Reduction in Power Cost due to Prepayment by Customers: Power Ministry

The Ministry of Power has asked the state and UT governments to consider reducing the cost of power due to prepayment by the end consumers.

Power Ministry Prepayment

The Ministry of Power (MoP) has in its latest notification asked the state and UT (Union Territory) governments to request the state electricity regulatory commissions (SERC) to consider reducing the cost of power due to prepayment by the end consumers.

The ministry has stated that Prepayment meters are being provided to the end consumers by the distribution companies. And that with the availability of the meters, consumers can pay in advance for the electricity consumed by them to the Discoms. And that in cases of prepayment, the carrying costs will come down, leading to reduced requirement of working capital for the Discoms. Further, this will also eliminate the associated costs involved in meter reading, billing, and collection. Thus, where prepayment meters are installed or being installed, the electricity tariff per unit for the consumer should reduce.

It also states that the necessary changes in the relevant regulations, orders, or mechanism to reduce the power tariff in case of advance payments or prepayments by the consumers, should be implemented six months from the time of issuance of the letter.

In October, Union Power Minister RK Singh had said that India is moving towards a new regime where a power consumer would pay first and then get power supply, which would eventually deal with the issue of non-payment in the sector. The minister also made it clear that states can give free power to certain sections of society but they would have to pay for it from their own budget. 

“That is what we are going to do. We are putting a connection between payment and delivery. You make the payment first and then you will get the power… there is no such thing as free power. You cannot produce power without an investment,” Singh said while addressing the 20th Annual Day of PTC India.

He further said “power has a cost and somebody has to pay for it. If you want to give free power then go ahead. But you (states) have to pay for it from your budget. That is what we are going to do.”

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Ayush Verma

Ayush Verma

Ayush is a staff writer at and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for