When Flossie Vaughn came to work in OEC’s customer service department, new service deposits were $45 and $95. But today, 25 years later, Vaughn says many new members are stunned by the security deposits required to establish new service.
“Our deposits are based on two high-use months’ [electric] revenue and collected from new members with low credit scores or no credit. I’ve seen them as high as $600. Some people get mad, but mostly they just can’t believe it. They are taken back, to say the least,” Vaughn says.
Vaughn sees the prepaid electricity program OEC is testing as a positive solution to a challenging problem.
“Unfortunately, deposits are typically collected from those who can least afford to pay them. Even though it’s difficult, it helps keep debt-collection and write-offs down, and that benefits all of the co-op’s members,” she says.
Unlike traditional service, where consumers use electricity and then are billed for the consumption, consumers pay in advance with prepaid electric programs as is done with most products and services. OEC is testing a newly developed software that will allow the co-op to implement a prepaid program. The co-op is in hopes of offering the program to co-op members August 1.
The concept of prepaid electricity has been around for several years, but the prepaid metering OEC is implementing offers more diversity and benefits than existing prepaid plans. Traditionally,
prepaid programs involve making a payment and receiving a swipe card—similar to a prepaid calling card—encoded with the amount of the payment. Then, the customer must swipe the card through an in-home device that registers the amount of the purchase. The device then begins deducting the credit as electricity is used. Some of the problems associated with this type of system include costly equipment terminals and occasional card malfunctions, where payments are not encoded properly. Another complaint of a swipe-card prepaid program is the inconvenience of getting payments on the card—the consumer has to take the card to an office or payment terminal, which defeats some of the convenience the plan is designed to provide.
OEC’s prepaid system will be different, and won’t use “swipe cards” or require in-home equipment. In fact, Jonna Buck, OEC’s data processing supervisor and a co-op member whose account is one of approximately 20 test accounts, says the software OEC is using integrates easily with the co-op’s existing infrastructure.
“There will be a fee for a disconnect ‘collar,’ which is installed between the meter base and the meter. That’s the only piece of additional equipment members will need to get on the program,” Buck says.
Buck says all transactions will be monitored electronically, and, thanks to the automated meters OEC recently installed at every residential account, meters will be read every night, the electric use calculated, and remaining credit on the account will be figured. Customers will be able to use the same method they currently use to pay their bill, and will have literally hour-by-
hour use and cost information available at their fingertips.
According to Buck, payments can be made by cash or check in our office or over the Internet for free, or by phone, using a credit card, or at one of the many local paysite locations for a nominal fee. She says payments by any of these methods should reflect on a member’s account within 30 minutes.
There are several benefits for OEC members who choose to opt for the OEC prepaid electricity program. For some, the program will serve as a way to monitor their electricity consumption. Surveys indicate more than 90 percent of those on similar programs believe they use energy more wisely as a result. Others like it for savings: Those who have trouble paying their bill no longer pay costly late charges, since the payments are made in advance, and avoid steep disconnect and reconnect fees.
Harlen Fipps, an OEC serviceman who, like Buck, is participating in the pilot program, believes the program will put control in the hands of the members. Plus, he believes it will make his job easier—both for him and co-op members.
“The hardest part of my job is having to collect payment or disconnect a service. It’s human nature to get frustrated in that kind of situation, and while people may be upset with themselves or the circumstances, they end up taking it out on us.
“I see this like your car running out of gas. The gas gauge warns you you’re running low, but if the tank is empty, you’re the only one to blame. And seldom do people go off on the gas station attendant,” he says.
OEC members who elect to use the prepaid system will stop receiving a paper bill, but will receive an email copy
of their bill and will have the ability to receive daily email notifications of their consumption. There also is a Web site they can visit or a toll-free telephone number they can call to check their balance any time day or night. If a consumer does run out of credit, the power will shut off.
Fipps says he will allow his personal account to run out of credit and disconnect during the testing phase. “It’s the only way to make sure the proper steps occur and the program is working as designed.”
Charles Barton, OEC’s chief finance officer and another program tester, says although prepaid is not for everyone, it does provide an additional payment option many consumers will use, and one from which every co-op member will benefit.
“Lower administrative costs, reduced bad-debt and fewer conflicts with members. It’s a win-win proposition,” he says.
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