Hope for prepay? New white paper promotes a path forward

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Quick Take: Although prepaid electricity is accepted in other parts of the world, North American regulators often reject it out of hand. Spurred on by consumer advocacy groups, they sometimes treat it as an effort by Evil Utility Overlords to exclude low-income families from getting electric service.

In reality, as long as prepay is voluntary, it can be quite useful to low-income customers as a budgeting tool. And quite convenient to transient populations such as college students. A new white paper from the DEFG consultancy marshals the arguments in favor of prepay and suggests a path forward for utilities that would like to add this option. - By Jesse Berst

If prepaid energy programs are to be offered to consumers, they should be voluntary and not limited to low income customers – they should be provided for all. That's one of the findings in a new white paper from management consultants DEFG LLC based on the company's research into prepay and relevant regulatory issues.

"The two key questions addressed by the white paper are – how can a balance be struck between allowing consumers to exercise their preferences and ensuring that adequate consumer protections are in place? And, how can regulatory rules and practices, including for low income consumers, be revised or updated to allow for innovation and new offerings such as prepaid energy or other new services enabled by smart grid yet maintain the intent of the original regulatory rationale?" said Cindy O'Dwyer, DEFG VP and project lead.

In addition to voluntary prepay for all customers, the white paper also concluded:

·         Consumer protections do and will continue to exist for prepaid services just as they have for post-paid consumers for decades

·         The "regulatory rulebook" needs to be updated to accommodate prepaid services

·         Regulatory principles, as differentiated from the rules and practices that implement those principles, should be re-examined. An example would be limiting communications for disconnect notices to letters and/or a knock on the door, which DEFG says may be both impractical and counterproductive when consumer credit issues are considered.

Click the PDF link below to read the white paper.

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