Exceleron Software
Case Study: Central Electric Membership Corporation

Exceleron Software’s Prepaid Account Management System lets Central Electric offer an affordable alternative to high-risk customers who would otherwise struggle to pay a $500 up front deposit for electric service. Thanks to the prepay system, Central Electric has been able to reduce its write-offs while offering its services to a wider customer base.

Company Profile

Central Electric Membership Corporation is a not-for-profit electric cooperative that provides safe, reliable and affordable energy to more than 19,500 commercial and residential member-owners in five North Carolina counties.

Organized and chartered in 1941, Central Electric now has more than $59 million in assets. In 2000, Central joined Touchstone Energy®, a nationwide alliance of electric cooperatives designed to increase visibility, educate the public, and offer a broader range of products and services.

Business Situation

Like any electric co-op, Central Electric faced major challenges in collecting its accounts receivable. Customers often fall behind in paying their electric bills, particularly when their consumption is highest. Despite the company’s best efforts to collect overdue accounts, it was not unusual for a customer to disappear with 2-3 unpaid bills. Depending on the time of year, that could represent a $500-600 write-off, which was a significant loss for the co-op.

To protect itself from this financial risk, Central Electric adopted a policy of asking high-risk customers to pay a deposit of as much as $500. Naturally, customers had difficulty coming up with that much cash and complained that the policy was unfair. “People just can’t afford to pay that, especially when you think that they’re just getting established in a new home,” says Angela Hare, Director of Information Systems.

Central Electric was fully aware that the $500 deposit was beyond the means of many potential customers, yet the co-op’s write-offs were so high that it couldn't afford to change its policy. The co-op desperately needed to find an alternative solution that would keep electrical service affordable for high-risk customers, but not expose the company to undue financial risk.

Solution

Central Electric’s administrators knew that prepay options presented a possible solution, since they would let customers pay ahead of time, eliminating the co-op’s financial risk in providing electrical service. Over the years, they had investigated various prepay systems, but they were all too expensive to implement, often because they required purchasing special equipment or making a significant investment in system integration.

Then Central Electric discovered Exceleron Software’s Prepaid Account Management System (PAMS), which provided a way for Central Electric to offer prepay options to its customers while using the infrastructure that was already in place. Exceleron’s PAMS would provide the link between Central Electric’s existing meters and billing system, seamlessly integrating the new prepay payment options with the company’s tried-and-true business processes.

When Central Electric began using PAMS, its number-one goal was to give customers an alternative to high deposits. “Any other results,” Ms. Hare noted, “were going to be bonuses.”

Benefits

Since PAMS was implemented in 2007 Central Electric’s customers have enthusiastically adopted the prepay system. Customers now pay ahead of time, some making a payment every few days, and others weekly. Central Electric no longer has to collect high deposits, because there is no longer a risk that customers will build up a large unpaid balance. “[PAMS] has given customers who don’t have $500 dollars the option to sign up for electric service for just $100, $70 of which goes to their electric usage,” explains Ms. Hare.

One of the major benefits of using PAMS has been that Central Electric can now offer more payment options to its customers, but even more importantly the prepay system has helped to reduce the utility’s write-offs. In 2008, Central Electric reported a significant reduction in write-offs, which Ms. Hare attributes party to the use of PAMS. With the prepay option, Central Electric’s most at-risk customers have only a minimal past-due balance when service is disconnected, whereas under the traditional system they could have accrued unpaid balances for up to three months of electricity usage.

PAMS has brought other benefits, too. Central Electric’s customers are now much more aware of their electricity usage and they contact the co-op when they notice unexplained changes. For example, one customer logged into MyUsage.com and saw that his electricity use had spiked. He immediately called Central Electric, which was able to trace the problem to a faulty heating element. Under the old system, the problem probably would have gone unnoticed until the next billing cycle, when the customer would have been shocked by the higher amount due. However, thanks to PAMS, the problem could be corrected almost immediately, resulting in energy conservation and higher customer satisfaction.

These are just some of the many ways that PAMS is helping electric service providers improve their customer service and business operations by offering prepay options.

About PAMS & Exceleron Software

Founded in 1999, Exceleron Software, Inc. delivers a suite of hosted customer relationship management applications, including order management, payment processing and payment processing integration, account management, notification services and web-based and interactive voice response customer interfaces. Exceleron’s special focus on the prepaid market has permitted it to gain an in-depth understanding of the unique challenges associated with this group of consumers.

Exceleron’s Prepaid Account Management System (PAMS) eliminates many of the requirements of a traditional billing model and gives electric service providers the ability to charge for usage on a daily basis. By combining information from the automated meter reading (AMR) system and customer information system (CIS), PAMS makes it possible to calculate a daily energy charge by applying the current base rate as well as the power charge adjustment (PCA) to the previous day’s total kWh usage. Once the charge is calculated, it is deducted daily from the consumer’s account, along with any additional prorated charges and taxes. This allows consumers to monitor their true daily charges and make better decisions on their daily energy consumption.