Exceleron Software
Case Study: Co-Mo Electric Cooperative

Exceleron Software’s Prepaid Account Management System has helped Co-Mo Electric Cooperative better serve its low-income customers by eliminating the need for high deposits and minimizing the service disruptions associated with disconnected service. Customers now are able to manage their service on their own, tracking their electricity usage, monitoring their balance, and requesting reconnection with a few simple clicks.

Company Profile

Co-Mo Electric Cooperative provides electric service over approximately 2,300 square miles in central Missouri. The northern two-thirds of the service area is primarily rural and agricultural, but most of Co-Mo Electric’s growth occurs in the southern third, in the Lake of the Ozarks Region, where there are burgeoning resorts and tourism. The company’s 32,000 accounts are demographically diverse, as most of the end users are local residents and rural farmers, while others own vacation homes and visit from the city only a few times a year.

Business Situation

As with many other electric co-ops, service disconnections and reconnections were becoming a major problem for Co-Mo Electric’s operations. Each time a customer fell behind on payments, Co-Mo Electric had to send personnel to the site to disconnect the electric service. Disconnected customers who wanted to reestablish service had to pay a high deposit that would cover any balance due if the account had to be disconnected again. Once the payment was received, Co-Mo had to send service personnel back to the site to reconnect the electric service. This represented a significant investment of time and money for Co-Mo Electric, and a major inconvenience and financial hurdle for customers who struggled to make such a large deposit.

To protect itself against financial losses for unpaid accounts, Co-Mo increased the required deposit amount. This created additional hardships for low-income customers, but as long as customers were paying after they had already used the service, there was always the possibility that they would leave without paying for the electricity that they had used, leaving Co-Mo to foot the bill. Co-Mo had to mitigate this risk and it didn’t have any alternatives other than raising the required deposit amount.

“We wanted to give our members an option so that they could reconnect their electric service without having to put up the high deposits,” explains Sr. Customer Service Representative Joy Lawson. “That was our main concern.”

Solution

Co-Mo Electric’s management knew that having a pay-as-you-go service would eliminate the need for high deposits. However, existing systems required purchasing and installing home monitoring devices. Reluctant to buy, track, distribute, and maintain additional equipment, Co-Mo continued charging high deposits until it discovered Exceleron Software’s Prepaid Account Management System. With no need to buy new equipment or software, it seemed to be the perfect solution. Co-Mo began using PAMS in October of 2007.

Today, approximately 440 of Co-Mo Electric’s accounts are using the prepay system. When a customer first signs up for prepay, a Co-Mo Electric customer service representative spends about half an hour explaining how the system works, how charges are calculated, and how to set up automatic notifications. Ms. Lawson sums up the message for her customers: “You won’t pay late fees or reconnection trip charges, because you’re paying as you go.” Co-Mo Electric charges a monthly fee of $8 for using the prepay service, but for many customers this is far less than what they previously paid in late fees and connection fees under the traditional system.

According to Jennifer Mercer, Customer Service Supervisor, some customers using the prepay system continue to get disconnected frequently, but now they can pay to be reconnected almost immediately after making a payment. Many customers also enjoy the flexibility of paying every day or ever few days. A few people prefer more traditional payment methods, so Co-Mo Electric gives them the option of saving up to pay the deposit and then switching back to the post-pay service.

Benefits

By the end of 2008, just one year after implementing PAMS, Co-Mo Electric’s write-offs had fallen from $81,000 to $65,000 - a 20% reduction. Ms. Mercer attributes this primarily to the prepay system. “In the past, under our traditional post-pay system, commercial services could owe thousands of dollars before they were disconnected. Now, with our prepay system, about $35 is the most that someone could owe us, and that’s only because we’ve chosen not to disconnect service on weekends and holidays.”

The prepay system also benefits Co-Mo Electric’s customers in many ways. “[PAMS] is a good option for people to get service with just $100 upfront, and that money goes toward their future energy use,” explains Ms. Lawson “Once they’re on the prepay basis, if they are disconnected, all we require is that they pay $40 to get back on again.” Customers don’t even need to call Co-Mo Electric to request the reconnection, and the company doesn’t have to send a truck to the site. “The system is more self-managed,” she adds. “You can see disconnections and reconnections happening daily where we never even talked to those customers.”

Co-Mo Electric recently found a way for assistance agencies to pledge financial support for low-income customers who are using prepay accounts. In the past, customers had to provide a disconnection notice before they could apply for financial assistance. However, the assistance agencies recently agreed to make a simple calculation based on the customer’s average daily usage in order to estimate how much financial support they can pledge. The agencies give the money directly to Co-Mo electric, which then applies the funds to the prepay account, and the customer has continuous electric service.

“Overall, [using PAMS] has helped our members,” says Ms. Mercer. “They’re very happy we’ve been able to offer another option for them, and that they don’t have to pay as much in deposits.” She notes that they appreciate the convenience of checking their accounts online or calling to hear their electricity usage for the past five days.” Customers are also more aware of their energy usage and are becoming more conscious about the importance of turning off the lights when they aren’t in use.

Co-Mo Electric’s customer service department often speaks with other co-ops that are considering switching to a prepay system. Their advice? “Don’t reinvent the wheel or go at this alone.” PAMS is a pre-packaged application with quick and easy installation that fully integrates with co-ops’ existing meter-reading and billing systems, posting payment automatically. “Take the time to understand your customers and determine whether prepay will benefit them as it did ours,” advises Ms. Mercer.

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.