Long popular in the U.K., South Africa, and some other countries, prepaid electricity service is now becoming available to more U.S. consumers, thanks to smart meters. Recently the Kansas Corporation Commission approved Westar Energy's proposed Pay As You Go pilot program. This voluntary prepayment program will allow up to 1,000 Kansas households to pay for their electricity in advance.
Smart meters enable prepayment because they include remote-disconnect capability. Utilities can implement optional prepayment as part of service setup. Instant connection or disconnection (such as would be needed when a customer moves) is simply a matter of software.
A surprisingly large portion of U.S. consumers are interested in prepaid electricity. In a survey by Ecoalign, 42% of US customers said they were "interested" in prepaid energy. Those consumers cited these benefits:
- Paying for energy as you use it.
- Eliminating surprises at the end of the month.
- Controlling costs.
Pay-as-you-go electricity can help utilities reduce costs, too -- by avoiding connections, disconnections and re-connections associated with non-payment of bills.
Typically, customers whose power is disconnected due to non-payment must pay the cost of disconnection and reconnection. They must also pay a deposit to reestablish service. Furthermore, customers who lack a credit history often must pay an up-front deposit to establish service. Using FERC Form 1 data, I've estimated that these deposits total in excess of $7 billion for all US electricity customers. (See my Electricity Policy article for details, subscriber access required.) Customers with prepaid service usually can avoid these costs.
The Kansas pilot is available to customers who already have a smart meter installed at home -- and Westar is currently rolling our smart meters in Lawrence, Silver Lake, Rossville and parts of Wichita.
To enroll in the program, customers must pre-pay at least $35 in their Pay As You Go account; this will be applied toward their initial electricity use. Thereafter, customers may deposit as much or as little as they like into that account, whenever they like, as long as the account maintains a positive balance.
Enrolled customers will have several options to track electricity use. They also receive frequent updates about their account status, including a special website and a MyUsage mobile application providing usage information. Customers may also sign up for text messages, email or phone calls that will be sent when their balance reaches a predetermined level.
Read more at Smart Grid Watch Blog!