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Prepay for Electricity?

APS pilot project begins next year

sewing, Arizona pre-paid electric meters

Photo by Andy Delisle/Wonderful Machine

Janice Allen, of Mesa, says she’s benefited from the convenience of prepaying for her electricity. Arizona Public Service Co. will launch a two-year prepayment pilot project next year.

En español | When Janice Allen, a 63-year-old receptionist at a Mesa charity, couldn't pay a $350 electric bill, her power company, Salt River Project (SRP), proposed that she avoid future spikes in her monthly bill by prepaying for her electricity.

She now pays from $20 to $60 every other week at an SRP kiosk at her grocery store.

See also: Affordable Utilities Now!

The program is similar to prepaid cellphone plans for customers with minimal credit ratings; it shifts the risk of nonpayment to the consumer. It's a way for consumers to be more aware of their electricity usage and for utilities to reach energy conservation goals, according to power companies.

Allen has an in-home monitor that shows the cost of the power and how much power remains before it will automatically cut off unless she makes another payment. Her grandchildren pay attention to the meter. "I don't have to tell them to turn off the lights," she said.

Consumer groups, including AARP Arizona, worry that as more prepaid meters are used, more people — especially older people — will lose their power, which can be dangerous to their health in the desert climate.

More than 122,000 of SRP's 950,000 households prepay for power — the most of any utility in the nation. The program began in 1993. SRP says it doesn't track how many prepay customers have been cut off.

APS to launch two-year pilot

Arizona Public Service Co. (APS), the state's other big utility, is starting a pilot prepayment program March 31.

APS, a public corporation, is regulated by the Arizona Corporation Commission. (SRP, a quasi-municipal corporation, is not.) The commission ordered APS to consider suggestions from consumer advocates, including AARP, before the program launches.

Steve Jennings, AARP Arizona associate director, said the prepay program makes it too easy for people to have their electricity turned off.

"Prepay is a potential danger in a climate like ours. We believe if someone is going to lose their power, that they should have a personal visit before power is turned off."

AARP Arizona has asked APS to track disconnections and examine the circumstances of why older people are cut off.

APS expects about 2,000 people to enroll in the two-year pilot program. Volunteers who want to try the prepay program are being recruited from its 1.1 million customers in 11 counties.

While a recent SRP study shows a 12 percent reduction in energy use by prepaid customers, Jennings questioned whether rationing comes at the expense of healthy temperatures. For example, during the summer when her bill is highest, Allen keeps the thermostat in her one-bedroom apartment at 85 when she's home, and 90 when she's away.

"It's comfortable for me," she said.

Next: Giving consumers more control. >>

Kelley Coats, customer programs leader for APS, said the prepaid program may not be for everyone. But she expects consumers will like it because it puts them in control. "If their credit balance is low, they can reduce their power usage for a few days."

Jodi A. Jerich, director of the Residential Utility Consumer Office, the state's consumer advocate, supports the prepayment program because it is voluntary and offers incentives that encourage people to use power more wisely. She noted that the program also offers consumers who can't afford utility deposits, ­which are currently $200 or more, another way to get service.

But consumer advocate John Howat, a senior energy policy analyst at the National Consumer Law Center in Boston, said "phantom" fees, such as the $5.95 for credit card payments, add up, especially if someone is paying every week.

Howat said the prepay programs need to do a better job of explaining the risks of cutoffs.

"It is important that elders and others who are considered vulnerable customers be alerted frequently to the dangers of losing their service. Notifications and disclosures are important even before someone signs up for service," he said. "In my view, the materials don't go far enough to describe who are vulnerable or may soon be vulnerable."

Cynthia Zwick, director of the Arizona Community Action Association in Phoenix, objects to the the utility companies describing the prepayment program as an energy conservation program. "If these programs are saving the utility companies money (for billing and unpaid bills), then those savings should be passed on to the customers," she said.

Zwick, whose nonprofit organization helps the poor manage their utility bills and weatherize their homes, said the program "allows the utilities to get their money from customers up front. If people get behind, they are asked if they want to join a prepay program, and, desperate to keep their power on, they opt in. It is coincidental that there is an impact on energy savings."

The APS prepayment program won't use in-home energy monitors like the SRP program, and its customers won't have to go to supermarkets or other vendors to feed a cash machine and recharge their utility cards, Coats said.

APS prepay customers will be able to pay the same way standard customers do: online, by phone, by check or at one of the utility's kiosks throughout its service area. Customers can check their balance online or have it sent to them every day via phone message, text or email. They can choose to be alerted when their credit reaches a specific amount, or it automatically will contact you when it is down to $25.

APS has built in a way for a second person, such as a family member, to receive an email if someone is about to be cut off. It also won't allow anyone with a serious medical condition to participate in the prepayment program.

Also of interest: Are 'smart meters' a good thing? >>

Maureen West is a Phoenix writer

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