Pre-paid meters and household electricity use behaviors: Evidence from Addis Ababa, Ethiopia

In low-income countries such as Ethiopia, pre-paid metering is often argued to alleviate several challenges with traditional electricity billing systems, including high non-payment rates, pilferage and fraud, administrative and enforcement costs, and inflexibility with poorer consumers’ irregular income. This paper examines the impacts of pre-paid metering on electricity consumption, appliance ownership, satisfaction, and cooking behaviour in Addis Ababa, using propensity score matching and instrumental variable techniques to address non-random selection into pre-paid metering. Pre-paid meters are found to reduce electricity consumption compared to post-paid use, have a positive but modest impact on appliance ownership and a significant positive impact on ownership of energy-efficient lights, and users express greater satisfaction with utility service. Impacts are heterogeneous: more educated and higher-income customers, and those who do not share meters, tend to reduce electricity use more.