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Analytical Study Of Impact Of Prepaid Metering System In Power Distribution

Sector In Bangladesh

Conference Paper · March 2019

DOI: 10.1109/CEPE.2019.8726848

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 Analytical Study Of Impact Of Prepaid Metering
System In Power Distribution Sector In Bangladesh
Tawhida Akand1, Ziaul Haq2, Abdullah Al Mejbah3
1,3
Department of Electrical and Electronic Engineering
1
Khulna University of Engineering and Technology
3
Chittagong University of Engineering and Technology
2
Sub divisional Engineer
2
West Zone Power Distribution Co. Ltd.
Khulna, Bangladesh
tawhidacuet@yahoo.com, zia04_eee@yahoo.com, almejbah@gmail.com

Abstract—Pre paid meter is one of the new improvement in Ariel and Luciana (2008) in their cost-benefit analysis of
billing system of power system of Bangladesh to reduce loss and prepaid meters discussed that accumulated debt was reducing
increase system reliability. In Bangladesh installation of prepaid with adoption of prepaid meters. They also indicated that the
meter is started in 2005 and people of this country have started pre-payment metering system reduced accounts receivables.
getting benefits of using prepaid meter. This paper is mainly
Power Holding Company of Nigeria and National Power
focused on the technical as well as the commercial effect of
prepaid meter in distribution system. Authority of Sierra Leone introduced prepaid electricity
billing after facing revenue collection challenge due to having
Keywords—Prepaid the meter, System loss, Revenue collection, huge customer debt profiles in 2006 and 2007 respectively.
power system. Their motive was to increase revenue collections and
minimize debts (Ogujor, 2007). This study showed that this
I. INTRODUCTION initiative increased revenue collection but it decreased revenue
generation. It means the consumers became conscious of using
Electricity is a vital element required for economic growth,
electricity. This study also concluded that consumers should
poverty reduction and social development. For a stable and
adopt the prepaid meters as through it consumers only pay for
economically viable electricity distribution system an effective
the electricity they consumed rather on the estimated postpaid
and trustworthy revenue collection system a countrywide
billing The prepaid system has been used in United Kingdom
prepaid metering system is evident. It is the most efficient
for 80 years and its motive was to minimizes the debts
device for increasing power system reliability as it reduces
(Kettless, 2004).
most of the losses. Over ten years ago the idea of using
Developed Western countries, as well as other
prepaid meters to stem the financial drain on Bangladesh
developing countries, embrace prepaid billing technology, for
power companies was born. This prepaid metering system was
instance, by 2003 up to 15-20 percent of consumers adopted
a result of collaboration between the BPDB and the KfW
this billing system and Northern Ireland Electricity had
Entwicklungs bank. Financial assistance (a grant of 4.09
increased prepaid billing system to 25 percent. Some experts
million Euros) for this system to Bangladesh is provided by
argued that human handling should be terminated from all
this bank on behalf of the German Federal Ministry for
billing systems to prevent fraud and error. Some other experts
Economic Cooperation and Development (BMZ) in
supported the prepayment system as a means of increasing
Chittagong. Experimentally this project had been introduced
revenue collections(Ontomwa, 2014). Some studies
in the port city Chittagong, before installation of prepaid meter
considered it as more important as it can provide service even
across the country. [1]
to the poorer sections of people (Blore et al, 2004).
In mid-1980s prepaid electricity billing was first
Another study was also conducted in Uganda on
introduced. The primary purpose of this initiative was
adopting prepaid billing system and it tried to identify whether
supplying electricity at an affordable rate to lower income
it reduces non-technical energy losses or not. This study also
level people. Following the success of prepaid billing in South
found that adopting prepaid meters has impact on reducing
Africa many countries adopted this such as United Kingdom,
financial losses such as revenue collection as well as bad
India, Argentina, Turkey etc. Their motive was to extend the
debts.
electricity connection in not only the poor urban area but also
The relationship between prepaid electricity billing
in the far poor rural areas (Tewari & Shah, 2003).
and working capital management was studied in the Kenya
Prepaid billing is normally developed to manage accounts
Power Company and it used a three year period data from
receivable (debtors) which causes because of credit sales.
2009 to 2012 and it found that there was both a positive and
Prepaid system can reduce the amount of unnecessary debt.
negative relationship between prepaid electricity billing and  keypad
working capital management(Kennedy, 2012).
 Lock system
Another Research by Kiokoon Kenya Power has been
conducted on the perception of prepaid meters by using a According to technical feature prepaid meter is two types.
survey research design to identify the effect on prepaid billing
system on revenue collection efficiency and it worked on 396  Pre-paid meter
meters in Nakuru Country. The stratified random sampling  Smart prepaid meter
method was used and 201 respondents were taken as sample.
The study was conducted on the basis of primary data by using The smart prepaid meter can communicate with the server.
questionnaire. The study found that there is a negative Normally two companies supply prepaid meter to BPDB.
correlation between perceived risk and revenue collection. It These companies are
also found that there is a positive relation of perceived low
 Hexing
cost and perceived usefulness with revenue collection. That
means perceived risk minimizes revenue collection and  Inhee
perceived low cost and perceived usefulness increases revenue
Already 87,000 prepaid meters have been installed and
collection.
another 200,000 are under implementation. The government of
The response of employees and clients to the transition of
People’s Republic of Bangladesh has planned 100% prepaid
service from postpaid to prepaid electricity bill payment was meter coverage within 2018.
studied in the West Kenya region(Miyogo et al, 2013).
Display
II. PREPAID METERING SYSTEM
The prepaid metering system is a special type of energy
Indicator Lights
metering system in which consumers have to buy electricity
before using. The concept of prepaid meter is “Pay First Then
Lock
Use.” It is a digital display metering system which modernizes
the electricity billing system. The main benefit of prepaid
meter is it can reduce account receivable and nontechnical
system loss up to 0% [1] and revenue collection increase up to
100%.
Keypad
The customers in the pilot area were satisfied using
prepaid meters. The overall customer services had improved in
the prepaid meter installed area. There are mainly two types of
prepaid meter. Fig 1 shows types of prepaid meter.

Pre paid meter

Fig 2: Prepaid Meter

Keypad type Smart card Type

III. WORKING PRINCIPLE OF PREPAID METER

Currency transfer
Currency
Transfer
Unit Transfer
Fig 1: Hierarchy of types of prepaid meter.
Bangladesh University of Engineering and Technology
designed and developed this system. DESCO financially
support for commercialization of prepaid meter.[1]
Figure 2 shows a keypad type prepaid meter. It has
 A digital display system,
 Indicator lights
Prepaid system is a two-way communication system. A
traditional electronic prepaid metering system operates on
three levels. First the meters installed at consumer’s house.
The next level is the vending station situated at utility’s offices
or at appointed agents. The communication between vending
stations and the meters is in the form of token, which is used
to top up the credit in the meter.
Token Vending Meter
Station
System
Master
Station
Fig 3: Block diagram of the operation of prepaid meter.
 IV. DISTRIBUTION SECTOR IN BANGLADESH
In Bangladesh, there are 5 distribution companies
operate in the various area of Bangladesh.
1. Bangladesh Power Development Board (BPDB)
2. Dhaka Power Distribution Co. Ltd (DPDC)
3. Dhaka Electricity Supply Co. Ltd.(DESCO)
4. Northern Electricity Supply Co. Ltd.( NESCO)
5. West Zone Power Distribution Co. Ltd.(WZPDCO)
All of these companies started using the prepaid metering
system and stated to get benefits of prepayment metering
system. After using prepaid metering system loss, Account
receivable/Sales ratio decreased. Table 1 shows their area and
starting of usage of prepaid meter.
V. FACTORS AFFECT POWER DISTRIBUTION
In the power distribution system factors that affect
economic efficient power distribution:
1. System loss
2. Revenue collection
3. The ratio of account receivable and sales
A. System loss
System loss in the power distribution system can be
defined as the difference between the sold amount of
electricity and revenue collected amount of electricity. On
another hand, it can also be described as the amount of
electricity that cannot be billed. Low system loss is an
indicator of a reliable system. System losses are two types:

Table I: Distribution companies and their area. 1. Technical system loss

Name Area Establishment Start 2. Nontechnical system loss
operation of
year the Prepaid
meter Technical system losses are line losses and it is fixed. It is
BPDB Chittagong, 1972 2010 because of the resistance and inductance of line,
Comilla, transformers etc.
Sylhet, Nontechnical losses, also called commercial losses, are
Maymansingh like inductive load, low power factor, electricity theft,
DPDC Dhaka city 2007 2015 metering inaccuracies, unmetered losses for very small
corporation(so loss, error in meter reading, billing problems etc.
uth), Nontechnical losses can be reduced. And it can be reduced
Narayanganj to almost zero by using the prepaid meter. As because
city consumers buy a fixed amount of electricity after using
corporation that much energy power, supply to the consumer is shut
(partly) down so electricity theft from one consumer to another
unmetered service can be caught easily. The inaccuracies
DESCO Dhaka city 1996 2010 of the meter are reduced as the prepaid meter is digital and
corporation(no every small load is taken account in this metering system
rth) so there remain no unmetered losses for the very small
WZPDCL Khulna, 2002 2016 load. As human can make mistakes so the error in meter
Madaripur, reading and billing problems can be reduced easily in the
Barishal prepaid metering system.
Energy theft can be reduced by a prepaid energy
NESCO Rajshahi, 2016 ---------------
meter. In average pre-paid meter, energy theft can be
Rangpur
identified by the meter itself. If larger current flows
through the neutral than phase then pre-paid meter detects
it and cut the line. In case of a smart prepaid system,
Among them, NESCO is the newest company in power someone tries to temper meter notification will be sent to
distribution system and WZPDCL has newly implemented the server.
pre-paid meter, so not enough record regarding prepaid meter.
System loss of the companies of Bangladesh is
reduced with the use of prepaid meter.
 In BPDB and DPDC system loss decrease with the
increase of prepaid meter. In DESCO system loss still
decreases with the decrease of a prepaid meter, because of
the decrease of technical losses. So an increase in a
number of prepaid meters causes low system loss (%).

Fig 6: Relation increase of prepaid meter and system

loss(%) in BPDB

Fig 4: Meter bypass

Fig 7: Relation between the increase of prepaid meter and

system loss(%) in DPDC

Fig 5: No reading at the bypassed meter.

Fig 4 shows a bypassed meter and Fig 5 shows energy

theft by no bypassed meter. Because of this, revenue
collection becomes low. This type of meter tampering is
not possible in pre-paid meter system. Fig 8: Normalized Increase of prepaid meter and system
loss in DESCO.
B. Revenue Collection.
Revenue means the amount collected from electricity
sale. Development of energy sector depends on this revenue
collection. The only income of distribution companies of
Bangladesh is revenue which comes from billing. So a healthy
amount of revenue/sales is important to maintain the
production of electricity.
With postpaid meter system, many people became used
with not paying the bill or delaying in paying the bill which
hampered the electricity production and so as the distribution.
In prepaid meter as consumers have to pay before so
revenue collection is increased to almost 100%. This gave a
second life to the energy sector of Bangladesh and reduced
subsidies. Fig 11: Relation between % revenue collection with
normalized increase of prepaid meter in DPDC.

In BPDB revenue collection has increased with the

increase of prepaid meter except the year 2012-2013. In
DPDC and DESCO revenue collection increase with the
increase of prepaid meter installation.

C. Account Receivable/sales
Account receivable/sales refer to how much amount
can be collected per sales. High account receivable/sales
mean the loss of government as well as loss of electricity
production. So low Account Receivable per sales is
needed.

Fig 9: Increase of revenue collection with the pre-paid

meter in DESCO

Fig 12: % decrease in account receivable per sales with

increase in pre-paid meter in DESCO.

D. New opportunity for skilled labor

In today’s Bangladesh, unemployment has cursed the
economy as well as the growth of a country. Because of pre-
Fig 10: % change of revenue collection with the prepaid
paid meter system, every distribution organization has to
meter in BPDB
create the IT sector. In which a lot of unemployed people can
find employment. The meter readers are also can find a better
opportunity with some training.

Fig 13: Number of vending station and Employee at the
vending station.
Fig 13 shows, the skilled employee is required for the
vending station, and it creates employment opportunity.
VI. CONCLUSION
To ensure better service for the consumer through
sincerity, dedication and new technology adoption, prepaid
energy meter is a smart system in the power distribution
sector. Distribution companies are now trying to spread the
use of a prepaid meter to every consumer of Bangladesh.
Using prepaid meter will end almost all confusions and
problems of the traditional billing system. This system will
help both the consumer and the Government of the country by
reducing system loss and improving revenue collection and
lead the country to prosperity. The authority is well aware of
the importance of the prepaid metering system. Increase in the
use of prepaid meter will bring the socio-economic prosperity
in Bangladesh.
Acknowledgment
The Author would like to thank all the employee of the
distribution sector, who published all information in the
website and made transparent all the information which was
helpful and have a contribution to this research.
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