Smart meters enable a fresh approach to prepayment

Prepayment is becoming an ever-more common way to pay for services as diverse as mobile phone usage, transport and healthcare. In many countries prepayment has long been a feature of the energy sector, too, but smart meters are transforming how utilities can serve this customer segment.

The latest smart metering and related technologies can bring benefits for both utilities and their prepayment customers.

  • No need for dedicated prepayment meters – Smart meters such as those being installed in the UK can operate in either credit or prepaid mode, allowing customers to switch between payment methods without having a new meter installed (which is sometimes at their own cost). This should benefit consumers by making it both easier and affordable to switch payment mode. It’s good for utilities, too, as installing a smart meter can be cheaper than replacing a traditional prepayment meter.
  • More flexible top-ups – Customers will have more flexible ways of topping up their balances – online using debit cards or e-vouchers and by smartphone, as well as cash top-ups at traditional pay-points (e.g. shops and post offices). This wider range of options makes it less likely that customers will find themselves caught out and unable to top up their balance before their supply is cut off (e.g. because all the pay-points are closed).
  • More secure payments – Utilities can reduce their reliance on payment mechanisms that in the past have been open to tampering and fraud, such as meter keys that activate cash top-ups. Customers will also be better protected from fraudulent scams that could leave them out of pocket.

The power of real-time rating and charging solutions

One of the key technology enablers for utilities’ smart prepayment deployments will be real-time charging and billing solutions, which are offered by vendors such as Basset, LogNet Systems, Orga Systems and SmartGridCIS.

Traditional prepayment meters not only measure a user’s energy consumption but also rate that usage based on pricing information that’s manually set within the meter itself. In smart meter deployments, pricing and rating functions can be decoupled from the meter and consumption measurement, and instead be managed remotely from the utility back office using real-time software systems together with the smart metering communications network that connects the utility to the customer premises.

With a real-time charging system, utilities can update prices remotely across entire groups of customers, without any need for expensive site visits (and return visits if the customer is not at home). Eliminating manual intervention for this process promises to significantly cut the cost of serving prepaid customers (the higher cost to serve is a common explanation for why prepayment tariffs are usually more expensive). Another benefit is that any price changes can be applied with immediate effect.

Real-time charging and billing software enables other functions too. For example, the utility can send notifications to the customer when their balance is low, and advise them how long their credit is likely to last based on their consumption patterns. This can help customers avoid being disconnected unexpectedly by reminding them to top up in good time or giving them an opportunity to cut back on their usage to make their credit last longer. It’s a way of giving them more control over their usage and spending. Of course, if the customer takes no action, then their energy company can remotely disconnect the supply when their balance reaches the disconnection threshold, but power can easily be reinstated as soon as they are back in credit.

In addition, software supports systems can flexibly accommodate a whole range of functions which enable the supplier to engage with its prepayment customers as never before. For example, they could automatically apply loyalty bonuses to customer accounts, such as annual rewards for staying with the supplier, or process pricing incentives for larger top-ups.

Better customer service and reward schemes should help improve brand perception and customer loyalty among the prepayment segment. With the right tariffs and pricing levels, there could also be an opportunity to extend the appeal of prepayment to other customer groups, such as retired householders on fixed low incomes or second-home owners.