Smart metering faces hurdles as not all discoms see financial benefit in it

The plan is also up against supply issues with vendors reluctant to deliver to certain states due to payment concerns

The union power ministry's ambitious plan for 100 per cent smart metering in the next two years may face some distress, with not all state distribution companies seeing a financial benefit from the devices.

In addition, the plan also faces supply issues with vendors reluctant to supply to certain states for payment concerns.

“I don’t see a benefit to make that huge an investment, when the returns are not impressive. It does not do much to change my financials significantly,” said a top official from a state distribution company, who did not wish to be identified.

A smart meter has a modem (communication device) and a remote switch by which demand, supply and billing can be monitored and controlled remotely. Data from the same is collected in a cloud server. This reduces energy theft, improves billing and bill collection. It also helps discoms collect data of consumer demand patterns, which in turn, can be used to plan supply.

At present, smart metering is being pushed through two options- one in which states can go ahead and make a capital expenditure and change to smart metering.  This involves a huge upfront financial outgo. “Some of these meters cost Rs 13,000 to Rs 14,000 each," said an official from a second state distribution company.
 

The official does not oppose the move, but added it is merely a value addition for the customer.

The second option allows distribution companies to move to smart meters through the operating expenditure model, where nodal agencies like Energy Efficiency Services (EESL) step in to fund it. “In the OPEX mode, the charges payable by the discom to EESL may cost anywhere between Rs 50 and Rs 80 a meter per month for a multi-year period,” the second official quoted earlier in the story said.

Tamil Nadu, Maharashtra, Jharkhand and Chattisgarh are some of the states that have shown no progress in achieving their smart metering targets as of June 30, according to data available under the UDAY scheme.

The second distribution company official quoted earlier in the story said the need to upgrade to a new billing system further adds to the cost. “For discoms with less than 15 per cent Aggregate Technical and Commercial (ATC) losses, there is no incentive to go for these metering, because losses are already low. In addition, moving to smart meters require discoms to upgrade their billing system, which is an added cost and a deterrent for some discoms.”

Saurabh Kumar, managing director, EESL does not see reluctance on the part of states to the plan. “Several states are pushing for smart meter installation. Rajasthan offered us the tender of 500,000 smart meters. We will offer tender of 500,000 each in Telangana and Karnataka. In Bihar, 3.4 million meters are to be installed,” he told Business Standard. EESL has installed 400,000 smart meters till date in Uttar Pradesh, Delhi, Haryana, Bihar and Andhra Pradesh.

In addition to some unwilling distribution companies, there are supply-side concerns as well. This paper recently reported of the 5 million meters offered in the first tender in 2018; barely one-fourth have been supplied by the meter companies till yet.

Meter makers are reluctant to supply to several states due to payment issues. “We have not received payment for our existing single-phase meters and soon they would have to be replaced with smart meters. This would lead to a lot of confusion,” said an executive. Leading meter makers such as HPL, Secure Meters and Genus, and contractors such as L&T are some awaiting payment for more than six months now.