“A massive revolution in the electricity utility of our daily lives is going to be inevitable.”
We live in a world where everything is almost too easily automated and technologically fuelled. With the advent of our environment becoming more self-operating and sustaining, our utilities have not been ignored from the picture. The Maharashtra State Electricity Distribution Company Limited (“MSEDCL”), earlier this year floated tenders for the installation of 10 lakh smart meters for domestic electricity users in the State. This radical initiative started way back in 2020, when our Finance Minister, Ms. Nirmala Sitharaman announced that all conventional consumer meters would be replaced by smart meters by 2022.
While this initiative took its time to reach the masses, MSEDCL went ahead with the implementation of smart meters for domestic consumers on an experimental basis.
“We will soon install smart meters in the homes of domestic consumers in major cities like Pune, Mumbai, Nagpur and Aurangabad. This will be done on an experimental basis. If the experiment is successful, the smart meter system will be implemented across the state.”
–Bharat Pawar, spokesperson for the Energy Ministry, Maharashtra in July 2021
The new system of electricity regulation is predicted to be a game-changer and reap many benefits for all of its stakeholders. Let us feed our curiosity with some more comprehensive data about this new system.
Smart Metering: What exactly are Smart Meters?
Recall how you used your prepaid or post-paid sim card; you essentially recharged according to your requirement or paid for the amount of usage, right? This is precisely how the smart meters intend to operate in your homes. Simply put, they can be defined as widely installed electronic electricity meters, when equipped with communication capabilities areconsidered smart meters.
In its latest publication of technical specifications,the Central Electricity Authority (“CEA”) explains that smart meters need to be provided with features such as bidirectional communication, integrated load limiting switch, remote firmware upgrade, net metering, prepaid, post-paid, and time of day tariff features, over and above facilities for measurement of electrical energy parameters.It should be also kept in mind that these devices need to retain data of specified days as well. Such feature requirements are given in detail in the pre-bid tenders for smart meters programs of various states, including Maharashtra.
Like it was mentioned earlier, the smart meters are similar to the prepaid/post-paid mechanism used in mobile phones. Consumers are free to recharge their meters using the special application or app developed by MSEDCL. This way they can control the amount of consumption of electricity. The existing meters have faulty occurrences that inadvertently affect billing, resulting in loss to state undertakings. However, such shortcomings of the existing system have been wiped out by the smart meters.
Institutional players in implementing Smart Meters: Is this MSEDCL’s bold move?
The National Smart Grid Mission, Ministry of Power, Government of India took out a model contract for Advanced Metering Infrastructure (“AMI”) service for Smart prepaid metering on Design Build Finance Own Operate Transfer (“DBFOOT”) basis.
This type of model involves incurring all associated charges and for every meter installed, charging the Distribution Companies (“DISCOMs”) a flat rate per month. Whoever gets the contract to provide the AMI services, will transfer the asset back to DISCOMs at the end of the contract period.
The MSEDCL has floated tenders for installing around 10 lakh smart meters and has also sent a proposal to the government requesting the setting up of 1.66 crores smart meters in three-four years. The managing director of MSEDCL seemed quite confident with the decision to implement the automated smart meters.
The MSEDCL has been in huge losses, over 10% due to power distribution with a client base of 2.8 crore. The DISCOM aims to brush off the shortcoming of the existing system and plant the new age system into the fabric of the power sector. With this unique model of consumption and distribution, MSEDCL is going to set up the stage for other states to follow.
Before we blatantly agree with this model of electricity distribution and consumption, let us look at some of its intended benefits to both consumers and state authorities.
Advanced Smart Metering: What is the reason behind its recent popularity?
The smart meters are destined to serve the independence of the consumers and lay down a system based on a perfect harmony between autonomy and control.
This revolutionary smart metering system is said to overcome the power sector’s woes and benefit both DISCOMs and consumers.
With respect to DISCOMs, the benefits include:
- With the integrated distribution system of smart meters, tracking losses is much easier.
- The ability to track losses implied better revenue collection and demand management.
- As the losses are curbed, billing and collection improve which can justify the high cost of installing smart meters on a large scale.
- Reduction in arrears, which are pending in crores with all categories of consumers.
- Lack of backlogs will enhance product efficiency and even bring profits that have been non-existent with the status quo.
With respect to consumers, the benefits include:
- More control overconsumption.
- Remote record of consumption history.
- Better quality of electricity supply with more autonomy.
- NIL chances of billing errors.
- Quicker detection of outages.
- No more worrying about electricity bills, recharge as per requirement.
The smart meter can also curb power theft which is again a disquiet in the power sector. With the new meters in place, if a third party is trying to meddle with the meter, an alert will be automatically sent to the server in MSEDCL and the consumer. This alarm message will be sent to both customers and DISCOMs in the event of any kind of meter rigging.
Experts said these meters will immensely benefit power utility firms to reduce the peak power consumption and control the average cost of supply. This essentially means that the authorities can conduct load forecasting and plan effectively at any given moment. This also enables them to track patterns of consumption and distribution across areas under the purview of this initiative.
MSEDCL has remote access to meters and can take readings remotely which will make meter readings during lockdown, hassle-free. Given the volatile situation of the deadly virus outbreak, a remote arrangement is what we needed so badly.
The benefits justify the large-scale popularity; however, this also raises questions regarding the treatment of arrears, assessment period, and monitoring power of the Electricity Regulatory Commission (“ERC”) over the meters. It will be of significance if we can look at the challenges posed by smart meters.
Challenges: At what cost will these smart meters be installed?
While the model has many benefits, catering to both its investors, the AMI deployment brings along with it a few challenges. Not only is there a requirement of a high upfront investment cost but there is also a complicated process for integration. Some of the burdens of smart meters are listed as follows:
- High capital costs: large scale implementation will require expenditures on all essential components including meters, network infrastructure, and network management software, along with the cost associated with the installation and maintenance of meters and information technology systems.
- Complex Integration: The technicalities of the integration system are highly complicated and would require more skill and expertise to execute.
- Uniformity: Although a model contract exists for the smart meter’s programs, it is crucial that the requirements for AMI technology and the successful connecting must be in sync.
Lack of choice over the mode of payment- The smart meters are designed in a way that they can remotely disconnect consumers if payments are not done on time, say in a post-paid connection. Similarly, upon exhaustion of the recharge credit limit, consumers with prepaid connections will face disconnection.
Precautionary measures: What can be done at the central level?
We saw that one of the benefits of smart meters is that integrated systems and remote access are easily attained. Well, this might seem like an achievement, but monitoring can be a challenge in itself. A system of accountability and monitoring needs to be in place, recruits well-versed with technology will have to be hired and a tight mechanism must be formulated.
Fortunately, the new energy efficiency code is now applicable for residential buildings as well. This might not be directly linked to smart meters; however, the conservation norms will only benefit rather than restrict.
Internet is everywhere and the world is going global online, but marginalized areas in India suffer without technological advancement. This can be a good way to bring ‘light’ into their lives and prepare them for the challenging future that awaits us.
The Futuristic Electricity Consumption is on its way
The smart metering project is being undertaken with great speed and efficacy, across the nation. While there has been inadequate monitoring, the MSEDCL initiative seems to be a solid one, paving the way for other states to follow.Uncertainty remains surrounding the costs of these programs and how they will be passed on to consumers.
After looking at smart meters critically, it can be said that it has immense potential to succeed and benefit us all. For this to work out, there must be a careful implementation that can only be achieved through elaborate analysis, learning, and evaluations of trial projects. It is vital to get it right than to do it hastily.
The power sector is indeed preordained to drastic change and it is upon us to ensure the electricity is still renewable. The whole idea behind such schemes is to conserve electricity and of course in turn converse money and lives! While a policy decision in this matter is pending, the MSEDCL seems to promise a better future.
About the Author
Adv. Gagan Anand is the Managing Partner of Legacy Law Offices, a leading PIE law firm with offices in New Delhi, Chandigarh, Mumbai, Nairobi, London, Seattle and numerous other cities.
A seasoned professional with over 500 PIE projects across 24 states of India and numerous overseas jurisdictions to his credit, he has served as the Chief Legal Advisor of the Punjab Infrastructure Development Board (PIDB) as well as the Honorary Advisor to the Punjab State Disinvestment Commission (PSDC). An active member of the International Bar Association (IBA), he has also served as a member of IBA’s prestigious Construction Law committee. He is also qualified to practice as a Solicitor before the Supreme Court of England & Wales.
He was awarded the foremost legal honor in India, the National Law Day Award (2010), by the Hon’ble Vice President of India in recognition of his merit in the field of Projects, Infrastructure, and Energy Laws.
Editorial Team
Managing Editor: Naman Anand
Head of C&WD: Namrata Bhowmik
Preferred Method of Citation
Gagan Anand, “Automated Smart Meters: The New-Gen System of Electricity Regulation” (IJPIEL, 27 April 2022)
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