Bikinis are always a good way to get some attention -- or at least it's working out that way for Dominica Electricity Services. Domlec, as it’s known on the West Indian island, put together a racy (by utility standards) promotional video a couple of years ago to help get the word out on its Pay-As-U-Go service. Today, about one-third of its 25,000 customers are on a prepaid plan.
In a world of debit cards, EZPass and checking via iPhone, prepaying for some of the most basic services -- like electricity -- is still a foreign concept in the U.S. That is changing. The notion has been seeping into the collective psyche, and practices, of many co-operatives and municipal utilities in recent years. Other markets, like South Africa and Central America, are growing much faster, but with smart meters, there are new opportunities, and new interest, in this billing option. And despite concerns that lack of payment makes it all too easy for utilities to cut off the most vulnerable customers, the plans are proving to be more popular than even the early adopters had anticipated.
Domlec got into the prepaid business with the hopes of offering lower-income customers a simpler way to keep the lights on. Now the utility can barely keep up with demand, according to Nathaniel George, Commercial Manager at Domlec. Not only can customers make a payment through partners across the Dominica, some roaming vendors even sell charges on the street or at sporting events. The first people to come to the program were those who had trouble keeping their electricity accounts in good standing, but the fastest growing market is near Ross University, where students love the system.
Salt River Project in Arizona also has about 112,000 of its customers on prepaid, and has found that the scope of the appeal is definitely beyond people with compromised credit. Both utilities have found that customers save an average of 12 percent using the system, and many save far more. Brunswick EMC in North Carolina has also had a robust prepaid service that, like SRP, predates two-way smart meters. Those utilities have been the exception -- until now. “It was an anomaly,” said Joe Gordon, President of Utiliflex, a company that offers prepaid billing products to utilities. “It wasn’t something that could be broadly done. With AMI, you can get over that hurdle. ”
With pre-pay there is usually no charge to have the meters turned on and off, so customers who have had trouble in the past can avoid costly deposits, reconnect fees and late fees. Others just like the flexibility of knowing how much money they’re putting into their accounts ahead of time.
For companies that are selling the software, and sometimes hardware (such as payment kiosks) to enable pre-paid plans, times are getting better. Both Exceleron and Utiliflex admit that the best thing about calling potential clients is no longer having to explain what prepaid is.
“The biggest problem we have is getting the utility to deploy,” said Gordon. “Once they deploy it, the customers demand it.”
Exceleron has more than 30 utility customers (mostly municipal), in the U.S. Utiliflex has mostly been working outside of the U.S., but is now also signing deals with municipal utilities stateside.
Even though George at Domlec said that customers love the service, it can't be implemented without some serious considerations. Texas’ PUC recently allowed for prepaid services, but they made sure that customers could not be shut off at certain times (like during natural disasters) and that their customers knew what they were getting into before agreeing to a prepaid plan. It only takes one grandmother on the local news talking about how her electricity got shut off in a snowstorm (or heat wave) to bury the service.
But voluntary pre-paid is saving utilities money -- by not having to carry as much debt from wayward customers, as well as saving the call center staff from having to handle reconnect and billing inquiries from accounts that have been shut off or are delinquent. Lastly, people like choice -- and pre-paid service is just one more choice.
Down at Domlec, George said that the average Dominican really distrusts (read: hates) the utility. But for those that are using Pay-As-U-Go, approval ratings are through the roof.
“When they don’t have to deal with us as much,” he said, “they like us a lot more.”