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CFC’s Financial Webinar SeriesThe Rise of Prepaid Metering
Financial Webinar Series
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CFC’s Financial Webinar SeriesThe Rise of Prepaid Metering
Financial Webinar Series
Financial Webinar Series
• Describe a prepaid metering system.
• List the benefits prepaid metering will bring to cooperatives and consumers.
• List the key questions to ask when considering adding a prepaid metering system to the cooperative.
As a result of this session you will be able to:
Financial Webinar Series
Dal Langston
Central EMC
Jonathan White
Peninsula Light
John Penry
CFC
Financial Webinar Series
Which of the following is not the name of an active prepaid card somewhere in the world?
A. Octopus
B. Proton
C. UPside
D. DoughRoller
E. Green Dot
Polling Question
Financial Webinar Series
Today’s takeaway:
The fine print in any contract…
is there for a reason!
Financial Webinar Series
Dal Langston
Central EMC
Financial Webinar Series
CEMC Pre-paid Metering Program
Financial Webinar Series
Financial Webinar Series
• Program began in 2008, as an alternative to paying a deposit
• CEMC requires a good credit score or a $500 deposit on all new connects
• Their options?– Pay deposit in full
– Pay in 3 installments over 4 week period
– Enroll in Prepay program
• Started with pilot program of 50 members
• Currently have 575 enrolled in prepay
Financial Webinar Series
Customer Hookup
• $30 service establishment fee
• $65 Minimum credit balance
• CEMC technician installs TS2 meter and Collar (remote service switch)
• Arrears can be paid off over time at 40% through debt recovery option
Financial Webinar Series
Disconnect Provisions
• System is programmable to allow for low balance threshold set by the member sending phone call or email per member choice
• Once below -$5 they receive a phone call alerting them to pending disconnect in 24 hours
• Once disconnected must establish $20 credit before reconnect
• No reconnect fees
• Automatically connects and disconnects
Financial Webinar Series
Rate Comparison
Residential Non Prepay rate
$20 Facilities Charge
June-October
< 1000 kWh = 10.60¢
> 1000 kWh = 10.08¢
November-May
< 1000 kWh = 10.60¢
>1000 kWh = 8.96¢
Residential Prepay rate
32.00 Facilities Charge
June-October
< 1000 kWh = 10.60¢
> 1000 kWh =10.08¢
November-May
< 1000 kWh =10.60¢
> 1000 kWh =8.96¢
Financial Webinar Series
Consumer Behavior
• Customers frequently buy small amounts weekly
• Purchases peak on Fridays, which are typically paydays
• Some Customers prefer the Prepay to paying Deposit amount at one time
• Makes customers more aware of usage?
Financial Webinar Series
Lessons Learned
• Prepaid programs do not fit into the traditional billing cycle
– Purchases are made frequently at the convenience of the customer
• System is not financially feasible without RSS devices
• Understand what you are trying to achieve through a prepay system
Financial Webinar Series
Jonathan White
Peninsula Light
21
• Founded in 1925
• Mutual Coop (Member Owned)
• Second Largest Coop in Washington
• 110 Sq. miles
• ≈ 30,000 Electric
• ≈ 2,800 Water
Who Are We?Who Are We?
Member Demographics
• More retired households (45%) than working households
• 64% are over 55
– 40% over 65
• 64% live in 1-2 member households
• 84% attended college
– 56% college grads
• Number of years served has increased – less transitory population
Bedroom Community to Retirement Community
Prepay RFP
• RFP March 2011
– 3 vendors
– 2 responded
• Developed Prepay Pro Forma
– 1% annual growth rate – 300 meters
– Deploy new AMI meter
– Monthly cost/meter
– Debt liability & recovery
Implementation TeamMulti Department Effort
•Member Services– Team coordinator
– Business case
•Information Services– Postpaid & prepay
•Financial Services– Revenue reporting
•Metering– New meter deployment
Areas of Implementation
Challenges1. Interface legacy CIS & prepay CIS
– Most time consuming
2. AR revenue/credit posting
– Creating new GL and financial reporting
3. Posting online payments
– Different file protocols between vendors
4. Keeping vendors on task
– Sometimes required intervention at a senior level
Conclusion• Can you make a business
case?
• One size doesn’t fit all
• Talk with other co-ops
• Do you have the internal resources ?
• Discuss your intentions with your other vendors
– Are they familiar with prepay?
– Have they worked with the prepay vendor that you’re considering?
• Get buy in from the other departments!
Financial Webinar Series
John Penry
CFC
Financial Webinar Series
Salt River Project
SRP Prepaid Metering
Program
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• Program began in 1993, in accordance with Arizona law to aid low income consumers
• Started with pilot program of 100 customers
• In-home display (UDT) hard-wired to meter – Used power line communication (PLC) in 1999
– Now uses dual frequency
• Began using payment kiosks in late 1990s (now over 100 locations)
• Program has more than 120,000 prepay customers
Financial Webinar Series
Customer Hookup
• $99 deposit for UDT ($87.50 refundable)
• $28 service establishment fee
• Customer gets two Smart Cards, one pre-loaded with $30 credit
• SRP technician swaps out new meter, customer connects UDT and marries with meter
• Arrears, deposits and fees are paid off over time at 40% of what the customer adds to the card
• Customer usage information is transferred to utility when credit is added to card
Financial Webinar Series
Arrears Example
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Disconnect Provisions
• System is programmable to allow for credit during certain hours and emergency periods
– Friendly Credit
– Emergency Credit
• Will disconnect if balance is zero, but no reconnect fee (as high as $100)
• Credit is paid off like arrears at 40%
• M-Power is not for the poor with a medical discount
Financial Webinar Series
Rate ComparisonE-23 (basic residential price plan) M-Power
< 700 kWh
701-2000 kWh >2000kWh
Nov thru Apr 7.80₵₵₵₵ 7.80₵₵₵₵ 7.80₵₵₵₵ 9.34₵₵₵₵
May thru Jun 10.10₵₵₵₵ 10.93₵₵₵₵ 11.62₵₵₵₵ 10.50₵₵₵₵
Jul thru Aug 10.64₵₵₵₵ 11.41₵₵₵₵ 12.12₵₵₵₵ 10.97₵₵₵₵
Sep thru Oct 10.10₵₵₵₵ 10.93₵₵₵₵ 11.62₵₵₵₵ 10.50₵₵₵₵
Monthly Meter Charge
$15 $15
Deposit $285 $99
Financial Webinar Series
Consumer Behavior
• Customers frequently buy small amounts weekly
• Purchases peak on Fridays, which are typically paydays
• Customers like having the kiosks where they shop for other items
• Customers prefer the convenience and budgeting ability
• Reduced consumption by 12%
Financial Webinar Series
Conservation Effect
• Prepaid metering is appealing to customers who choose to use less energy
• Many like the cost and usage visibility for educating family members
• Customers can make immediate adjustments to usage
• 12% reduction has been constant across groups and time periods
Financial Webinar Series
Lessons Learned
• Prepaid programs do not fit into the traditional billing cycle
– Purchases are made frequently at the convenience of the customer
• Work closely with consumer advocacy groups
• Work with a system that is scalable
• Understand your cost drivers
Financial Webinar Series
Now…let’s turn it over to our audience!
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How to Submit Your Question
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For more information about the Salt River Project:
www.srpnet.com/environment/earthwise/
pdfx/spp/EPRI_MPower.pdf
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Mark Your Calendar For Our Next Event:May 9,
1 p.m. Eastern Daylight Time
The Topic:The Topic:
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For Directors, Our Next Event is:April 19,
3 p.m. Eastern Daylight Time
Considering Equity Management:Considering Equity Management:
The Directors CutThe Directors Cut
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This program—Uncollectables and the Rise in Prepaid Metering—is a copyrighted
presentation of CFC. No portion of this program may be reproduced, used or
distributed without CFC’s written consent.
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