This brief has laid out the implications of the norm that electricity is a right on access to power in developing countries. Ironically, insisting that all consumers should have equal access to electricity regardless of payment leads to limited, unreliable supply for most, including those who are willing to pay more than they are charged.
While it is critical to provide lifeline style electricity to the poorest, doing so in a way that causes electricity markets to fail harms everyone and stifles economic growth. This suggests that there is an important role for policy to “break” the norm that electricity is a right and re-link supply and demand for power. Several complementary policy options stand out:
- In general, policymakers in developing countries should seek to tackle electricity non-payment issues in addition to traditional generation capacity concerns.
- Refining electricity subsidies to only target the poorest citizens can help break the norm that electricity is a right for all.
- Incentivising bill payment, either by cutting off non-paying communities or by properly incentivising bill collectors, can also restore the link between electricity supply and demand.
- New technologies such as affordable prepaid meters can improve distributors’ ability to exclude non-paying households and ease payment issues for customers.
- Privatisation, though appealing in principle, requires addressing non-payment norms first before it can have real impact.