Residents of Uttar Pradesh, particularly Lucknow, are bracing for a potential increase in their electricity bills. This follows a recent advisory from the Union Ministry of Power (MoP) that could allow power distribution companies (discoms) to pass on the maintenance costs of smart meters to consumers, a move that appears to contradict earlier government assurances.
From Free Promise to New Cost Burden
In a letter dated November 28, the MoP, through Under Secretary Neeru Lal, advised all State Electricity Regulatory Commissions (SERCs) and Joint Electricity Regulatory Commissions (JERCs) to permit discoms to recover expenses related to smart metering works. The aim, as stated, is to ensure "cost reflective tariff" for the discoms while safeguarding consumer interests.
This directive is part of the Revamped Distribution Sector Scheme (RDSS), which operates on a 'Totex' (total expenditure) model. Under this, private Advanced Metering Infrastructure Service Providers (AMISPs) handle the supply, installation, operation, and maintenance of smart meters. Discoms pay these providers on a per-month, per-meter basis, covering both capital and operational outlays.
Critically, the MoP's latest stance seems to reverse its own 2023 order, which clearly stated that the RDSS scheme should impose no additional financial burden on consumers for smart meter installation.
Regulatory Response and Consumer Backlash
The Uttar Pradesh Electricity Regulatory Commission (UPERC) has stated it will consider the MoP's advisory while finalizing the tariff order for 2026-27. This opens the door for the proposed costs to be integrated into future electricity rates.
Consumer advocacy groups have labeled the move a "betrayal." Avadhesh Kumar Verma, a member of the Central Advisory Committee (CAC) and Chairman of the Uttar Pradesh Rajya Vidyut Upbhokta Parishad (UPRVUP), has formally protested to Union Power Minister Manohar Lal Khattar, demanding the immediate withdrawal of the November advisory.
"Existing consumers were promised free installation under RDSS. Now, through a backdoor order, the entire cost will be recovered through higher electricity rates," Verma said. He argued this constitutes a 'double recovery'—first through initial connection charges for old meters, and now through tariff hikes for smart meters.
Financial Concerns and Tender Discrepancies
The financial implications are significant. Verma points out that approximately 3.62 crore consumers in Uttar Pradesh have already paid an estimated Rs 3,000 crore for their existing non-smart prepaid meters during initial connections. Replacing these with smart meters within warranty periods renders that investment wasteful.
Adding to the controversy are the tender costs. While MoP guidelines capped smart meter costs at Rs 6,000 per unit (including infrastructure), tenders in Uttar Pradesh were awarded at Rs 8,000-9,000 per meter. The state's smart meter tender was awarded for Rs 27,342 crore, nearly Rs 8,500 crore higher than the approved Rs 18,885 crore.
"Now, the government has found a way to recover this additional cost from consumers," Verma added, suggesting the excess would directly benefit private players.
The MoP, however, defends its position. In its letter, it stated that "efficiency gains will offset these costs over time" and thus regulators should allow these expenses in tariffs. The Central Electricity Authority's (CEA) guidelines from January 30, 2025, also support treating monthly Totex payments as regular business expenses for discoms, recoverable through tariffs after regulatory scrutiny.
Nationally, under RDSS, work for installing 20.33 crore smart meters has been sanctioned, with over three crore meters installed by the end of November. The outcome in Uttar Pradesh could set a precedent for how these costs are managed across India, placing consumer interests and regulatory independence under scrutiny.
