Prepaid Electricity Plans Gain Momentum
More pilots, more technology and more data drive acceptance
Using electricity is often compared to going to a grocery store that doesn’t list any prices on its items, picking up whatever you want and then getting a bill at the end of the month. Sometimes the analogy is a buffet, rather than a grocery store. The outcome is always the same: you consume with abandon, then get stuck with a bill in the future.
Customers appreciate the ability to more closely align their budget with their spend. It eliminates surprises.
Jamie Wimberly, CEO, DEFG
In every other aspect of our lives, prepay or pay-as-you-go plans are ubiquitous, whether in the form of gift cards, subway passes, EZPasses or cell phone plans. Prepay electricity has long been a staple in other regions of the world, but it has been slow to penetrate the U.S. market. Today, customers are increasingly interested in prepay for electricity and utilities, and regulators are taking a closer look than ever before.
“Customers appreciate the ability to more closely align their budget with their spend,” said Jamie Wimberly, CEO of DEFG EcoAlign, a management consulting firm specializing in energy. “It eliminates surprises.”
When you compare the potential savings with the cost of anything else, it becomes pretty clear there’s nothing that compares to how fast, persistent and big those savings are. Even more importantly, customer satisfaction is very high with prepay.
Jamie Wimberly, CEO, DEFG
In a recent study, conducted by a working group put together by DEFG EcoAlign, consumers’ growing interest in prepaid electricity was confirmed. The groups most likely to move to prepay include younger adults, renters and males.
Some municipal and cooperative utilities have had prepay electricity for years, such as Salt River Project. But for large investor-owned utilities, there has been a general disinterest coupled with regulatory hurdles in decades past. Now, a convergence of aggressive energy efficiency measures in some states, advanced metering and mobile platforms are reigniting an interest in prepay. Wimberly noted that large utilities such as Georgia Power, Detroit Edison and APS all have prepay pilots underway.
One of the biggest drivers is demand-side management, said Wimberly. For customers on prepay plans, the energy savings are usually 10 percent to 15 percent. Even if only a portion of all customers are on prepay, that can be a significant load drop. “When you compare the potential savings with the cost of anything else, it becomes pretty clear there’s nothing that compares to how fast, persistent and big those savings are,” said Wimberly. Even more importantly, customer satisfaction is very high with prepay.
Another shift has been technology. Prepay was possible without advanced metering, but smart meters certainly make it easier. Software platforms that can connect metering data with customer information systems with multiple communication channels — such as email and mobile — are also critical for a successful program. …