Overbilling consumers

Published September 15, 2020

THE debate on Pakistan’s power sector has mostly focused on the macro-fiscal issues plaguing it: electricity shortages, circular debt, and expensive power purchase agreements with private producers. These are often cited as factors responsible for making electricity unaffordable. Structural issues at the retail electricity distribution stage such as exorbitant transmission and distribution losses, power theft, unrecovered bills, corruption, and bad management seldom find space in the overall power-sector reform discourse. Nor is the chronic issue of overbilling by distribution companies (including the privatised K-Electric) to cover up their losses and inefficiencies, and inflate their revenues, considered a serious matter. The practice continues despite widespread complaints of inflated billing by consumers. Even repeated warnings by the power regulator Nepra have failed to convince distribution companies to end this practice. Past attempts to instal smart meters to resolve the issue of overbilling have been resisted by the distribution companies. A smart-meter project funded by the ADB in Lahore and Islamabad had to be discontinued two years ago, and has only recently been revived.

In its State of Industry Report 2019, Nepra has once again highlighted the issue of overbilling. Expressing its concerns over the pathetic performance of Discos, it says: “The overbilling issue … still haunts the consumers of electricity. Discos are still involved in systematic manipulation of the electricity units to manage their distribution losses which are factually higher.” It further points out the inability of the retail electricity sellers to cut their transmission and dispatch losses, which is one of the main reasons for overcharging consumers. Another reason for overbilling is the inability of the distribution firms to fully recover their bills. Instead of improving their recovery ratios, Discos have been allowed to resort to revenue-based blackouts in high-loss areas. This practice has, in turn, proved a disincentive for them to improve bill recoveries. Besides, it has stifled sales growth and increased electricity prices. It is believed that the practice of overbilling is in the knowledge of the management of the Discos. Macro-fiscal issues afflicting the power sector need to be tackled to prevent its total collapse. But these are more like the symptoms of a deep-rooted disease, which cannot be cured without treating the causes — retail-level structural problems that are eating their way through to the top of the power sector. No reforms will succeed without fixing distribution companies and ensuring competition at the retail level.

Published in Dawn, September 15th, 2020

Opinion

Editorial

Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.
Concerning measures
Updated 03 Nov, 2024

Concerning measures

The govt must seek political input and consensus on the changes it is seeking to make and be open about its intentions.
Short-lived relief?
03 Nov, 2024

Short-lived relief?

POLICYMAKERS must be jumping with joy. At the close of the first quarter of FY25, the budget posted a consolidated...
Brisk spread
03 Nov, 2024

Brisk spread

THE surge in polio cases has reached distressing levels with a tally of 45 last reported, after two cases emerged in...