Prepaid Programs at the Forefront of Utility Deployment Strategies

How prepaid software, cellular solutions, and regulatory changes are setting utilities on the path toward energy conservation

Prepaid electricity is approaching an inflection point for rapid implementation and adoption in the United States.

We believe the market for prepay energy is ripening quickly, with more than 10 percent of utility customers nationally on a prepay energy account in five years or so.

Jamie Wimberly, CEO of DEFG

According to a recent report by the Distributed Energy Financial Group (DEFG) and the Prepay Energy Working Group, the percentage of Americans interested in a voluntary prepaid energy option increased by 3 percent from 2012 to 2013. The potential of prepaid programs is just beginning to be tapped; enrollment in prepaid programs has been tied to an average reduction in energy usage of 11 percent. Clearly, these programs are already playing an important role in the search for green energy solutions. Together, the rise of cellular-based spot deployment strategies and regulatory changes pushing the adoption of prepaid programs past the tipping point.

In the past, utilities looking to launch prepaid programs first needed to make a significant investment in a full AMI rollout. However, recent advances in prepaid account management software and cellular solutions are allowing utility service providers to adopt a spot-deployment strategy in which smart meters are installed on-site only where account holders have opted in to the prepaid program. Daily readings are communicated back to a collection point via a cellular network, providing a seamless, scalable method for implementing prepaid services and other programs in alignment with a spot-deployment strategy.

Exceleron Software and Itron work together seamlessly using the MyUsageTM Prepaid platform and the Itron TOTAL Grid solution. These hosted solutions take advantage of the firms’ industry-leading capabilities in metering, communications, data management, analysis and managed services, and package them together in a simplified, subscription-based pricing structure. By opting for a hosted solution, utilities avoid the need for additional IT resources, software, hardware and in-home devices.

Jefferson Energy Cooperative of Georgia has deployed a cellular-based smart payment solution powered by Exceleron Software’s MyUsage Prepaid and the Itron TOTAL Grid solution. “We thought prepaid would be a good fit, but it has been even better than we anticipated,” said Dan Fowler, senior vice-president of energy services for Jefferson. “Offering prepaid accounts is one of the best things we’ve ever done. It makes the customer happy and it helps to relieve our bad debt.”

Municipalities are also attracted to the benefits of cellular solutions for prepaid programs. They can easily reduce write-offs without the need to collect large deposits or disconnection fees, and customers embrace the opportunity to take control of their bills and electricity usage. The town of Selma, North Carolina, for example, was unable to pursue a full-scale AMI rollout, so town officials are taking advantage of the cellular-based spot deployment strategy and are currently wrapping up a pilot program that uses Exceleron’s MyUsage in conjunction with Itron. “Selma chose Exceleron because it was a cost-effective alternative to traditional billing,” said Donald Baker, electric director for Selma. “The ease of the MyUsage website and prepaid solution has done wonders for our town.”

Utilities are finding that hosted and managed services improve customer satisfaction. “Through the Prepay Energy Working Group, we have conducted more than five years of customer market research, and the findings consistently point to high customer satisfaction with those customers who choose a prepay option,” stated Jamie Wimberly, CEO of DEFG. “We believe the market for prepay energy is ripening quickly, with more than 10 percent of utility customers nationally on a prepay energy account in five years or so.”

Just as MyUsage presents a hosted solution for launching and managing prepaid programs, the Itron TOTAL Grid smart grid solution provides grid-facing functionality, freeing utility staff to focus on their core business. This multi-service network allows the utility to leverage the most advanced technology today while having the flexibility to adapt to needs as they arise. Utilities are also finding that hosted and managed services result in savings. When paired with prepaid solutions and other smart grid applications, cellular-based solutions help achieve cost savings for the utility, better customer service, improved employee morale and energy conservation.

As the benefits of prepaid programs become increasingly apparent, larger municipal utilities and investor-owned utilities are turning to cellular-based solutions. Together, Exceleron and Itron are working with investor-owned utilities that are interested in a cellular-based, spot deployment strategy. A restrictive regulatory environment has slowed these efforts, but the tide is turning.

“Regulators are taking note of the benefits of prepaid programs, viewing prepay as a customer-facing return on their investment in smart grid,” said Wimberly. “Regulators across the country are beginning to turn toward prepay energy as a voluntary bill pay option that provides customers with a convenient way to better manage their utility bills.”

For example, in late 2013, the State Corporation Commission of Virginia approved the framework to allow state residents to participate in voluntary prepaid programs, and Rappahannock Electric Cooperative became the first utility in Virginia to offer prepaid accounts. Oliver Price, director of district customer services and the project manager for Rappahannock’s prepaid offering, noted that laying the path for the prepaid program “was a long and exhausting road,” but also stated that a prepaid program “pays for itself” in the long run.

Efficiency and accuracy are paramount when deploying smart grid solutions. When deployed together, Itron’s cellular AMI solution within Itron TOTAL Grid and Exceleron’s MyUsage Prepaid enable utilities of all sizes to offer cost-effective prepayment programs. Customers in remote areas, mobile populations like college students and apartment-dwellers, and those who carefully manage a monthly budget can benefit from the payment flexibility and energy awareness afforded by prepaid accounts. When the customer benefits, the utility benefits, as demonstrated by the high customer satisfaction ratings of existing programs.

A prepayment solution utilizing Itron and Exceleron solutions can be deployed quickly as the customer base for prepaid accounts is identified through voluntary enrollment or pilot definition, enabling the utility to begin realizing benefits and measuring success immediately. Solution components and utility system integrations can expand as the program grows, keeping costs aligned with the program size.

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