- Smart meter based prepaid service is on the rise in the US, as utilities look to leverage benefits from their advanced metering infrastructure deployments.
- Emerging consumer benefits include better control over energy usage, lower consumption and bills, and increased customer satisfaction.
- Investor-owned utilities must overcome consumer protection concerns, but the utility commissions appear increasingly open to prepaid pilot requests.
- Energy conservation impact of prepayment could collectively save customers US$350M on their electricity bills in 2021.
Cambridge, United Kingdom (24 March 2017) – Prepaid electric service is poised for growth in the United States, as interest from utilities mounts in launching this new payment option for consumers as an incremental benefit of their advanced metering infrastructure (AMI) deployments.
“The experience of the early-adopting utilities, such as the rural electric cooperatives, suggests that prepaid service can benefit consumers and utilities alike”, says Catherine Viola, Consulting Analyst at Quindi Research. For householders, the benefits can include better control over their energy usage, reduced consumption, bill savings, and increased customer satisfaction, while utilities can experience improvements in collection and debt levels, operational efficiency, and front-line staff morale.
However, prepaid utility service faces scrutiny from consumer advocates, who raise concerns that certain existing consumer protections for utility service must be waived to accommodate the technological advances that AMI-based prepayment leverages, such as remote disconnection of the customer’s power supply.
Although the regulatory situation remains challenging, the public utility commissions seem increasingly open to requests from the large investor-owned utilities for pilots as evidence for the benefits of prepaid service becomes more abundant.
“We forecast that there will be between 2.62 million and 2.86 million prepaid electric users by the end of 2021, depending on how the regulatory situation evolves,” continues Viola. This compares to an estimated 660,000 prepaid users at the end of 2017. “Much of the forecast growth will come from the investor-owned utilities, as they move beyond prepaid pilots and launch commercial services.”
Many customers on prepaid programs find they reduce their energy consumption, as they adjust their behavior in response to daily feedback on their usage and spend. Some utilities report average energy savings of 6-13% across their prepaid users.
As prepaid service adoption rises, this energy conservation effect could translate into significant aggregated usage and bill savings for consumers. Assuming average energy savings of 10%, we estimate that prepaid customers could collectively save around US$350 million on their electricity expenditure in 2021. The energy savings from prepaid service could also bring broader societal benefits, including a reduced reliance on fossil-fuel power generation and lower carbon emissions.
Smart Prepaid Utilities in the United States: Forecasts & Analysis is available from Quindi Research, priced at GBP3500 (plus applicable taxes).
About Quindi Research
Quindi Research provides research and advisory services for organisations throughout the energy and telecommunications sectors. The company’s publications and research help software vendors, equipment manufacturers, network operators, service providers and regulators identify and exploit the opportunities from the emergence of new technologies. Founded in 2012, Quindi Research is based in Cambridge, UK. For more information, please visit www.quindiresearch.com.
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