Cutting energy consumption: Is prepay the way to go?


By: SGN Staff


An analysis of the relationship between prepaid energy services and electricity consumption came up with some surprising results: participation in prepay plans has a significant impact on electricity use. DEFG, a management consulting company focused on energy, says participation in prepaid energy services resulted in average reductions in energy use of 11%.


DEFG launched the Prepay Energy Working Group in 2010 and working with an economist, the Oklahoma Electric Cooperative and other participants and stakeholders on the analysis. The economist, Michael Ozog, used accepted techniques in evaluating utility-led energy efficiency programs to identify the effect of prepaid services on electricity use.


"The major finding is that participation in prepaid energy services results in an average reduction in energy usage of 11%," said Cindy O'Dwyer, DEFG VP and working group leader. "Relative to other common energy efficiency measures, that is a large number and is achievable without a significant outlay by the customer in equipment. Nothing in the current portfolio really compares to prepaid energy in regard to the size of the impact, speed and cost-effectiveness."


DEFG made it clear that the 11% reduction occurred while customers' service was connected, and not attributable to service disruption. An 11% cut in monthly bills for Oklahoma Electric Cooperative's customers would theoretically mean an annual savings of $192 per customer.


"This study supports the notion that regular communication providing timely data where usage is tied to dollars and cents is key to a shift in consumer energy consumption," said DEFG CEO Jamie Wimberly. "Prepaid service operates as a consumer platform for both energy and budget management."


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