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Is Smart PAYG the panacea for pre-pay energy suppliers?

A new type of advert from energy suppliers has hit our screens this year. The Pay-As-You Go ad. In marvellous marketing speak the ad explains how new technology has made prepayment energy sexy and convenient. And it's true... smart meters make top ups easier to manage, credit balances more accessible, and the product as a whole cheaper to operate. Win, win. 

Legacy prepay customers will be some of the biggest beneficiaries of the smart meter roll out programme, but smart prepayment (Pay-As-You-Go) is not a panacea. Many businesses are struggling with the archaic industry processes and systems used to operate legacy prepayment, and not all of these will be blown away by smart. Here we discuss what smart can and can’t do for three big challenges that pre-pay suppliers and their customers are wrestling with right now:
 
Misallocated payments – all suppliers currently use the same network of shops to enable their customers to top up close to home. As a result, customers’ payments can sometimes be allocated to the wrong supplier or the wrong customer account (eg just after the customer changes supplier, or when they move house). This causes a real headache for suppliers as they try to reconcile payments onto a customer account to the costs they are incurring. Will smart solve this? In the main, yes. The new smart communications infrastructure will link the supplier and the meter much more closely and in real-time, meaning that suppliers are unable to generate a top up for a customer they don’t supply. This said, there is potential for real complexity in some “rainy day” pathways where the comms network is down during a change of supplier. Having clear, well defined processes for managing these exceptions will be critical for suppliers as the number of smart customers increase.
 
Not being able to see what the customer sees – today, suppliers often have terrible visibility of their prepayment customers status, and as a result pre-pay customers often have poor satisfaction levels and a high propensity to call their supplier. Will smart solve this too?  It has the potential. Regular meter reads and the ability to check the balance in real time will give suppliers the information needed to answer customer questions quickly and accurately. A word of caution though - matching the display in the customer’s home to the supplier billing system will be hard. Accurate information needs to be immediately available to the person talking to the customer for the potential benefits of smart to be realised – getting the data model right will be key to ensuring call volumes go down instead of up.
 
Expensive meters and backlogs for exchange visits – whether a customer has chosen pre-pay or has agreed to it to support a debt repayment plan, replacing a credit meter with a pre-pay one (or vice versa) is often inconvenient for the customer and expensive and time consuming for suppliers. Will smart solve this final example? In the mid-term yes – the next generation of smart meters can be easily operated by any supplier and switched from credit to Pay-As-You-Go and back at the flick of a switch, making the process easier and cheaper all around.
 
In conclusion, smart has the potential to solve these problems for suppliers and their customers. However, it doesn’t guarantee a solution – that will very much depend on how suppliers choose to implement smart for their customer base. 

Back to March 2016

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