Regulators not on board with prepaid metering, despite growing acceptance

Regulators not on board with prepaid metering, despite growing acceptance

The market for prepaid electric metering is steadily gaining ground due to smart metering technology, in which the accompanying advanced infrastructure can enable utilities to offer prepaid electricity and/or gas
service as an option, as well as growing public acceptance around the idea of prepaying for services among those who prefer prepaying because it allows them to better manage their budgets and, in some cases, reduce their energy use.

By implementing this service, utilities can improve their cash flows and reduce delinquent payments. However, some regulators have blocked this payment method because of risks they perceive to vulnerable customers like the poor or elderly. Despite the hesitation with regulators, Navigant Research predicts the global installed base of prepaid metering customers to grow from 31.7 million in 2014 to 85.2 million in 2024.

In a few markets, like Great Britain, South Africa, and some countries in Asia Pacific, the existing prepaid
meters and payment systems have been accepted and Navigant expects adoption to grow. In Great Britain, for example, new smart meters will be installed so they can be used for prepay if the customer desires. In South Africa, prepay has been in use for more than 20 years, and conventional prepaid meters are expected to change slowly to smart versions as investments in new metering technology unfold.  In some areas in Asia Pacific, such as Indonesia, conventional prepaid metering also has strong footing and is expected to shift gradually to more advanced methods.

"Vendors expect prepaid metering to grow steadily in the coming years, but some regulators have not embraced the idea out of concern for protecting vulnerable customers, such as the elderly," said Neil Strother, principal research analyst with Navigant Research.

"While prepaid metering is common at some utilities, such as SRP in Arizona, and in South Africa and the
United Kingdom, this market is highly dependent on local norms and regulations."
In North America, only a small fraction of customers use prepay, Navigant explains, although the
service has made some inroads, particularly among cooperatives that have made it a priority. Navigant expects Asia Pacific to have the most prepay customers, driven by countries like Indonesia who have made prepay a priority and are deploying conventional prepaid meters at a fast pace.


Smart Grid Bulletin March 2019

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