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February 23, 2011

Pay-As-You-Go Utility Usage? It's Possible With Smart Meters



Anyone with green savvy knows about smart metering: using more intelligent household utility meters that record electricity consumption in short intervals – such as hourly – and communicate the information at least once daily, or even more frequently, to the electric or natural gas utility for monitoring and billing purposes. For consumers, the benefits are clear: they eliminate the need for estimated bills, which many people find confusing and frustrating, and they feature displays that can provide precise information to homeowners about their gas and electricity consumption, helping people better manage their energy use and reduce their energy bills and carbon emissions. By understanding the times of day and year during which energy costs are highest (so-called “peak” periods), homeowners can match their consumption to the lower-priced periods to reduce consumption and cost.

So where does the pre-paying come in? Consider a program that would allow you to designate your budget for energy each month in advance, and pay it upfront, then let you use smart metering technology and other home energy management solutions to help you “match” your consumption with your goal, managing your household consumption against that amount.

This concept of prepaid utility services was recently examined in a consumer survey by marketing firm EcoAlign, according to ZD Net. Just under half of the 1,000 respondents reported that they had no interest in pre-paid utility service via smart metering, indicating that the utility industry has some work to do in communicating the benefits: notably, that studies have shown the pre-paid program can help save homeowners five to 15 percent off their energy bills. Among the top objections to such a program were privacy concerns and the fear that utilities would be shut off if the household exceeded its limit.

But the model is compelling: according to the report, “EcoPinion: Is Prepay the Way? Consumer Perceptions of Prepay in the Utility Sector,” there are a number of benefits to the pre-paid option: for starters, a majority of people who have used the services (and most are under-30 renters, not homeowners) are satisfied with them. In addition, the model eliminates the “surprise bill” at the end of the month that most homeowners dread, and allows individuals interested in reducing their energy consumption – or spending less – to have complete control over their power use.


Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.

Edited by Tammy Wolf

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