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CFC’s Financial Webinar SeriesThe Rise of Prepaid Metering

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CFC’s Financial Webinar SeriesThe Rise of Prepaid Metering



• 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:


Dal Langston

Central EMC

Jonathan White

Peninsula Light

John Penry

CFC


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


Today’s takeaway:

The fine print in any contract…

is there for a reason!


Dal Langston

Central EMC


CEMC Pre-paid Metering Program



• 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


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


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


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¢


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?


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


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!


John Penry

CFC


Salt River Project

SRP Prepaid Metering

Program


• 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


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


Arrears Example


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


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


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%


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


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


Now…let’s turn it over to our audience!


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For more information about the Salt River Project:

www.srpnet.com/environment/earthwise/

pdfx/spp/EPRI_MPower.pdf


Mark Your Calendar For Our Next Event:May 9,

1 p.m. Eastern Daylight Time

The Topic:The Topic:


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


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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