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Prepay Billing and Payment Option (Part 1 - Regulatory challenges in US Market)

Pay-As-You-Go billing and payment option, also known as Prepay Service, is not an alien concept in Utilities. Even though it's very popular in Europe and Africa, it's gradually making it's way into US market as well.

I would like to discuss about one major challenge that this concept is facing in US market and why it is not big of a challenge. The challenge is not physical infrastructure but regulatory constraints from utility commissions.

The main concern that is being raised is to safeguard the customers and that is "utilities shouldn't disconnect the customers without taking all required measures for protecting the customer's interests".

Let me give you few analogies which show that prepay service works very well in few other industries in spite of having similar constraints.

Gasoline Usage and Mobile Prepay and their similarity with electric prepay:

Just take the example of prepaid services for mobile phones or gasoline usage in cars. Both mobile phones as well as gasoline have also become basic necessities in today's world much like electricity. Do electricity regulators ever think why prepaid services are allowed in these when they are not yet willing to accept it for utility? It's mostly due to mindset.

Customers having prepaid mobile phone already know about the risks associated with it and they knowingly opt for prepaid service and hence make required adjustments in their lifestyle and take required action to keep their prepaid service running as long as they want.

Same goes with gasoline usage. Did you ever hear a customer complaining that he was left stranded in the middle of a non-service area due to running out of gasoline in his car or a prepaid mobile phone user complaining that he doesn't have enough balance in his account to talk? In the gasoline scenario, isn't there any situation today where the customer runs out of gas even though he needed it badly?

Car manufactures already provided fuel indicators in each car so that customers are aware of how long the gas will last. Mobile prepaid service providers similarly provide alerts on minutes or balance remaining on the account.

So if customer is made aware of similar risks associated with prepaid service in electric utility where utilities will take the responsibility of providing them timely alerts of such risks like low balance and customer still voluntary opts for it then there shouldn't be an issue in disconnecting the customer when they run out of balance.

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