Electricity theft - a complex problem

Commercial, or in other words non-technical losses account for more than 1% of electricity use around the world. The dominant component of these losses is electricity theft. In the largest extent, electricity theft is a problem related to residential customers. In some countries, electricity theft is in the range of, or far exceeding, technical losses in the transmission and distribution sector. Amounts of unbilled (also called non-invoiced) electricity may completely disturb the normal process of incentive regulation of electrical distribution companies (later referred to as utilities). It is also a moral problem that the energy conservation efforts of one group of people is wasted by others.

Why people do it?

In several countries, such as India, theft of electricity has some kind of endemic character. I heard a story from India; it was about the failure of the meter and the whole power panel. It took some time for the utility staff to come and check, and finally they could not restore supply thru mater so made a temporary connection bypassing the meter, which remained that way for a very long time.

Indian case

China and India are the largest developing economies. They are often compared. Why electricity losses in China are 8% while in India they are about 4 times higher? These losses are growth threat in India. This article is describing the situation in India, where tremendous efforts are undertaken to increase the amount of electricity generated while commercial losses go down very slowly.

The reasons of this situation are very different. In very numerous situations the reason is poverty and need to provide for the most basic needs. Some reasons however are linked to the performance of the utility or political connections and corruption environment.

Still many people remain without access to electricity and this is another reason for electricity theft. This may often happen in slums and generally in poor countries, but also in rural areas where temporary connections to overhead lines are made for a number of strange purposes (camping, forestry jobs, exploration and so on).

Electricity theft is often seen as sort of spiral effect. Unbilled electricity cost is charged to consumers who need to pay more and if they cannot afford it, some of them start to bypass electrical meters.

Japanese case

It may also happen that the supply had been stopped by utilities because of previous electricity theft and the “victim” cannot live without electricity, but equally cannot pay for it. In such a case, the country's wealth is not a factor.

Canadian case

It may also happen that people steal electricity to remain quiet and anonymous.

US case

Most often, however, the motivation to steal electrical power is the temptation not to pay for the service, or more often to pay less. This type of electricity theft is present in developed countries and is not only limited to low income parts of the population.

Many utilities say energy theft has risen sharply during the economic downturn. Culprits include residential customers whose power is turned off when they fall behind on their bills and small businesses struggling to keep their doors open.  

Legal aspect

What is the definition of electricity theft?

It is the use of electrical power without a contract with a supplier with total or partial bypassing metering system or interfering this system in the way to adulterate its measurements. Contract is understood here as a valid obligation to deliver power and to pay for it.

This definition, although technically comprehensive enough, is not always univocal for lawyers. It is extremely important that electricity theft is a criminal law offence which at the best should be prosecuted ex officio. In most of the cases, it is. However “ex officio” term has different shades. In Poland, following the sentence of the Supreme Court, discovering electricity theft (an object) usually does not require the investigation of a perpetrator (a subject). This means that the issue of a perpetrator's responsibility will be considered at a later stage of the criminal process, and that utility is expected to prepare sufficient evidence.

In civil law, the general rule is the duty to compensate the damnification which, in the case of electricity theft, means the necessity of joint compliance to the following three premises:

  • there must be either property or nominal damage;
  • there must be the basic fact of human activity which caused the consequential damage. The damage alone is not sufficient to incur responsibility;
  • there must be causality between the human's activity and the damage.

As a summary of all above, a utility itself must find the place of theft and must provide evidence (protocols, pictures). Local regulations sometimes give the right to utility representatives to enter a residence to perform the control. In such cases, utilities have an obligation to inform the police or other official public security institutions about this. It is best if this contact is done in advance based on well-justified presumption, or immediately after the control has proved positive, as police assistance mandates utility actions. The police, however, are not always interested in witnessing uncertain investigations.

There is another approach: dualism in location of meters. The instructions are that meters should be in easily accessible locations, but they must be very well secured against interference from third persons.

Good legislation should give utilities the right to stop electricity supply in the case of conviction without an alternative electricity supply. In such cases, reconnection can be made for a trial period on the basis of prepay.

In practice, courts may accept many excuses, among which the most popular is that the illegal connection was done by a technician (sometimes temporarily, but the technician forgot to remove it or inform owners about it) and contact with this person is no longer possible.

How is electricity being stolen and how can this be combatted?

The following are some popular methods for stealing electricity:

Bypassing the feeder. Usually the bypass supplies power to large and stable loads which will not trip fuses in the case of overload. It may be heating or air cooling, i.e. loads providing functions which may be also supplied in non electrical way. In the case of partial bypass, the rest of the circuits are supplied normally through the meter, so the bill, which is close to average, does not suggest a theft. The most efficient way to fight against such cases is to partner with crime stoppers. Nobody else knows better how people are powering their devices than neighbours. In Poland, for example, there are specialised agencies hired by utilities which start local investigations from buying a number of drinks in a bar to men who want to say how much they know about the secrets of a local community.

Another common form of electricity theft is to invert the meter (pull the meter out of the socket and plug the meter back in upside down, which causes the meter to run backwards and the kWh register to go down instead of up). The user leaves the meter inverted for a number of days to shave usage off of the bill and the meter is then reinstalled before a meter reading. GE and others in the industry have historically employed tamper detection tools to alert utilities that a meter is inverted. GE patented a method to prevent it.

Particularly recently, a popular way to slow down a meter is the use of strong permanent magnets like rare earth neodymium magnets (for instance previously disassembled from old hard disks). In induction meters, a number of torques are balanced to get optimum linear characteristics. One of them comes from permanent magnet (N-S) braking the aluminium disc (Al).

Neodymium magnets installed close to rotating discs may effectively boost braking torque. After removing this magnet, the meter starts to rotate much faster so “having already saved a lot", users complain about extortious reading. Fortunately, utilities found a way to distinguish between malfunctioning meters and those previously treated with neodymium.

Finally, a great promise for combatting this problem is smart meters. The meters, with integrated billing functions, provide real time energy balance. This balance helps to detect illegal load almost immediately and in most of the cases to narrow investigation to just one low voltage circuit. Smart meters are far more expensive in developing countries like India, however, as electricity theft is so much the problem there they could be particularly helpful. This article is about this promise.

These examples provided by Public-Private Partnership of the World Bank, by no means exhaustive, of innovative initiatives to address non-technical losses by sector    

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