by Betsy Loeff, contributing writer
In this economic climate, offering prepaid metering can be more than a collections tool. Prepaid metering can help utilities increase customer satisfaction by returning control to customers and allowing them to be more proactive with customer care.
When The Wall Street Journal covered prepaid metering in June 2007, it did so under the headline “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 in-home displays that show 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. Those customers use an average of 12 percent less—1,750 kilowatt hours—than customers in similar households. Ontario, Canada's Woodstock Hydro has reported savings in the range of 15 percent, according to SRP.
Brunswick Electric Membership Corp. (BEMC), a utility based in Shallotte, N.C., sees customers drop consumption 12 percent or so initially, but the conservation doesn't always last, said 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,” Green said. “We didn’t force anyone.”
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 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 said, “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.
Customer-focused features distinguish the best technologies, Richmond said. Such features include 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.
Customer convenience is part of prepay's draw, Green said. 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,” he said.
They also feel more in control of their energy use and finances, he said. 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 appreciate the heads-up, Green said.
Mark Hall, an analyst with Chartwell's energy industry researchers, said that utility interest in prepay systems is on the rise. According to Chartwell's “Prepaid Metering Report 2008,” 38 percent of utilities said 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 said. “If they say they're 'planning' it, that means there's a pretty good chance they're going to do something. 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.”
He sees several forces behind this increase. AMI, for instance, provides an enabling technology, which means there's no need for special equipment, Hall said.
Another impetus, Hall said, 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 said that he's seen this show up throughout North America and Europe.
Finally, there's the thumbs-up factor. Prepaid metering typically enjoys high customer-satisfaction ratings, Hall said.
“It's often the highest-rated program,” he said.
Hall estimates that an 85-percent satisfaction rating is common industrywide.
Betsy Loeff has been freelancing for 15 years from 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).