Who Benefits from Prepaid Billing for Electricity?

One of the advantages of having smart meters is that power grids can be programmed to allow prepaid billing and remote disconnections. The electric utilities promote prepaid billing as a plan that does not require a deposit, credit check or cancellation fees. Customers benefit by paying for service in advance based on estimated usage, and by being able to monitor their energy use and remaining credit in real time. “In North America, prepaid meters will expand from 2 million last year to 10 million in 2017” according to one forecast.

However, critics argue that utilities target poor customers to avoid chasing delinquent accounts. “The National Association of State Utility Consumer Advocates passed a June 2011 resolution that recommends an array of consumer protections, including no shut offs that could jeopardize health or safety, a “reasonable” grace period before disconnections, availability of payment assistance plans and lower rates than traditional service to reflect reduced overhead.”


Reference: Hatch, David, Rise of Prepaid Electricity Brings Scrutiny, Governing, September 5, 2012

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