Power users denied security deposit benefits

Emran Hossain | Published: 00:56, Jan 15,2020


Security deposits paid by consumers to power distributors for decades have never been used properly though in parts of the world it offered direct relief to consumers from increasing burden of power tariff.

Until November, state owned six power distributors had realised from consumers Tk 4,700 crore as security deposits from 1960s, according to Bangladesh Energy Regulatory Commission.

A conservative estimate of the commission said that the piled up money should have earned the power distribution companies Tk 165 crore in bank interests alone last year.

In many countries interests generated on security deposits are distributed among consumers every month, by adjusting their utility bills, in order to give them an instant relief against ever increasing power costs.

But power distributors in Bangladesh considered security deposits and the interests generated on it as their income and were never held accountable for spending it.

‘The distribution companies never realised that it is not their income rather consumers money,’ said Bangladesh Energy Regulatory Commission member Mizanur Rahman.

In 2017, the commission asked the power distributors to separate security deposits from other transactions and keep it in a separate bank account and update the commission with information on interest generated on it.

The power distributors told the commission that they were working on managing security deposits separately but the commission refused to stay satisfied with mere explanation.

Last month, the commission’s technical evaluation committee told public hearings that the distribution companies should report twice a year to the commission with specific banking information.

‘We are trying to discipline a system that long denied consumers benefits,’ said Mizan.

Security deposit is the money distribution companies realise from consumers in advance for giving power connections, according to Power Development Board.

The board said that security deposit is a safeguard against power consumers disappearing with a trace without paying electricity bills.

The payable amount of security deposit varies depending on consumer’s power demand and it roughly equals two months of his probable electricity bills.

Theoretically, consumers would get back their security deposits once they discontinued their power connection.

It is highly unlikely for household consumers to disconnect power connection but industrialists may need it in cases of losing businesses.

But, in history of Bangladesh anyone never got back their security deposit.

Rather, people had to pay security deposits for each and every power connection ever since the establishment of the Water and Power Development Authority in the 1960s, said PDB.

The security deposit increased in amounts gradually as the demand for power increased over the years and the power distributors expanded their businesses.

The power distributors charged varying amounts as security deposits, mostly arbitrarily, and never gave any account of how they were spending the money.

In 2017, the power distributors charged up to Tk 3,000 per consumer for giving power connection.  

But the commission ruled that things could not go like this and set a unified security deposit for all the power distribution companies in 2017. Depending on consumers power demand, it could be up to Tk 1,000.

PDB general manager Kawsar Amin Ali said that interests generated on security deposits were always adjusted to power tariff.

Still he admitted that poor record keeping over the years made it difficult for them to return security deposits to consumers no longer in power connection.

PDB found it in an uncomfortable situation when their consumers in parts of the country took to the streets demanding return of their security deposit.

The demonstrators were power consumers who switched to pre-paid metering system in which they pay in advance for power.

In 2017, the commission had said that consumers switching to pre-paid billing system must get back their security deposits.

It also said that new consumers getting power connection under pre-paid billing system would not pay any security deposit.

Over 11 lakh people installed pre-paid meters so far but none of them got their security deposits back, said PDB’s Kawsar Amin Ali.

He said that they did not have record of security deposits paid by many of these people who got power connection as early as four decades ago.

‘We are trying to find a way to solve the problem,’ said Kawsar.

‘But the people will get back their money,’ he said.

Regarding BERC’s instruction about not treating security deposit as their income and keep it separate from their other transactions, Kawsar said that they would follow the instruction.

Consumers Association of Bangladesh’s energy adviser professor Shamsul Alam is against the idea of keeping money unused and idle.

‘Rather the distribution companies should invest security deposits in development activities,’ he said.

He said that the power companies’ expenditure increased considerably for running development works with high interest loans taken from donors and foreign aid agencies.

The commission said that there were a number of ways to put security deposits in use. It said that India adjusts interest gained against security deposit with consumers monthly electricity bills.

It may seem a little amount to many but for others it would mean relief.

Over 1.5 crore of 3.5 crore power consumers in the country fall in lifeline consumer slab, a category of power consumers spending less than Tk 200 a month.

‘Power has become so expensive recently that the saving of even a penny would help us a lot,’ said Meherun Nesa, a housewife in Tangail.

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