Unpaid electric pills may be leading to widespread outages and rationing of power in developing countries, according to researchers at the University of Chicago.
Despite efforts to improve electricity access and reliability, more than one billion people worldwide still lack access to reliable electricity.
According to the researchers, the reason behind this may be the fact that society often views electricity as a right, something that doesn’t need to be paid for.
This view sets off a vicious cycle where consumers don’t pay their bills, governments tolerate this, utility companies then lose money, eventually going bankrupt and therefore cutting off consumer supply because they can no longer afford to pay generators.
The researchers are therefore calling for three changes to the current system:
• Subsidy reform: Since consumers of all incomes often enjoy electricity subsidies, subsidies are frequently regressive and poorly targeted. Removing these subsidies and supporting the poor through direct transfers will allow them to pay for power without distorting the electricity market.
• Changing social norms: Introducing consumer incentives and changes to the bill collection process could reduce electricity theft and nonpayment of bills. The study shows that theft is not restricted to the poor. Indeed, larger consumers account for most of the losses.
• Improved technology: Technology-based reforms such as using smart meters would explicitly link payments and supply at the individual level.
Micheal Greenstone, coauthor of the study said: ‘It is critical to provide lifeline electricity to the poorest, but doing so in a way that causes electricity markets to fail harms everyone.
‘Our view is that no solution will work in the end, unless the social norm that electricity is a right is replaced with the norm that it is a regular product that people pay for, just like food, cell phones, etc.’
Anant Sudarshan, south Asia director of EPIC added: ‘At the heart of our recommendations is the goal of achieving universal access to electricity that runs reliably 24-hours a day, every day of the year, and the economic growth that it facilitates.
‘Many of these policies complement one another and seek to change how people think about electricity—that is, to break the social norm that it is ok to not pay their full electricity bills.’
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