n recent times, a surge in electricity tariffs has left consumers struggling with rising monthly bills, causing financial insecurity. The average consumer tariff, including taxes and surcharges, has soared to alarming heights.

The price hike has further compounded the financial strain on households already wrestling with the burdens of inflation and economic challenges. In these chaotic times, innovative solutions are paramount to alleviate the consumers’ suffering.

The concept of budget billing is based on annual electricity consumption. Assume your electricity bill is no longer a monthly rollercoaster ride, but rather a steady, predictable expense. This approach aims to offer customers a more consistent and manageable billing experience.

The idea is refreshingly simple: your annual energy costs are evenly distributed across the year, resulting in a fixed, monthly payment based on your average monthly bill through retrospective analysis.

How does the system work and what are the benefits? The approach centres on closely monitoring energy consumption through smart meters, which collect data throughout the year to accurately estimate monthly energy usage. The result is a stable and predictable bill, alleviating concerns during months of higher electricity consumption.

Prepaid meters are a promising option for the utility companies as they offer several advantages. They also empower consumers to save money by paying for electricity upfront, providing greater control over energy use.

These metres also foster energy conservation by offering real-time usage information, raising awareness of electricity consumption and prompting users to adopt more energy-efficient habits.

Real-time meter readings enable users to monitor use and make necessary adjustments to save costs.

Under this scheme, monthly electricity bills are calculated by taking a 12-month rolling average of power use, smoothing out the crests and troughs that frequently characterise traditional billing.

The consumers receive 12 bills per annum, each closely resembling the others. This provides the reassurance of an electricity bill like other regular expenses such as rent, mortgage or car insurance.

Arguably, the best thing about budget billing is that it makes electricity payments average out. This is a solution for typical Pakistani electricity consumer on a tight budget and wanting to know how much they’ll spend on electricity each month.

This system isn’t solely about fixed payments; it embodies fairness. If estimated payments consistently surpass actual consumption, consumers may receive refunds or credits. Conversely, if estimated payments consistently fall short, adjustments may be necessary. 

The system remains adaptable. Regular reviews ensure that estimated consumption aligns with actual use. At year’s end, total energy consumption is tallied based on smart meter data. This system isn’t solely about fixed payments; it also ensures fairness. If estimated payments consistently surpass actual consumption, consumers may receive refunds or credits. Conversely, if estimated payments consistently fall short, adjustments may be necessary to cover the difference.

A budget billing facility can be offered to all consumers.

However, such a shift warrants a reevaluation of existing tariff structures, fuel inventory methods and energy invoicing practices of the CPPA(G), the NEPRA and the Ministry of Energy (Power and Petroleum Division). The proposed changes may present new challenges, necessitating financial solutions to address potential issues.

The psychological impact of this transition must also be considered. Adapting to the new system may initially evoke apprehension, particularly when consumers encounter higher winter bills for lower energy consumption. Effective education and communication will be vital in managing this psychological adjustment.

To ensure the effectiveness of this system, security deposit mechanisms at the distribution company level and with landlords of rented properties may be necessary. These measures ensure recovery of electricity bills throughout the year.

Considering the challenges faced by the economy, finding new approaches to tackle the rising electricity costs is crucial. However, there are no quick fixes. We must develop a comprehensive plan that encompasses short-, medium- and long-term strategies, ensuring sustainability to avoid recurring issues.

While the government of Pakistan could potentially provide financial support to electricity consumers, the current economic instability presents formidable obstacles to that approach. A different approach is needed to enhance electricity affordability and facilitate a move to solar energy.

Budget billing based on annual electricity consumption emerges as a transformative solution in this context. It not only provides relief to consumers but also offers a fair and manageable approach to energy payments. The potential benefits for consumers and the energy sector make this concept a forward-looking and viable solution.

The writer is a research associate at the Sustainable Development Policy Institute