EcoPinion No. 28 - Prepay Energy: Past the Tipping Point and Scaling Up for Success
EcoPinion Consumer Survey Report No. 28 is focused on questions relating to prepaid energy service. The charts display statistically-valid data from a sample of households in the U.S.
Prepay energy is part of an intensifying mega-trend for consumers adopting all types of prepayment, e.g., gift cards, reloadable debit cards, etc. Nearly seven in ten respondents in the 2016 annual survey stated that they have used some sort of prepayment, representing a small increase of 3% since 2015.
Consumers are either highly satisfied (42%) or somewhat satisfied (40%) with the prepay option. This represents an 8% increase in customer satisfaction levels since the last survey. As a result, interest in a prepay energy option is also increasing. In 2016, 14% of Americans stated they were “extremely interested” in a prepay energy option and another 15% of respondents were “very interested.” The 29% of respondents with interest in prepay energy in late 2016 represents a 12% jump from 2015.
Prepay energy is a highly segmented offering, meaning that certain segments will really value the option. But what is the value of prepay energy to them? Respondents have consistently ranked as the top reasons for using prepay as “want increased control over energy costs and budget” and “prefer to pay for energy as you use it to eliminate surprises.”
Prepay energy is correlated with a move towards mobile payment. Further, different customers will want different channels to reload their prepay account. A good number of customers will be paying in cash, therefore point-of-sale platforms and kiosks will be important. Wealthier and younger Americans are increasingly relaying on electronic payments and mobile platforms.
The consumer survey points to the need to support a variety of payment channels and communications methods, and to be prepared to offer new program features as the offering evolves.
Research has consistently shown that consumers who choose prepay energy decrease their consumption by 8% to 15%. Therefore, prepay energy is increasingly viewed as a potential behavioral efficiency measure as part of the utility DSM portfolio.
The survey tested whether a customer would ever consider a voluntary self-disconnect. As before, we found that many Americans (34% of respondents) would consider it if there were no penalties to do so and self-disconnecting fit their needs. This calls into question who determines whether electricity is an essential service — the regulator or the individual consumer — when consumers are given control via a new bill pay option such as prepay, and they are allowed to leverage the underlying technology of smart grid (fast reconnection).