same date every month, and the base effect (a return to regular billing after the disruptions caused by Covid). Gaps in billing regularity despite the switch to smart meters (15 per cent) are mainly due to customers’ limited access to detailed bills (discussed in Section 3.2).
Bill payment is easier and more flexible for most consumers: Two-thirds of the surveyed consumers feel that paying bills is easier with smart meters, as they pay bills using smart meter mobile apps and in varying amounts (small/large). Around 30 per cent of prepaid users recharge more than once a month, with the highest share in UP (38 per cent), indicating the need to promote this feature more.
Multiple perceived co-benefits: More than a third of the surveyed consumers report co-benefits to using smart meters: a greater sense of control over electricity expenses, a drop in instances of electricity theft, and improved supply to the locality. These perceptions are linked to enhanced access to consumption/ bill information and infrastructure upgrades that accompany smart metering deployment.

What are consumers’ concerns about smart (prepaid) meters?

Notwithstanding the positive outlook of many consumers on smart (prepaid) meters, we encountered several issues that adversely affect the experiences of consumers with smart meters; these problems merit the close attention of discoms.

Lack of access to detailed bill breakup: Nearly 44 per cent of the surveyed consumers cannot access detailed bills; the share is higher among prepaid users and households whose income earners have relatively less education (67 per cent for households with primary income earner uneducated as compared to 30 per cent for households with primary income earner being a graduate or above). Some discoms, particularly, in Assam, Bihar, and UP, have stopped distributing (or are in the process of withdrawing) paper bills to smart meter consumers, assuming they can access bills through the smart meter app. However, due to poor digital literacy and a lack of awareness of smart meter apps, many consumers rely solely on SMS updates, which do not provide break-up of bills. As a result, the majority (70 per cent) of surveyed consumers would like to continue receiving paper bills.
Limited awareness and use of smart meter mobile apps: Only half of the surveyed consumers are aware of the mobile apps, and just 45 per cent use them. App usage is highest in Bihar (80 per cent), followed by Assam (47 per cent); it is, however, extremely low in Haryana (14 per cent) and MP (13 per cent). The variation across states is linked to the presence of prepaid users: app usage among prepaid users (72 per cent) is three times that among postpaid users (24 per cent).
Some consumers face difficulties in paying bills or recharging: Nearly 12 per cent of consumers report that paying bills has become difficult since the switch to smart meters for multiple reasons: fear of disconnection upon failing to recharge in time, cash flow issues, and barriers to digital payments.
Delays in recharging and reconnection: A third of prepaid users had their electricity disconnected at least once when they failed to recharge on time. For a third of consumers for whom the electricity got disconnected at least once, it took more than 30 minutes to reconnect even after a successful recharge, which is a cause for concern.

How satisfied are consumers, and what drives their satisfaction?

The majority of the surveyed consumers (60 per cent) are satisfied with their billing and payment situation, and they would recommend smart (prepaid) meters to their friends and relatives.3 There appear to be four key determinants of satisfaction: a smooth installation process, access to detailed bills, knowledge of how pending arrears are adjusted towards present/ future bills, and the co-benefits of smart meters such as reduction in theft and improved quality of supply.
More prepaid smart meter consumers are satisfied (63 per cent) and willing to recommend the technology to others (69 per cent), as compared to postpaid consumers (55 per cent of postpaid consumers are satisfied while 53 per cent are willing to recommend the technology to others). This difference can be explained by the fact that a higher share of prepaid consumers use smart meter apps to check their bills and consumption and have flexible payment schedules. This is important given that most discoms, barring those in Bihar, have made the prepaid mode optional.
Out of all postpaid smart meter users, only a few are aware of the prepaid functionality (26 per cent) and even fewer are willing to switch to it (13 per cent). A lack of awareness of the prepaid mode, status quoism, and a fear of disconnection are the three key reasons for the limited willingness to switch. Of those who are willing, more than three-fourths believe that switching to the prepaid mode would enable more conscious and judicious use of electricity (due to daily deductions).

Ensuring a consumer-centric transition to smart (prepaid) meters

In view of our findings, we propose the following recommendations.

Discoms, along with REC Limited, should undertake sustained consumer engagement to spread awareness of the benefits and features of smart meters and their mobile apps. Discoms should use diverse channels to reach consumers; particularly, they should encourage one-on-one interactions with consumers by the field staff installing smart meters, in addition to promoting smart meters via social media, pamphlets, and loudspeakers. The smart meter app needs to be made available to consumers in a user-friendly format and in vernacular languages to promote ease of use. Creative video explanations in regional languages should be featured on social media such as YouTube, WhatsApp, and Facebook.
Discoms should continue giving paper bills and phase out their withdrawal. Where bills have already been discontinued, consumers may be given the option to opt for paper bills.
Discoms should help consumers use the flexible payment feature to generate acceptance of prepaid meters. We propose three steps: i) link the minimum recharge amount with the consumption level – high minimum recharge amounts (e.g., INR 500 in Haryana) may constrain low-consumption households from making partial payments; ii) waive any additional fee (convenience charge) associated with recharging or making digital payments and give rebates to prepaid users; and iii) educate consumers about these benefits, the applicable tariff structure, and the bill deduction process.
Discoms should send out timely alerts and facilitate a smooth recharge experience to dispel the fear of disconnection among prepaid consumers. They may consider four steps: i) regularly update discom records with consumers’ mobile numbers and send multiple notifications/ SMS upon exhaustion of the recharge amount (e.g., when there is five days’ worth remaining); ii) have generous ‘happy hours/days’ when no disconnection happens and inform consumers of these times; iii) ensure timely reconnection following recharge through the strict enforcement of advanced metering infrastructure service provider (AMISP) contracts; and iv) facilitate innovative offline payment modes like mobile ATMs and e-wallets operated by neighbourhood shopkeepers or women’s self-help groups (SHGs), especially in areas with poor mobile network connectivity.
State electricity regulators should issue smart (prepaid) meter guidelines to ensure a uniform consumer experience. Currently, provisions for smart meters are scattered across different regulatory orders and directives, which makes them inaccessible to key stakeholders, especially consumers who are often unaware of key provisions such as rebates or specified disconnection hours. Dedicated smart meter guidelines in each state for meter installation and charges, billing, recharge, payments, and rebates would help ensure a smooth consumer experience.
REC Limited must facilitate cross-learning and the sharing of best practices among discoms. Both the survey findings and our interactions with discom staff during field visits indicate several opportunities for cross-learning between states. For instance, Assam has the highest share of consumers who are satisfied and feel that smart (prepaid) meters have enabled greater control over electricity expenses. Bihar reports the most awareness and uptake of the smart meter app, partly because of the intensive consumer engagement efforts by discoms. More than half of the smart meter users in MP claim that electricity theft has reduced; this is partly because discoms leverage smart meter data for vigilance activities.
End-to-end ownership of the smart meter programme by discom leadership. Our study suggests that the success of the smart meter rollout is closely linked to the involvement of discom officials across the hierarchy with smart metering service providers and consumers during the on-ground implementation. The proactive participation of state governments and end-to-end ownership of the smart meter rollout efforts by top management in the discoms are critical to India’s vision to digitise the power distribution infrastructure and to paving the way for the clean energy transition.