By Noah Solomon, Senior Research Analyst –
To right the perceived wrongs of the universe, Avengers: Infinity War sees Thanos the Mad Titan seeking the Infinity Stones, the first being the Power Stone, in an attempt to gain control over his and others’ destiny. In the same fashion, utility customers seek greater control over their own utility bills and usage. One way customers find power in this regard is utility prepay programs.
Similar to prepaid cell phones, prepay programs allow customers to add funds to their balances, which then go toward electricity usage. When the balance gets low, the customer is alerted so they can add more funds and avoid an electricity shutoff. Prepay programs offer customers more control over their bills, choosing when and how much to add to their balance. This promotes greater understanding of power usage and its costs, and thus prepay participants often wind up using less power overall, as well as avoiding surprises on their bills.
On the utility side, prepay offers a new avenue for recouping outstanding balances from customers, applying a percentage of prepaid customer payments to any debt and the rest to the prepay account balance. From 2014-2016 through a prepay program, Georgia Power was able to recover $1.7 million in old debt (member login required). Utilities can also save on notification and billing costs, as information is no longer sent on a regular basis.
Not all effects of prepay are positive, however, and there are concerns. Depending on the rate structure a utility offers, its customers might wind up paying more on a prepay program. Additionally, Chartwell research finds prepay programs are most popular with low-income customers, a demographic most heavily impacted by electricity shutoffs, which can happen more easily as some prepay programs require waiving certain notification and/or disconnection notice requirements.
Ultimately, prepay programs are well-liked by customers enrolled in them, and Chartwell’s 2017 Residential Consumer Survey found 16% of utility customers are interested in prepay, while only 9% of customers are enrolled in a program, providing a clear opportunity for program expansion and creation. For more information on prepay programs, mark your calendars for Chartwell’s webinar on Prepay Opportunities and Strategies on Aug. 22 at 2 p.m. EST, and please reach out to Chartwell about our Billing and Payment Leadership Council.
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