Abstract
A significant share of households in low-income urban areas access electricity from shared meters, which may result in suboptimal electricity use. However, this issue has received little attention from academics and policymakers. While electricity meter sharing may reduce the fixed connection costs, it can contribute to reduced energy efficiency, create agency problems between landlords and tenants (due to imperfect information on different households’ electricity consumption), leading to social conflict (mediated by asymmetries in bargaining power and knowledge), and undermining confidence in service provision by the utility.
More specifically, three potential problems arise from meter sharing. First, households may pay significantly below or above their actual consumption, triggering undesirable responses to price-based energy efficiency policies, or to efforts to promote adoption of energy efficient equipment. Second, the inability to know one's consumption creates trust issues and potential social conflict, as the landlord's interest in bill management may misalign with the tenant's perceptions, needs and actions. Third, suboptimal electricity usage can compromise living standards and slow the energy transition. Thus far, though meter sharing is common in low-income countries and has documented adverse effects on equity under many prevailing tariff regimes, there is a lack of evidence on the challenges that meter sharing poses to bill allocation, energy use behaviour, and related welfare implications in low-income countries. This study aims to provide such evidence, to inform analysis of the social benefits of potential policy interventions that reduce these problems.
The study aims to understand whether introducing a consumption monitoring device resolves information asymmetry in electricity consumption between parties. We aim to answer two questions, using a Randomized Controlled Trial (RCT) with two treatment arms and a comparison group. First, we evaluate the impacts of the consumption monitoring devices on landlord-tenant agency relationship and billing sharing arrangement. Second, we estimate the welfare implications of shared vs. unshared connections, under a volume differentiated tariff structure.