Prepaid electricity is now being offered to the residents of Naga by the Visayan Electric Company (Veco), as part of a pilot programme to assess the viability of the technology in the Philippines.
According to Teresa Sederiosa, the pilot will assess 100 connections over a period of six months, as well as access customer acceptance of the scheme.
During an Association of Governement Information Offices 7 meeting, Sederiosa told reporters: “We chose Naga as pilot area because it is very receptive of this prepaid scheme, which is similar to a prepaid phone. With prepaid electricity, the people will learn to save power and budget the use of power.”
“It is purely voluntary, only for those who want to avail of it,” she continued.
It would appear the programme is off to a somewhat rocky start, as according to Sederiosa, of 24 prepaid meters installed in a previous trial in May 2014, only 7 were activated. In a second round of installations “we activated 16 commercial accounts out of the 24 meters that we installed. We are currently working on 32 elementary schools in the City of Naga to be converted to prepaid,” Sederiosa said.
Global opportunities for prepaid meters growing
In other prepaid metering news, Navigant Research has reported that “the global installed base of prepaid metering customers to grow from 31.7 million in 2014 to 85.2 million in 2024.”
The global research company reports that, although adoption of prepaid metering is expected to grow, the trends will be different depending on the market and geography.
In some markets - like southern Africa and some countries in Asia Pacific – prepaid metering systems are well established. However, in other markets, such as North America and Europe, prepaid metering is growing, but at a slower pace.
“For North America, the installed base of prepay meters is expected to grow from 650,000 to 3.1 million during the forecast period, with a CAGR of 17.0%,” a statement from the company said.
“Utilities see prepaid metering as a way to avoid bad debt and increase cash flow,” says Neil Strother, principal research analyst with Navigant Research.
“Advanced smart meters and utility back-office processes can remotely enable customers to pay for electricity ahead of usage without having to install a prepay-only meter and, in addition, some customers are finding prepay programs to be helpful in managing their budgets and becoming more energy efficient.”
One of the challenges to the growth of prepaid metering programmes is the resistance from customers and the stigma that prepaid metering is for customers who are considered high-risk for non-payment. In order for these perceptions to change a major shift among regulators and larger utilities is needed.
By way of example of how this has been successfully managed: the City of Cape Town has a policy in place by which all new residential connection automatically get prepaid metering. This has changed the perception that prepaid metering is for 'bad payers' only, as everyone get prepaid metering, regardless of where they live.
Other challenges to the acceptance and growth of prepaid metering include:
• Different rate structures
• Lack of system integration
• Objections from consumer groups