Arkansas Valley Electric rolls out ‘prepay power’ plan, first of its kind in the area

The Arkansas Valley Electric Cooperative (AVEC) recently rolled out a prepay power program – the first of its kind in the Fort Smith metro – following what Key Account/Member Service Manager Greg Davis called a “successful” beta testing period.

Participating in the beta test were some of AVEC’s own employees and a select number of customers, who were “uncomfortable” with the deposits and connection fees that come with traditional accounts.

With prepayment, AVEC is offering customers a chance to pay for only the electricity they use as they would with vehicle fuel or month-to-month cable streaming options. Customers also have the opportunity to monitor usage through the Cooperative’s website and smartphone application. Usage is calculated and updated daily.

An “unintended positive” of prepay electricity is that customers “tend to use less electricity when monitoring usage on a regular basis,” the company added in a news release.

According to an Arizona Republic article from November 2015, the Arizona Public Service Co. reported that of the 2,000 members in its pilot program for prepay power, there was a 7.5% reduction in the amount of energy used.

One critic, Cynthia Zwick, executive director of the Arizona Community Action Association, argued that “low-income customers decrease electricity usage on prepaid programs” because of “tight budgets and the inability to pay” and speculated that much of the savings comes as a result of these shutoffs. The APSC researchers refuted that claim, stating they did not count disconnections in the 7.5% reduction figure.

Davis is aware of the arguments for and against and acknowledges that prepay power may not be for everyone.

“I knew we had to make the program where if it’s not working for you, you could easily go back to a regular account,” Davis explained to Talk Business & Politics. “Otherwise, there are a lot of people, who wouldn’t sign up for it, say, if they were locked in for six months; because it’s a paradigm shift.”

Once the user is comfortable with that “paradigm shift,” they can enroll by paying a one-time $25 membership fee, a $10 connection fee, and a $20 upfront purchase of energy. When the user’s account runs low, they will receive an alert by phone, text, or email telling them it’s time to recharge.

Should the customer run out of energy, their power would be shut off, but not without ample warning, Davis said, and the only action required from that point would be to purchase more energy. There would be no disconnection or reconnection fee.

Furthermore, if an AVEC customer decides they’re not ready for the program, they can go back to their traditional account without having to do a new deposit, credit check, and connection fee.

If they decide to reenter the prepay program later, they would be covered by their initial $25 membership and $10 connection fee, so the minimum $20 upfront energy purchase would be the only additional requirement.

For Davis, the customers, who seem to prefer the prepay program, tend to fall in the “18-to-34 demographic” and they’re not quite as “cash-strapped” as Zwick makes them out to be.

“We’ve actually seen that it has been more of a younger demographic,” Davis said. “And you can only tell by appearance, but they’re not seemingly strapped. Many of them grew up with prepay phones, prepay this, and prepay that, because that’s how their parents introduced them to things, and they’re just comfortable with it.”

Interested AVEC customers can sign up at the company’s website.