Prepaid metering is a way that both customers and utilities can benefit from the technological advances in metering that have been made in recent years. When it comes to paying for electricity it seems that the electric industry has fallen behind the rest of the retail world. Electric utilities allow customers to use their service and then at the end of the month calculate how much each customer used and then sends them a bill. This has worked well almost since the first electric bills were sent out. However, with post-pay when customers cannot afford to pay their bills they end up working out arrangements with the utility to pay at a later date. Also, some customers decide that they need to move and they do not think that they need to pay their final bills.
If only there were a way to change some of this. But there is. Prepaid metering is a way that utilities can collect the money from their services up front.
Prepaid Metering Is Good For Customers
There are several advantages that prepaid metering has to the traditional way of billing. One being that payments are collected before the customer uses the power. Just like a prepaid phone service, when the purchased time runs out, the service stops. With smart meters now including remote disconnect devices the utility can monitor the usage from the office. This allows the utility to turn the power off to customers when their purchased kwh time runs out.
Some people will cry foul here and say that it is unfair to the customer to be turned off without notice. But, the companies who offer this service provide customers with text an email alerts notifying them that they need to pay or be turned off. Many of these services offer the ability to pay from the customer’s smartphone.
In addition to being able to pay their bills from their smartphones, customer can purchase blocks of power. Customers can purchase what they can afford at the time to keep the lights on. This is beneficial to many customers who may not have the money to pay a $300 light bill at the end of the month. They may only have $50 to get them through the next few days. This ensures that they do not lose service.
Customers also have the added benefit of an online portal where they can monitor their usage. They can keep up to date with the amount of power that they are using as well as the amount of power they have left. Many studies show that customers who are on prepaid rates are more conservative with their energy usage.
Prepaid Metering Is Good For The Utility
Prepaid metering allows the utility to reduce its bad debt expense. The bad debt is debt that is written off because it will never be collected. This can be due to customers leaving without paying or customers who cannot afford to pay and change the name on the account. What happens is the utility ends up being a lender of sorts. When a customer does not pay the utility often gives them a grace period. All the while the customer is using more and more power. Their bill is getting higher and higher.
The utility eliminates some of its bad debt by collecting up front. If the customer decides to leave the utility reimburses, depending on the rate, the customer. This can be good for utilities who have meters in high turnover areas such as college towns, and apartment complexes.
One way to implement this would be to offer it on a voluntary basis. This is where customers sign up voluntarily. Another way is to start with new customers. Still yet, using credit checks is another.
Conclusion
Prepaid metering is not for everyone. But there are instances in which it is perfect for some. Utilities should examine whether it is beneficial to both the bottom line and the customer. Customers should view prepaid metering with an open mind and look at the potential benefits it offers them.