The next time someone says pre-paid, don't just think of your mobile phone. Incredible as it may sound, the day may not be far off when pre-paid could be the lingua franca of power consumers as well.

The country's largest private sector power utility, Tata Power Company, and the Madhya Pradesh State Electricity Board are thinking of introducing pre-paid cards for buying power modeled on similar cards in the telecom industry.

Says F A Vandrevala, managing director of Tata Power, "We are evaluating the issue internally but have not made any formal presentations to anyone on this. It is something we could look at on a national basis."

The Madhya Pradesh State Electricity Board could, however, be the first utility off the block. The chief engineer of the board, K C Jain, told Business Standard in Indore: "We are looking at introducing a pilot project and the state government is considering the proposal. Once, the clearances come through we will launch the scheme."

The Rs 200-250 crore (Rs 2-2.5 billion) project being contemplated by the MPSEB entails installing a pre-paid card in the consumers' meter board. The consumer will insert the pre-paid card in it like a floppy.

He will then be able to buy pre-paid cards from private power companies in three denominations: Rs 100, Rs 500 and Rs 1,000. This is proposed to be introduced first in Indore, a city that has the maximum domestic consumption of electricity in the state.

And how does the consumer know when his power supply is going to end? Once 95 per cent of the electricity that has been paid for is used up, the meter will begin to emit signals, so that the consumer can buy a new pre-paid card.

The meter will expel the used card immediately after it is fully used. The new card has to be inserted simultaneously if electricity supply is to continue.

But how does the consumer benefit? Instead of his earlier complaints of high electricity bills, he can now keep a tighter reign.

Second, consumers won't have to stand in serpentine queues to pay their bills. The pre-paid cards will be sold by private power companies to consumers. Then, of course, on the introduction of this system, consumers won't have to put down a security deposit.

In theory, MPSEB would also save money on employing casual workers -- meter-readers, for example -- and prevent tampering with bills, though it certainly won't be able to lay off employees.

"In the long run, since we can save on a number of expenses, power tariffs for consumers could actually come down. We are looking at the whole issue internally. However, no discussion has been initiated with any state electricity board," says Vandrevala.

Power companies will also breathe a lot easier if the pre-paid card scheme takes off. This could be one way of making recalcitrant consumers pay.

India has witnessed huge power theft (transmission and distribution losses). A couple of years back state electricity boards recorded transmission and distribution losses of Rs 33,000 crore (Rs 330 billion). This could be one small way of combating the problem.

Pre-paid electricity cards have been around in Europe since the early 1990s.

If Madhya Pradesh launches them, other states could follow suit too. The constant refrain among senior power sector executives and ministry officials is that they should reduce power theft. The launch of pre-paid cards may just signal the beginning of the end for these free lunches.