Sudden inflation in the price of energy sector

Electricity is one of the fundamental infrastructures of modern civilization. Every sphere of human life depends on electricity, specially linking to industry, agriculture, education, healthcare information technology and daily household activities.

Therefore, an increase in electricity prices is not merely an economic decision. It also creates social, political, and developmental impacts.

Particularly when electricity prices are increased suddenly, a question naturally arises among the general public.

From an economic perspective, there may be valid reasons for price adjustments. However, from the consumers’ perspective, where is the visible improvement in the quality of service?

If electricity bills increase, will the quality of service improve proportionately? Or will consumers simply have to bear the additional financial burden? From an economic perspective, there may be valid reasons for price adjustments.

However, from the consumers’ perspective, where is the visible improvement in the quality of service? Several areas deserve special attention to improve the quality of customer service.

First, introducing a 100 percent smart metering system would enhance transparency in billing.

Second, artificial intelligence-based customer service and online complaint management systems could be made more effective.

Third, if information regarding power outages, estimated repair times, and service progress were communicated through mobile applications or SMS, customers’ inconvenience would be significantly reduced.

Fourth, emergency response teams at the field level should be made more active so that problems can be resolved more quickly.

In addition, specific performance indicators may be established to evaluate the efficiency of electricity distribution companies.

These indicators may include the average duration of power outages, the average time required to resolve complaints, billing accuracy, and customer satisfaction rates.

Regular publication of these indicators would encourage healthy competition among the companies and strengthen accountability.

Analysts say that this enormous subsidy in the electricity sector is a warning signal for the country’s overall macro-economy.

If nearly Tk. 44,000 crore from the national budget is spent solely on covering the electricity sector’s deficit, essential sectors such as education, healthcare, and social protection will face severe budget shortages.

To ensure long-term stability in the electricity sector, electricity generation, transmission, distribution, financial management, and energy security must be considered in an integrated manner.

Price adjustments alone cannot provide a permanent solution to existing problems.

Efficient management, technological modernization, good governance, corruption control, and accountability together can establish the electricity sector on a sustainable foundation.

A phased approach to electricity price increases is also important. Sudden price hikes place an immediate burden on the public.

On the other hand, planned and pre-announced phased adjustments allow households and businesses to plan their expenditures accordingly.

At the same time, if visible improvements in service quality are introduced before implementing price increases, public acceptance is also likely to improve.

The government is fully aware of the issue of electricity price increases.

To reduce the subsidy burden, the government, through the Bangladesh Energy Regulatory Commission (BERC), has increased electricity prices at the consumer level by an average of 16.68 percent, effective from the June billing cycle.

However, in order to protect marginal consumers, the tariff for those using up to 75 units of electricity has not been increased.

At the retail level, the price has been increased by Tk. 1.52 per unit, bringing the rate to Tk. 10.63 per unit, which is nothing less than adding insult to injury.

Since electricity consumption in rural areas generally does not exceed 75 units per month, marginal consumers in villages remain outside the scope of this price increase.

According to conventional estimates, nearly 80 percent of the country’s population falls into the marginal category.

This 80 percent includes low-income groups such as labourers, farmers, blacksmiths, potters, weavers, fishermen, and similar occupations.

Following the recent increase in electricity prices, a survey was conducted among 50 consumers belonging to the lower-income, lower-middle-income, and middle-income classes.

The respondents included small business owners, retail and wholesale vegetable sellers, medium-sized shopkeepers, primary and secondary school teachers, and third- and fourth-class employees in both the public and private sectors.

Discussions with them revealed that this sudden increase in electricity bills has created an additional burden on household livelihoods, that has undoubtedly exceeded the limits of affordability.

Should a lower-middle-class or middle-class salaried employee, such as a school teacher or a third- or fourth-class government employee, also be regarded as belonging to the marginal population? Are they also consumers of only 75 units of electricity, or members of the marginal community? In many developed countries, electricity companies regularly publish performance reports and present service quality indicators to the public. Bangladesh also needs to adopt and expand such practices.

If an increase in electricity prices becomes unavoidable due to genuine economic necessities, that decision must be inseparably linked with improvements in the quality of customer service.

A situation in which consumers pay higher prices but continue to receive the same-or even poorer-quality of service cannot be acceptable in the long run.

Public confidence must be earned through uninterrupted electricity supply, transparent billing, prompt resolution of complaints, the use of modern technology, and effective accountability.

The true success of the electricity sector lies not merely in increasing generation capacity, but in delivering reliable, high-quality, and fair services to the doorstep of every consumer.

(The writer is former Deputy Director General, Bangladesh Ansar and VDP).