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Got Prepaid?

Smart meters open the door to advance billing.

Fortnightly Magazine - July 2010

complete, the only remaining hurdle is to define and communicate to customers the written disconnect notification rules for customers who choose the prepay option—which is exactly what APS and DTE are addressing right now.

In Arizona, current law requires an electric utility to issue written notice five days before terminating a customer’s service. Further, the electrical service may be disconnected only in conjunction with a personal visit to the premises by an authorized utility representative. Both requirements diminish the attractiveness of remote connect and disconnect. “We’re asking the ACC to waive the existing disconnect notification requirements,” says Tony Tewelis, manager of smart-grid programs at APS. “I’m sure there will be some discussion there.” He adds that rules prohibiting a disconnect due to weather or medical issues would remain in place.

Similar requirements apply to DTE. In Michigan, the MPSC requires written notice 10 days prior to executing a disconnect, and DTE has been working with MPSC staff since January to revise that requirement. Both utilities hope to have the issue resolved by the end of 2010 so they can begin soliciting volunteers for their 2011 and 2012 pilots.

How it Works

The goal, in effect, is to replicate SRP’s M-Power program, by far the most successful prepaid offering in the United States.

So successful, in fact, that according to Michael Lowe, SRP customer service manager, 18 U.S.-based electric companies, including nine IOUs, have contacted or visited SRP over the past year to investigate exactly how the system functions. “We started it with 100 residential customers in 1993,” says Michael Lowe, SRP’s customer service manager. “By 2000, it was up to 6,000. Today roughly 104,000 out of 850,000 residential customers are on prepaid.”

Here’s how it works: The customer enrolls and receives an in-home display that plugs into any electrical socket. The customer pays a refundable $88 equipment deposit for the display, which shows the current credit level and projects how long it will last based on current usage.

The household also receives two M-Power cards. The cards can be “reloaded” in $1 increments at 90 SRP PayCenter machines, which look like ATMs, located throughout the Phoenix area. The machines are available 24/7 and accept cash and checking account debits. The customer returns home and slides the card into the home display unit to transfer the credits to a Landis & Gyr meter. When the customer’s credits reach zero, the meter disconnects the power automatically. Once new credits are input, the display transmits them to the meter, which turns the power back on.

SRP never charges its prepaid customers late payment or reconnect fees. If a customer runs out of credit after hours, the power stays on and the meter runs in negative credit mode nights, weekends and holidays between 6 p.m. and 6 a.m. When the consumer reloads the next morning, the display unit subtracts the credits already consumed.

The prepaid rate is generally competitive—slightly higher or lower—with the standard post-pay rate, depending on the time of year ( i.e., summer versus winter) and the amount of electricity consumed, per month.