Over a billion people in the developing world are not connected to the grid at all, and hundreds of millions more, once connected to the grid, get only erratic supply. A fundamental reason for this gap is that in many developing countries theft and non-payment are widespread and state-run electricity distribution companies lose money on each kilowatt-hour sold. These distribution companies are not given unlimited public subsidies, so their response is to limit the supply of electricity to those on the grid and make it hard for those off the grid to get connected.
This project will evaluate whether using technology, in the form of smart metering, can lead to increased consumer payments and/or concomitant improvements in service quality. Smart meters can lower both monitoring costs and the transaction costs associated with enforcement actions such as disconnections. They may also mitigate the role of liquidity constraints by enabling new payment models such as pre-paid metering and flexible top-ups of a running balance used to pay for power. Smart meters also enable real-time pricing, improving the utilities ability to charge more (less) for electricity at times when it is more (less) expensive to supply.
For all these benefits, there is very little evidence on whether this technology can change payment behaviors or improve reliability and access, in a developing country context with modest state capacity and high levels of theft. Our study involves conducting a large-scale randomized-control trial to measure the effect of enabling online billing and remote disconnections, via smart-meters, on consumer payment behavior, consumption levels, and supply quality. We will also seek to measure spillovers by varying the number of consumers in a neighbourhood for whom these smart meter enabled services are enabled. Finally, we will measure outcomes relating to service quality including billing complaints and consumer satisfaction measures.
The experimental setting is the state of Haryana in India and the experiment is in partnership with the Department of Energy and the state electricity utilities.