Prepaid energy is a payment option that is part of a mega-trend that includes gift cards, reloadable debit cards, benefits cards and numerous services that are paid for in advance. The trend is intensifying, and 62% of Americans responding in a survey that they used some form of prepayment in 2013. This was up from the responses to the same question in similar surveys in 2012 (55%) and 2010 (49%).

Prepayment is definitely in the mainstream of American life, and consumers are generally satisfied with prepayment. In 2013, 39% of Americans surveyed who have used prepayment were “very satisfied” and 36% were “somewhat satisfied” to make purchases or use services after prepaying. Younger and more mobile Americans were especially well satisfied.

Prepay energy allows consumers to pay for energy in advance and then to monitor their usage and account balance through daily communications from their local distribution utility or energy provider. Knowing your daily usage changes your behavior and facilitates energy management for the home budget. DEFG has analyzed the conservation savings of prepay customers. On average, there is an 11% reduction in usage–comparing pre- and post-enrollment–by customers who switched to a voluntary prepay electric service option.

We do not believe that prepay energy arose from smart grid investments. Prepay energy has been around for a while, and the advanced meters have allowed utilities and energy providers to conduct new transactions with energy consumer. Prepay is best understood as part of a mega-trend toward convenience and control over family budgets.

EcoPinion Consumer Survey Report No. 18, “Prepay Energy at an Inflection Point,” offers insights into consumer preferences regarding energy prepayment.

Filed Under: Prepaid