September 1, 2020

How Pre-Pay Programs Can Drive Results in An Economic Downturn

Customer satisfaction decreased from 2019 to 2020 among utilities for the second year in a row, according to the American Customer Satisfaction Index (ACSI) Energy Utilities Report. The report states that customers need more clarity and transparency from their providers, including information on energy-saving ideas. In the wake of the COVID-19 pandemic, meeting customer expectations will continue to be a challenge as an increasing number of consumers struggle to pay their bills due to unemployment and an uncertain economy.

Introducing Pre-Pay Programs

Pre-pay energy programs provide answers for the many utilities collecting debt during the economic crisis. They offer customers an alternative payment option that allows for manageable payment sizes and increased transparency into their energy usage and account balance. Pre-pay programs also help customers become more energy-efficient since consumers are more mindful of the energy they’re using. Rather than paying for electricity after energy is used, customers can “load and go” by adding money to their utility account before energy is used. As the power is consumed, the account is charged, and the pre-paid balance declines.

There are more than 336,000 utility customers on a voluntary pre-pay offering as of July 2020, according to PEWG (Pre-pay Energy Working Group). And, as many as 29% of consumers would be extremely or very interested in a voluntary utility pre-paid option. Customers support pre-pay options because they gain more control over their energy usage and payment schedule. They also benefit from reduced or eliminated deposits and disconnect/reconnect fees. 

Pre-Pay Programs Drive Results

Customers are not the only ones who benefit from pre-pay programs. Utilities reap financial benefits and see improvements in their customer satisfaction scores.

  • 74% of consumers that have used a pre-paid service were satisfied with the option.
  • 11% average reduction in energy usage per individual enrolled in a pre-pay solution. 
  • 10+ point increase in customer satisfaction when customers use a pre-pay solution. 

When a utility in North Carolina took part in a pilot pre-pay program, the provider experienced success across the board, including:

  • 80% positive effect on overall satisfaction with the utility
  • 78% of customers paid off their deferred balance while participating in the program
  • 59% of participants believed they used less energy
  • 50% of customers gave the program a 10/10 customer satisfaction score

Surviving Economic Downturns

During economic recessions, low-income individuals are often more impacted than other socioeconomic groups and struggle to pay their utility bills. In March 2020 alone, 82% of surveyed U.S. adults expressed concern about the ability to pay their utility bills as a result of the COVID-19 pandemic. Pre-pay programs that target low-income individuals can help ensure fewer missed bill payments and reduced costs of energy shut-offs. For example, a North Carolina utility participated in a one-year pre-pay pilot program in which 594 customers enrolled. A staggering 82% of participants paid off their deferred balance during the pilot. The remaining 18% continued to pay toward their amount after that. This high percentage of paid accounts demonstrates the success of the program and customers’ ability to pay off their debts while remaining in service.

Pre-pay options not only help reduce costs and financial risks for utilities, but they help customers save money as well, especially during economic hardships.

To learn more about how your customers can benefit from pre-pay options, check out our infographic on the 8 Reasons Why Millennials Will Love Your Utility Pre-Pay Program.

 

Sources:

 ACSI. “Energy Utilities Report 2019-2020.” March 2020.

 UCRC. “Prepay Energy Landscape Review and Expert Panel.” July 2020.

EcoPinion Consumer Survey Report “pre-pay Energy: Past the Tipping Point and Scaling Up for Success.” January 2017.

DEFG. “NEUAC Panel Presentation: Overview of Prepay Energy.” June 2016.

CNBC.  “Americans Fear They Won’t Be Able to Pay Their Bills During Coronavirus Outbreak.”  March 2020.

Sowell Gray Robinson. Duke Energy Carolinas Prepaid Advantage Pilot Learnings Report. 2015.