General Interest

Pay As You Go electricity basics, advantages, and disadvantages

Pay As You Go ElectricityPay as you go electricity plans allow consumers to pay for their electricity in advance. The plan, which uses prepayment meters, helps consumers to monitor and control the way they use electricity. This saves on energy costs.

Consumers purchase the electricity credit through the company’s authorized agents in a variety of methods. This depends on the type of meter and the energy company. The commonly used methods are tokens, keys and prepaid power cards and smart cards. Some utility companies offer an option that enables consumers to purchase the tokens online or through smartphone apps.

The charges for the electricity used in the pay-as-you-go plan are more or less the same as those based on the billing method. This includes both the fixed and variable costs. During installation, the meter may have some preloaded units to start-off the consumer; this is then deducted later when the consumer purchases credits.

The pay as you go electricity prepayment meter

A typical prepayment meter has the following features:

  • The metering feature and display
  • Credit input feature, such as card reader or keypad
  • Communication link

Pay As You Go ElectricityThe meter used in conjunction with a circuit breaker through a two-wire communication link. This allows automatic disconnection of power when the consumer exhausts the credit. Conversely, automatic reconnection is fast once the consumer adds new credits.

Types of prepayment meters

Keypad based prepaid meters: This meter has a keypad to input the electricity token number. Consumers purchase the credit using a variety of methods. These include visiting the agent, paying through banks or mobile payments in some countries.

Key meter: Consumer uses an electronic key loaded with the tariff information and credit.

One way card system: Uses a disposable card. The user purchases power with a reloadable debit card. The loaded card is then passed near the meter, which has an in-built card reader.

Two-way card systems: Uses a smart card and the meters have a real-time, two-way communication capability. It is one of the most secure, but more complex and expensive methods to implement.

Smart pay-as-you-go meters

These allow consumers to interact with their meters and query balances using their mobile phones by sending an SMS to a monitoring system. In addition, the user is able to track electricity use by the hour, day, month or annually using the phone or online access.

These smart prepaid meters offer easier top up options. They include online payments or by text, as well as scheduled and auto top-ups.

Advantages and disadvantages of pay as you go electricity

There are several benefits to both consumer and the electricity distribution company.

Consumer benefits

  • The energy company does not have to keep on disconnecting and re-connecting electricity for a customer defaulting on payments.
  • Consumers can monitor their consumption and adjust the way they use the energy and hence control their costs.
  • The customer does pay for any late payment or reconnection penalties. The electricity gets disconnected once the units are finished; the reconnection is automatic and does not require a technician.
  • Can get credits in small and affordable amounts.
  • A prepaid meter can help consumers build up enough credit during the summer period so as to have extra units during the winter period.
  • Emergency credit available.

The utility company benefits include:

  • Improved employee productivity and safety for field technicians who do not have to disconnect and re-connect electricity to the consumer’s premises
  • Improved cash flow
  • Fewer high-bill complaints
  • Reduce number of disconnections and reconnections
  • End paper bills, hence saving on paper and distribution
  • Minimize confrontations with the energy company over incorrect bills
  • No need to access consumer premises
  • Avoid estimates and inaccurate meter readings

Challenges of pay as you go electricity

  • Too few really good plans that consumers like.
  • Challenges topping up when using prepaid cards or keys since the consumer must visit the agent.
  • Added cost to utility companies since they have to replace the old billing meters with the prepaid meters.

Who uses pay as you go electricity?

Pay As You Go ElectricityPay-as-you-go electricity meters are used by landlords and individual homeowners who have problems paying their electricity bills on time. However, there are instances where utility companies install the prepayment meters for all consumers in a certain region. Some consumers prefer the meters and ask for them.

The pay as you go plan ensures that tenants will pay their electricity bills in advance, thereby reducing the risk of running up a large bill and leaving the landlord to pay it.

The energy company may install a prepaid meter to help those consumers who struggle with their bills. This helps them to control their energy use and avoid excessive bills and disconnection and reconnection penalties.

Some utility companies load the meter with a few units to start the consumer off. However, these are usually paid for when the consumer purchases future tokens.

Precautions for consumers using pay as you go electricity

Keep on checking remaining credit

When using a prepaid meter, the customer must keep track of the remaining credits and replenish to avoid disconnection.

Load enough credits when going away

Ensure there is enough credit when going away for long periods. The meter will continue collecting the standing charges even when on no load. Consumers should ensure they have enough credit to last until they return.

Beware of pay as you go key frauds

Some crooks will take advantage of the consumer’s lack of knowledge and offer them cheaper credits than those bought directly from the utility company. For example, they will sell their credits at half price. This is more common with Key Prepaid Meters and the crooks will usually have master Keys, which they use to top off the consumer’s meter.

If the energy company finds out, the consumer ends up paying twice for their electricity; first to the crook, and then to the energy company.

To avoid falling victim:

  • Consumers should always buy from authorized agents.
  • Do not allow people to put other keys in your meter unless they are from the utility company and with prior arrangement.
  • Avoid topping up from door to door sellers! Most energy companies do not offer this type of distribution. If anyone shows up at your door, ask for their identification.