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Got Prepaid?

Smart meters open the door to advance billing.

Fortnightly Magazine - July 2010

smart meters delivering consumption data to the MDM, which then will deliver it to the prepay software and CIS. “We haven’t finalized that part of the pilot yet,” Kirchner says. “We’re looking at a number of vendor offerings for the prepay software, but we might develop something in-house, at least for the pilot.”

Since the smart meters eliminate the need for a site visit, the main concern is an MPSC rule requiring DTE Energy to provide written notice 10 days prior to the customer’s termination date.

“The MPSC has been receptive thus far. We’ve been working with their staff since January to determine how the customer will be notified. There are a number of ways to do that, such as email. We’re also looking into developing a way to use daily usage data to estimate a customer’s remaining balance and send the message 10 days before a shutoff would occur. But nothing has been finalized yet.”

If and when the billing rules are revised, Kirchner says DTE Energy will be free to implement the two-year prepaid pilot and, once the pilot is complete and results have been evaluated, to offer prepaid as an option to any customer with a smart meter. “The AMI program is already approved by the MPSC. Since we’re not changing the tariff, we don’t need any approvals there either,” he says. “Once the billing rules are revised, we’ll be able to offer prepaid to everybody, if that’s what we choose to do.”

The Customer Experience

How the APS and DTE Energy pilots pan out remains to be seen. But based on existing prepaid programs, it appears many customers will like the option. For instance, Mary Hutchinson, a program manager with the Tempe Community Action Agency, a nonprofit social service organization, switched to SRP’s M-Power program five years ago and says she prefers prepay.

“I’m not low income, but I heard good things about it at work,” Hutchinson says. “With two teenagers I like being able to monitor what I spend on electricity day to day. And we have changed our habits. I use the washer and dryer only on weekends now.”

Still, she adds, prepay isn’t for everyone.

“You need easy access to transportation to get to the M-Power locations. I wouldn’t recommend it to a senior citizen, or someone who’s disabled.”

Howat, on the other hand, remains skeptical about utilities’ motives. He worries that ending on-site disconnects will increase risks to public health. He points to a January 2009 incident in which a 93-year-old man reportedly froze to death in Michigan after a municipal utility placed a limiter on his meter, which restricted the amount of electricity that could enter the dwelling until a past-due bill was paid. A neighbor who discovered the man’s frozen body reported seeing cash clipped to the utility bill sitting on the kitchen table.

“The technologies differ, but health and safety is threatened by the ability to disconnect service remotely, without a premise visit or personal contact with the customer,” he says. “Without that contact, tragedies like this will only increase.”