Pay it forward: Prepaid metering as a customer service

by Betsy Loeff, contributing writer

When The Wall Street Journal covered prepaid metering in June 2007, it did so under the header, “New Ways to Monitor Your Energy Use.” According to the article, prepaid metering can be “a conservation tool capable of helping people monitor” energy use and, perhaps, cut back on it.

That’s because prepay technologies generally give customers an in-home display that shows how actions affect electric bills. Such knowledge usually makes people more careful about turning on the lights and air conditioner.

Several utilities have seen this conservation effect in action. For instance, Phoenix-based Salt River Project (SRP) has the largest prepay deployment in North America, with 59,000 of the utility’s 935,000 electric customers enrolled in the utility’s prepay option. According to SRP, those customers use an average of 12 percent — or 1,750 kilowatt-hours — less than customers in similar households. Ontario, Canada’s Woodstock Hydro has reported savings in the range of 15 percent.

Brunswick Electric Membership Corp. (BEMC), a utility based in Shallotte, North Carolina sees customers drop consumption 12 percent or so initially, but the conservation doesn’t always last, reports James Green, the co-op’s supervisor of field services.

Still, conservation is now a driver of prepaid metering. So are the economy, the convergence of prepaid metering with advanced metering infrastructure (AMI) and a host of consumer-oriented evolutions in the prepay-technology space.

No stigma attached

Like most utilities with a prepay option, BEMC started its program as a collections tool. Still, managers tried hard to ensure there was no stigma attached to it. “We offered it as an option; we didn’t force anyone,” Green explains.

They didn’t have to. Within a year of launch, the program had some 1,500 participants, more than seven times the original target. It grew with no promotion on the utility’s part and, 20 years later, 6,200 out of BEMC’s 83,000 customers are enrolled in it.

What’s the appeal? Green remembers one customer saying she couldn’t pay a $100 electric bill, but she could swing $25 per week to keep the lights on. “It’s the same amount of money,” he notes, “but she can pay it when she has the money to pay it.”

Peggy Richmond is general manager of North American Operations for Landis+Gyr, a provider of prepay systems in the U.S. She says giving customers control over how much they prepay and when they pay it is crucial to an effective system.

In fact, customer-focused features distinguish the best technologies, Richmond notes. Such features include a variety of ways to purchase power, which means accepting cash, credit cards, debit cards and financial-aid vouchers, as well as taking those payments in person, online, via phone or even at a community-based kiosk that, for instance, might be in a convenience store.

BEMC’s Green says customer convenience is part of prepay’s draw. The option works well for customers who don’t have credit built up and might have to plunk down big deposits to get service. “Customers see it as cheaper” than traditional electric bills, he says. They also feel more “in control” of their energy use and finances.

Plus, the technology behind prepaid metering allows BEMC to offer proactive customer aid. For instance, utility workers call customers when they see an abnormal usage problem that might signal trouble with an electric heat pump. Customers really appreciate the heads-up, Green says.

Popularity rising

Mark Hall, an analyst with the energy-industry researchers at Chartwell, says utility interest in prepay systems is on the rise. According to Chartwell’s “Prepaid Metering Report 2008,” 38 percent of utilities say they’re considering using AMI systems to offer prepay systems, up from 23 percent in 2005.

“If a utility is considering prepay, that means they haven’t ruled it out yet,” Hall says. “If they say they’re ‘planning’ it, that means there’s a pretty good chance they’re going to do something,” such as a pilot program. “In 2005, we had 3 percent of survey respondents planning to use AMI for prepay. In 2008, it was 11 percent. That’s a significant increase,” Hall adds.

And, he sees several forces behind this increase. AMI, for instance, provides “an enabling technology, so you won’t need to put in special equipment,” he says.

Another impetus, Hall notes, is the economy. He thinks the traditional driver — “reducing credit collection problems” — is on utility managers’ minds.

Then, too, there is the conservation effect. Hall says he’s seen this show up throughout North America and in Europe.

Finally, there’s the thumbs-up factor. According to Hall, prepaid metering typically enjoys very high customer-satisfaction ratings. In fact, he says, “It’s often the highest rated program,” for utilities that have it. He estimates that an 85-percent satisfaction rating is common industry-wide.

Betsy Loeff has been freelancing for the past 15 years from her home in Golden, Colo. She has been covering utilities for almost four years as a contributor to Utilimetrics News, the monthly publication of Utilimetrics (formerly the Automatic Meter Reading Association).

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