Prepaid metering found to reduce energy usage

A research project commissioned by the DEFG Prepay Energy Working Group concluded that a link exists between prepaid electricity metering and energy conservation. The researchers disclosed in The Effect of Prepayment on Energy Use that energy usage was reduced by 5 percent to 15 percent when customers switched to energy prepayment plans, with an average energy savings of 11 percent.

Additionally, the report said the 11 percent average energy usage decrease is not a product of higher levels of disconnections when smart meters run out of time and power is cut off to households. The analysis indicated that "the level of disconnects is driven by usage and not by deprivation."

The findings were based on data obtained from the Oklahoma Electric Cooperative Inc., which supplies low-cost electricity to communities in rural Oklahoma. For prepaid metering, OEC employs Exceleron Software Inc.'s prepaid metering system, Prepaid Account Management System (PAMS).

From a sample size of 1,217 households that use electricity supplied by OEC, DEFG compared traditional, post-paid electricity consumption of households over a time period that averaged 32 months against families that used the PAMS alternative over a span of 22 months, ending no later than March 2012. That data was then merged with monthly disconnect and temperature data to arrive at the study's evaluation database.

The data not only suggests that households use less energy when they employed PAMS, but that disconnects were quicker to be remedied when households employed prepaid metering rather than post-paid metering. Ninety-one percent of prepay customers had their electricity reconnected in the same day it was disconnected, according to the report.

"Arguably, service disconnects on prepay are less stressful than service disconnects endured under traditional post-pay service," the report said. "With postpay, a significant debt has typically accumulated and late payment penalties and additional deposits are often required to restore service. These hurdles may result in a longer disconnection period and an increased burden for the customer."

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