Prepaid Meters in Electricity. A Cost-Benefit Analysis

Prepayment meters have been widely adopted by utilities in different countries. Yet its practice, they are still controversial. This chapter uses social cost-benefit analysis to assess the adoption of prepaid electricity meters within a local community. The analysis highlights how the role of tariffs, the cost of start-up investment and the socio-economic characteristics of the population affect system performance. Simulation exercises are used to examine the sensitivity of results to change in some distinctive elements of policy implementation. The chapter also summarizes the results of a survey conducted among local electricity users. Results indicate that prepaid meters lead to an increase in welfare. They also indicate that the advantages of the system are linked to a reduction of arrears in accounts receivable, and operational and financial costs on the part of the service provider, as well as to a better allocation of resources for the consumer. However, survey evidence suggests that the main argument against prepayment relates to the possibility of self-disconnection by low income consumers. Los sistemas de comercialización prepago de servicios públicos constituyen una solución innovadora al problema de facilitar las posibilidades de pago de los usuarios. A pesar de su amplia difusión, el uso de estos sistemas es aún controvertido. Este trabajo contribuye a ese debate porque emplea un análisis costo-beneficio para examinar la adopción del sistema prepago de energía en una comunidad. Los resultados resaltan la potencialidad del sistema prepago de energía como herramienta tendiente a incrementar el bienestar social