Overcharging for electricity

News that power distribution companies have been using manipulative techniques to overbill customers — especially those in protected classes — is both upsetting and unsurprising. News reports say the National Electric Power Regulatory Authority (Nepra) has confirmed that in August, the distribution companies raked in several billion rupees extra by delaying meter readings to allow consumers to jump into higher rate categories for the billing period, and also allowing the companies to charge on low-end, mostly poor consumers for which they would not have to pay under normal circumstances. Many consumers also saw other unusual additional charges on their bills.

The irony is that while privately-owned utility companies the world over are praised for their efficiency and criticised for prioritising profits over consumers, public companies, despite their inefficiencies, are supposed to prioritise citizens, rather than squeeze them for cash. Nepra has not made its inquiry report public yet — the news reports were all source-based — so we can’t be sure if the overbilling was a result of collusion or if all the distribution companies just happened to employ the same schemes at the same time.

The Lahore Electric Supply Company and Hyderabad Electric Supply Company probably will face some action, as the reports said “a significant portion” of overbilling was concentrated in these regions. However, the nature of the action is still up for debate. While we hope consumers will be refunded and the guilty parties punished, the government also needs to look into reforming the billing system to avoid such fiascos in the future.

A popular solution in many countries is to allow consumers to pay estimated bills, which use the average monthly consumption of several months to calculate bills — making it harder for a one-month spike to change a consumer’s billing category and reducing the harm associated with late meter reading. Such a move would also let consumers ‘spread out’ bills from higher consumption months, making it easier to balance their books.

Published in The Express Tribune, November 22^nd, 2023.

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