Residential Consumer Understanding of Electricity Bills: The Case of the Indian Consumer

Residential Consumer Understanding of Electricity Bills: The Case of the Indian Consumer

Gauri Joshi, Vasundhara Sen
Copyright: © 2021 |Pages: 16
DOI: 10.4018/IJABIM.293275
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Abstract

The neoclassical model of economics assumes that greater the information available, the easier it is for a consumer to make decisions. In the context of electricity usage, overwhelming amounts of information presented on energy bills and a lack of real-time information deter consumers from understanding their own energy usage and developing personalized strategies to reduce it. This study assesses the literacy levels regarding electricity bills amongst consumers in India. Regression results indicate that homes with stronger beliefs in energy conservation minimize their usage. The size of the dwelling,demographics, and the ownership of the dwelling influence literacy levels regarding electricity bills. The study had a counterintuitive finding, as the respondents were found reluctant to receive a normative comparison of their electricity bills—strange for a collectivistic cultured society like India. The study recommends making electricity bills more visually appealing and increasing their frequency to increase awareness of energy usage.
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1. Introduction

Residential electricity consumption has increased by a factor of more than 50 since 1971 in India (Chunekar & Sreenivas, 2019). The increased pace of urbanization coupled with rapid electrification and rising incomes has resulted in increased appliance ownership and, thereby, increased electricity usage in India (Chunekar & Sreenivas, 2019). Despite consuming less than one-third of the world’s average electricity, India still ranks third in carbon emissions, after USA and China as per the Intergovernmental Panel on Climate Change, 2015 While on the one hand, there is progress towards meeting United Nations Sustainable Goal 7 of energy access to all, on the other hand, there is a conscious drive towards reducing energy-related environmental pollution(International Energy Agency, 2020). The energy demand in India is poised to double by 2040 (International Energy Agency, 2020), indicating increased energy generation and carbon emissions even further. India has contributed a 5% growth in CO2 emissions with the rise in its GDP (Azevedo, Sartori, & Campos, 2018). This necessitates energy conservation to reduce the impacts of climate change. Conservation efforts can start with the residential energy sector, which contributes 25–30% of all energy consumption worldwide, while also contributing to 17% of total CO2 emissions (Nejat et al., 2015; Swan & Ugursal, 2009).

Providing consumers relevant, timely and symmetric information can enable them to participate in conserving their residential energy. The electricity bill is intended to provide usage-related information to increase energy consciousness amongst consumers and encourage them to reduce consumption (Trotta, 2020). It is received periodically and the included price and quantity information offers consumers an opportunity to modify their consumption in response to external feedback (Wichman, 2017). A well-drafted energy bill serves as an effective tool in facilitating consumers on their electricity usage (Brühl, Smith, & Visser, 2019). Consumers need to receive adequate and transparent information on electricity pricing, consumption and complaint redressal procedure from their energy providers to enable energy conservation (Balani, Ramesh, & Aggrawal, 2021).

Gathering such robust information on energy consumption is possible with the help of smart meters, that enable electricity consumption tracking in 15 minute intervals and transmit energy consumption information to the user and the utility provider. However, in India, smart meters are yet not widely installed. As of current practices, data on residential energy consumption is not recorded till the utility provider completes the physical examination of electricity meters in residential premises. The nation wide lockdown enforced between March and May 2020, ensued by the COVID-19 crisis, showed the urgency for installation of smart meters which can enable in monitoring energy usage and also recommend ways to conserve the energy.

The need for residential energy conservation is more pressing in the post-COVID-19 world. Data suggests that during the COVID-19 lockdown residential consumption of electricity increased significantly (Elavarasan, et al., 2020), while that of large industrial and commercial units was reduced (Aruga, Islam, & Jannat, 2020). While literature is well documented in other facets of energy literacy amongst electricity consumers (DeWaters et al., 2013; Martins et al., 2019), this study seeks to understand the following from the consumer’s montly electricity bills

  • 1.

    Consumer’s interpretation of their bills

  • 2.

    Consumer’s perception of their bills

  • 3.

    Impact of socio demographic factors on electricity usage

  • 4.

    Electricity consciousness of the consumers

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