Free power at a big price

Synopsis: The promise of free power to households/ other activities cannot be sustained.

Introduction

With elections coming near in many states, political parties started offering a lot of freebies to the people. Promises such as free power up to 300 units /month for households, free households, free households etc have been made. These all have adverse impacts in the long term.

Some states provide subsidized electricity as low as less than ₹1/unit while others like Punjab, Karnataka offer free electricity. Although it ensures various benefits like promoting rural livelihood but providing free electricity has its adverse impacts.

What are the problems associated with free power?

Agriculture:  Nearly ¾ of agricultural connections are unmetered in India. Their consumption estimates are often inflated by distribution companies to increase subsidy demand and project low distribution losses. Also, the inefficient use of electricity and water, neglect of service quality by DISCOMS led to frequent outrages, motor burnouts and a high subsidy burden on state governments.

Small Consumers: Although subsidized low tariff for small consumers is necessary because of the pandemic situation and economic slowdown. It is to be noted that these consumers require only 50-100 units/month to meet their basic requirements. But states like Delhi and Punjab offer 200/units of free electricity, which is not required.

Further, it will also discourage people to opt for environment-friendly options like rooftop solar etc

What methods can government/discoms adopt?

Providing free electricity is only short-term relief. It should be restricted to those only who are in dire need of it. Government should look for long-term measures on how to provide better services to people.

It can provide a rebate of up to 200/month for residential customers in the electricity bill. This will make a significant impact on small consumers.

Similar rebates can be offered to home-based enterprises. Additional rebates can also be offered to those who used energy-efficient enterprises like TV, Fridge etc.

Initiatives should be taken to solve the mistrust between consumers and distribution companies. There should be a quick resolution of queries/complaints.

Source: This post is based on the article “Free power at a big price” published in The Hindu on 13^th October 2021.