London, U.K. — (METERING.COM) — March 19, 2010 – The rollout of smart meters should help to provide major improvements in prepayment, bringing important benefits to users, including greater convenience and flexibility from new ways to add credit, new services and lower prices, according to a new report from the think tank, Sustainability First.
Prepayment meters are used by millions of consumers in Great Britain, although their use is not so widespread in many other countries. While prepayment meters have both advantages and disadvantages, they are generally popular with those who use them, largely because of the budgeting control which they give them.
However, three key factors have limited the attractiveness of prepayment as a payment method from a customer point of view. These are the higher prices paid by prepayment meter users, inconvenience, and the risk of self disconnection either due to lack of money or difficulties adding credit. These factors have led to gas and electricity prepayment being perceived as a payment method of last resort for people who have got into debt or have difficulties in budgeting.
Suppliers in Britain believe that the availability of a universal prepay platform would enable them to improve customer service and offer greater competition in prepay tariffs. However, the government is not yet committed to including prepay functionality for all gas meters and has commissioned further work on the technical, commercial and operational issues. Common functionality in all meters could help to reduce the costs of procuring, installing and managing meters and provide the opportunity to equalize costs and service between credit and prepayment for both fuels. Further, take up of smart prepay would be assisted if customers can switch without changing their meter but could be hindered if meters have to be changed.
The report recommends that the government should mandate prepay functionality for gas smart meters as well as electricity smart meters.
Nevertheless the regulator Ofgem needs to ensure adequate protection before a customer is remotely switched from credit to prepay. Ofgem also should explore with consumer organizations and suppliers about setting friendly credit and emergency credit periods and amounts, and needs to discuss the pros and cons of self disconnection monitoring with consumer groups and suppliers.
The report also notes that there is a need for further research into the pros and cons of trickle flow or load limiting before these could be offered to consumers.
The report was authored by energy policy specialists Gill Owen and Judith Ward.
Commented Owen: “In Northern Ireland, prepayment has become a mainstream payment method, used by 30 percent of all electricity customers. This is due to the lower prices of prepayment, ‘friendly credit’ no disconnection periods in the evenings and at weekends, and a wider range of top up options. The rollout of smart meters in Great Britain will provide a major opportunity to offer a better prepayment service to the benefit of customers and suppliers.”
For the full report “Smart prepayment in Great Britain,” click here.
Other smart meter papers by Gill Owen and Judith Ward are available at www.sustainabilityfirst.org.uk