Prepayment of utility service appears to change consumer behavior. Using prepayment, consumers increase control over their household budget. They receive daily usage and cost information which they can associate with recent behaviors. Statistical analysis of monthly billing data shows an average household energy savings of 10%-15%.

Nat Treadway, DEFG managing partner, participated in the December 2014 Behavior, Energy and Climate Change Conference and presented findings on energy savings and prepayment.

Prepay is a daily bill-pay transaction. The customer’s account balance is adjusted daily, and the consumer is highly aware of the cost. Modification of the transaction may prove to be a more effective means of changing consumer behavior than enrolling in an energy efficiency technology program. Additional study of prepayment will reveal the specific behaviors, the persistence, whether consumers invest in energy-efficient devices and whether consumers are losing any essential services.

Voluntary tariffs, rate designs and billing approaches can result in significant changes in energy use. It may be merely a matter of time before transactional approaches, like prepayment, take their place alongside traditional, equipment-based energy efficiency programs in a portfolio of integrated approaches that increase the economic efficiency of the utility industry.

From a consumer perspective, some people may prefer an alternative rate design, or a new DSM program or an alternative bill payment mechanism. With choice, the individual consumer can express his/her preferences by selecting the program, rate and/or transaction that best suits their needs or lifestyle.

Filed Under: Choice, Prepaid