"Our company had minimal success with our prepay pilot. We've actually discontinued the program due to low signup."
Back Office Buddy got me thinking, what are the challenges a US utility company faces when delivering prepaid service? We have the technology, the personnel, and infrastructure required to be able to choose our flavor of prepaid (token, card, server, ... ).
1) Goals: More often then not, political pressure to 'go prepaid' forces utilities into this space but without a problem to solve or the correct metrics (other than adoption rates) these projects can become painful for everyone involved. There are plenty of good business reasons for prepaid (usage reduction, non-technical loss reduction, customer satisfaction, or increasing cash flow), they just need to be aligned with the utilities' current direction.
2) Customer buy-in: Successful prepaid pilots need customers to be excited about prepaid. How does a utility accomplish this? Since most customers will be postpaid first, successful incentives include bill credits, debt forgiveness, or payment arrangements. What is key, however, is immediate feedback via SMS or email. When a customer pays and gets an SMS letting them know reconnections normally take X mins, the utility has done two important things. The customer has a reasonable expectation of reconnection and most importantly, knows the utility acknowledged the payment.
3) Expense: Prepaid requires investment in meters with remote disconnect (and usually two-way communications). While this sounds like a small investment for the ability to limit truck rolls, increased meter communications, and better network control, the initial investment is considerable. Radio mesh networks require propagation studies and careful planning and cellular network coverage is beyond the ability of the utility to control. While this sounds like a serious problem, the nature of prepaid customers helps out utilities in the expense department. Reviewing existing deployments, we have found the average customer adds funds to their account nearly 6 times a month. Combining this increased cash flow with a significant (11% in one study) decrease in consumption and the fact that most prepaid customers choose to go paperless, prepaid customers are very inexpensive to serve.
At the end of the day, prepaid does take a lot of work to plan and execute. But once it's up and running, customers and the utility end up with a much better way to do business.