Prepaid Electricity - Taking surprise out of energy bills

PrePay Power

One of the readers tipped me off to something I had never heard of: Prepaid Electricity.  Most of us sign up with a utility after they check our credit and deem us worthy, use electricity all month on credit, then get billed by the utility at the end of the month on the faith that we will pay them for the energized electrons they provided to our home.  But some people aren't so lucky to have good jobs and/or good credit, and it makes it harder for them to get credit for electricity (we don't think of it that way, but we buy electricity on credit and most of America says, "Keep the tab open Electric Co.!").  While there are obvious benefits for utilities to employ prepaid electricity for non credit-worthy customers, there are also advantages to the customer too.  UtiliFlex lists prepaid electricity benefits as:

  • No Bill Due Date: Never receive an electric bill again. Prepaid customers pay as they go, with no surprises.
  • Control Your Cost: Buy what you want, where you want, when you want. Make your power purchase go further.
  • Save Money: Same rates, No fees.
  • No Deposit: No need for hefty deposits. Apply existing deposits to your balance.
  • Get Out of Debt: Pay past balances over time, while still receiving service.
  • Conserve Energy: Studies show prepaid customers use 10-15% less power than post-paid customers.

From UtiliFlex's About Us section:

Prepayment is not limited to credit-challenged customers.  When properly deployed and marketed, a broad cross-section of consumers finds prepayment an attractive alternative that puts them in control of their electricty consumption.  Customers appreciate the ability to budget and control their electricity costs and the feedback inherent in the system.

Exceleron focuses more on lowering risk associated with customers not paying their electric bills.  From their website:

Prepaid consumers pose no credit risk to their electrical service providers. Deposits are not required from prepaid consumers which eliminates the need to compute interest on deposits. There is never a past-due balance; invoicing and collection efforts are, therefore, eliminated.

While I don't see many customers choosing to prepay for their electricity (only because it decreases the convenience factor), it is an interesting concept and it will only increase in popularity as electricity costs rise and consumers look for ways to gain control of their consumption.  I wonder if prepaid electricity rates would be higher than rates paid by normal customers?  Does anyone have experience with prepaid electricity?

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UtiliFlex currently has people using our system in the Caribbean, Guyana South America, South Africa, Botswana, Ghana, India, Bulgaria... and is in the process of delivering systems to the Middle East. Although based out of Chattanooga Tennessee, we are still looking for a U.S. utility to turn on to the idea of doing it right. I am currently in Johannesburg S. Africa doing upgrades to the fastest growing prepaid system in S. Africa. Juice (our platform) integrates directly with several metering vendors technologies including STS (a multi meter manufacturer standard founded in S. Africa) meters by Conlog, Hexing, Landis+Gyr as well as modern AMI (two way communication smart meters) by Echelon, Elster, Hexing and others. The U.S. market has some issues with the whole concept, but is warming up to it. The "Salt River Project" in Tempe Arizona is very sucessful, Texas has introduced the concept of Prepaid utilities but it's mostly a remarketing effort by resellers in a deregulated environment. There are some others in North and South Carolina doing it properly as well. Most US Utilities don't offer prepaid except as an outsourced problem solving solution to the very botton of their customer base, We would like to do it the same way as we do it in other countries which is a utility wide solution.
I'm one the energy/systems geeks at UtiliFlex (not a sales droid), and just wanted to answer some questions: By law/tariff in most places, the cost for prepaid electricity is exactly the same as a traditional "arrears billing" account. In some cases (depending upon the utility and country) there are minor differences in basic fees for being on prepaid. A good prepaid driven utility or submetering system is integrated with "smart" meters that have a integrated disconnect. You don't get penalized with disconnect/reconnect fees, your lights just go out. Don't panic, you will have had lots of warnings, it just might be your choice to run out of power until you want to or can buy more. Specifically with a Utiliflex driven system, you will have gotten text messages and e-mail alerts, as well as (depending on the metering technology used by the utility) an in-home display showing you usage and account balance information. You can buy power via many methods ranging from local stores, cell phone vending, web page interfaces.... Anytime. Often, prepaid electricity consumers feel empowered because of all the feedback mechanisms of a good prepaid utility system and either because of that, or they are watching their pennies smarter.. use less power. Many studies have shown that people use 10-30% electricity (and save that money) just by going prepaid. I also like the term: "No Deposit Electricity". Or maybe just "buying some electricity", just like you buy groceries.. or gasoline.. or...
Thanks for the great comment Mike. I was very impressed by Utiliflex's great descriptions and website design. You give a lot of information to the consumer. What states are you currently active in?
Oh and thanks for linking back to our website from the graphics from it.

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