November 2007
Prepaid meters: Pay-as-you-use consumption
PLUG AND PAY The Salt River Project's user display terminal plugs into a standard wall outlet.
Prepaid, or pay-as-you-go, meters were the first of these kilowatt-counting devices to reach the U.S. residential market.
A half dozen or so utility companies nationwide currently offer the service to customers. Here's how they work for customers
of the Salt River Project, a utility that serves more than 900,000 customers in the Phoenix area and whose M-Power plan is
the biggest prepaid-electricity program nationwide, with about 50,000 customers, a figure that climbs each month:
After a customer contacts SRP to sign up for M-Power, a field worker replaces his standard electrical meter with one that communicates with a small in-home "user display terminal." That LED device (shown) plugs into a standard wall outlet.
The customer uses a smart card--which closely resembles a credit card--to purchase power remotely, either by charging the card at an ATM-like kiosk in SRP customer-service centers or many area supermarkets. The customer pays for electricity with cash or an EChex virtual check.
When the customer inserts the card into the display unit (shown) at home, the energy purchase amount on the card is transferred to the meter and is added to whatever is left on the meter. The display terminal indicates how much money is on the account, how many kilowatts the household consumed in the last hour, day, and month, how much that power cost in dollars and cents, and when, approximately, the account will need replenishment.
Prepaid services offer some clear benefits, but those programs are not without drawbacks. Having to purchase power remotely, possibly a car ride away, is inconvenient. There's also the possibility of a sudden, untimely cut-off of power if a homeowner forgets to "feed" the meter. Power is restored once the customer recharges the card and reinserts it into the display unit, but that could mean waiting until a customer-service center opens. (Those shutoffs can, of course, happen to utility customers who fall too far behind on their bills.)
SRP and other utilities with prepaid meters have tried to address service cutoffs. With the M-Power program's "friendly credit" feature, if a customer runs out of purchased power after 6 p.m. on weekdays or over a weekend or holiday, the power will not be shut off. The customer will retain normal service and the meter will record how much energy he used during the credit period. That amount will be deducted when the customer makes a subsequent energy purchase.
Prepaid plans can be a boon for credit-challenged. Not only does the plan eliminate a security deposit (for one utility, installation of a prepaid meter costs $99 compared with a $240 deposit for traditional service) and late fees, but it also forces customers to use only as much power as they can afford. During cash-strapped months, they'll have no choice but to cut back on consumption, where before they might have ignored how much electricity they were using, only to be hit with a bill they can't afford.
One of the unexpected benefits of prepaid meters has been decreased energy consumption, according to Jennie King, a principal planning analyst at SRP. "Conservation was not the primary driver, but a lot of customers have told us that the program helps them manage their energy usage," she says. She points to the fact that M-Power customers used on average 12.8 percent less electricity annually than regular customers in 2003, 2004, and so far in 2007.
Other utility companies with pay-as-you-go plans have reported similar conservation. Peter Price, a retired computer programmer from Sacramento, Calif., enrolled last year in the prepaid program offered by the Sacramento Municipal Utility District. "I like knowing where we stand with electricity consumption," he says, adding that his wife uses the clothesline more often now that she knows just how much running the dryer costs.
Even with the conservation benefits, prepaid meters are unlikely to pop up in many Americans homes. The concept, common practice in the United Kingdom and South Africa, for example, is just too alien to Americans. "Americans seem to like their convenience," says Edward Pollock, a residential team leader in the building technologies program of the Department of Energy's Office of Energy Efficiency and Renewable Energy. But for homeowners who will put up with the hassle if it means avoiding the shock of a higher-than-anticipated monthly utility bill, prepaid meters are worth a look.
After a customer contacts SRP to sign up for M-Power, a field worker replaces his standard electrical meter with one that communicates with a small in-home "user display terminal." That LED device (shown) plugs into a standard wall outlet.
The customer uses a smart card--which closely resembles a credit card--to purchase power remotely, either by charging the card at an ATM-like kiosk in SRP customer-service centers or many area supermarkets. The customer pays for electricity with cash or an EChex virtual check.
When the customer inserts the card into the display unit (shown) at home, the energy purchase amount on the card is transferred to the meter and is added to whatever is left on the meter. The display terminal indicates how much money is on the account, how many kilowatts the household consumed in the last hour, day, and month, how much that power cost in dollars and cents, and when, approximately, the account will need replenishment.
Prepaid services offer some clear benefits, but those programs are not without drawbacks. Having to purchase power remotely, possibly a car ride away, is inconvenient. There's also the possibility of a sudden, untimely cut-off of power if a homeowner forgets to "feed" the meter. Power is restored once the customer recharges the card and reinserts it into the display unit, but that could mean waiting until a customer-service center opens. (Those shutoffs can, of course, happen to utility customers who fall too far behind on their bills.)
SRP and other utilities with prepaid meters have tried to address service cutoffs. With the M-Power program's "friendly credit" feature, if a customer runs out of purchased power after 6 p.m. on weekdays or over a weekend or holiday, the power will not be shut off. The customer will retain normal service and the meter will record how much energy he used during the credit period. That amount will be deducted when the customer makes a subsequent energy purchase.
Prepaid plans can be a boon for credit-challenged. Not only does the plan eliminate a security deposit (for one utility, installation of a prepaid meter costs $99 compared with a $240 deposit for traditional service) and late fees, but it also forces customers to use only as much power as they can afford. During cash-strapped months, they'll have no choice but to cut back on consumption, where before they might have ignored how much electricity they were using, only to be hit with a bill they can't afford.
One of the unexpected benefits of prepaid meters has been decreased energy consumption, according to Jennie King, a principal planning analyst at SRP. "Conservation was not the primary driver, but a lot of customers have told us that the program helps them manage their energy usage," she says. She points to the fact that M-Power customers used on average 12.8 percent less electricity annually than regular customers in 2003, 2004, and so far in 2007.
Other utility companies with pay-as-you-go plans have reported similar conservation. Peter Price, a retired computer programmer from Sacramento, Calif., enrolled last year in the prepaid program offered by the Sacramento Municipal Utility District. "I like knowing where we stand with electricity consumption," he says, adding that his wife uses the clothesline more often now that she knows just how much running the dryer costs.
Even with the conservation benefits, prepaid meters are unlikely to pop up in many Americans homes. The concept, common practice in the United Kingdom and South Africa, for example, is just too alien to Americans. "Americans seem to like their convenience," says Edward Pollock, a residential team leader in the building technologies program of the Department of Energy's Office of Energy Efficiency and Renewable Energy. But for homeowners who will put up with the hassle if it means avoiding the shock of a higher-than-anticipated monthly utility bill, prepaid meters are worth a look.
