Prepaid Energy and Low Income Issues: A Way Forward

DEFG White Paper Addresses How Regulations Should Govern New Products and Services in Smart Grid Era

Washington, DC … DEFG, a management consulting firm in the energy sector, released a white paper today entitled, “Low Income Consumer Issues and Voluntary Prepaid Energy Offerings: Perspectives from Three Industry Thought Leaders.

Extensive research conducted by DEFG in 2010 and 2011 revealed that prepaid energy could be transformational as it is the first customer-facing application of the smart grid. DEFG launched the 2011 Utility Prepay Working Group to further explore leading regulatory and consumer opportunities and challenges presented by prepaid energy. Regulatory issues include disconnect and reconnect policies, weather moratoriums, forms of account notification, cost and benefit allocation, fees and rates. “Two key questions addressed by the white paper are – how can a balance be struck between allowing consumers to exercise their preferences and ensuring that adequate consumer protections are in place? And, how can regulatory rules and practices, including for low income consumers, be revised or updated to allow for innovation and new offerings such as prepaid energy or other new services enabled by smart grid yet maintain the intent of the original regulatory rationale?” stated Cindy O’Dwyer, DEFG Vice President and project lead.

Broad areas of consensus include:

  • Prepay offerings should be voluntary and not directed specifically to low income customers but offered to all customers served by utilities.
  • Consumer protections do and will exist for a prepaid service offering as they have been in place for post-paid consumers for decades.
  • Prepaid service touches the body of bill pay and consumer protection rules and highlights the need to update the regulatory rulebook.
  • There is a need to analyze regulatory principles as distinct and separate from the rules and practices that implement those principles, for example, limiting the form of communication for disconnect notifications to letters and/ or a knock on the door may not only be impractical but counterproductive when considering consumer credit issues.

DEFG LLC is making the white paper available to the public at no charge on our website:

For more information on the Prepay Working Group, contact Cindy O’Dwyer at codwyer@defg.local

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