Prepay, use less

Michael Giberson at the Knowledge Problem blog writes,

The most detailed study of a prepaid power program in the United States is EPRI’s “Paying Upfront: A Review of Salt River Project’s M-Power Prepaid Program.” The report provides a good overview and assessment of the program. See the abstract, copied below, for more of a description of the content.

Giberson continues,

One issue of interest with prepaid is whether it promotes energy conservation. The Salt River Project has studied this question a few times and, with varying methods, has found that M-Power customers tend to consume about 12 percent less power than customers on traditional post-paid power accounts.

Which raises the obvious question of Why? Giberson notes,

Not all of the conservation effect may be due to the prepaid program itself, however. In M-Power, consumers get an interval meter installed that can provide relatively instant feedback on consumption rates and remaining balance. Non M-Power consumers get a monthly paper bill that arrives a week or so after the end of the billing period. Some of the conservation effect may be driven by the instant feedback and greater sense of awareness and control that such a device provides.

So if you give people better information about their consumption, they control that consumption better. Is that really so surprising?

The abstract:

Arizona’s Salt River Project (SRP) has operated M-Power, the largest electricity prepayment program in the United States, since 1993. The customer population has grown to about 100,000 (approximately 12% of all residences served by SRP), and it has expanded from the initial target population—consumers with arrears facing service terminations and low-income customers—to include consumers with different expectations from M-Power service. The in-home portion of the SRP prepay configuration consists of a user display terminal (UDT) that communicates with the customer’s meter. The purchasing component of the M-Power program is the self-service kiosk, known as a PayCenter, accessed via a Smart Card, which is also the conduit through which electricity consumption information is transferred back to SRP.

The constant aspects of the M-Power experience have been a high level of customer satisfaction and an overall conservation effect reported by SRP of approximately 12%. SRP attributes the conservation effect to a variety of factors, noting that M-Power requires consumers to pay attention to when and how they use electricity, allowing them to make immediate adjustments in usage to lower their bills.

This report provides an overview of how the M-Power program works along with an examination of the technology, systems, and costs associated with the program. The overview is followed by an analysis of customer perceptions of the program as well as a discussion of the program’s potential conservation effect. The report concludes with a discussion of impact studies needed to answer several outstanding research questions, including the effect of various types of payment options on conservation as well as whether SRP’s experience is transferrable to other markets, climates, customer circumstances, and supply conditions.