Prepaid electricity, anyone?

You may not expect prepaid metering for electricity to become tomorrow’s consumer hit, but there are some pretty solid arguments that can make the concept a viable option for those who subscribe.

Prepaid retail electric service (PRES), according to the Energy Regulatory Board, uses a prepaid metering system designed to allow a residential customer to purchase credit and then use electricity until such time as the credit is exhausted. It will work almost about the same way as prepaid mobile phone cards.

The scheme had been put to test in Leyte by the Leyte II Electric Cooperative (since 2000), and last year in Subic by the Aboitiz Power Corp. and within Metro Manila by Meralco, the country’s biggest electricity distribution company.

Prepaid metering has been successful in South Africa largely among consumers who prefer to closely monitor their electricity consumption, and those who frequently travel and leave their residences or offices unattended for a period of time. The ERC, however, has modeled its scheme after Singapore’s.

Satisfied users

In Leyte, where about 2,000 residents claimed to have sa-tisfactorily shifted to prepaid metering, the convenience of being able to manage their electricity consumption on an even weekly basis has been most cited reason for the change. Some residents claimed to have managed to live on just P100 a week of kilowatthour loads.

Electricity loads are sold in cards that have numbers to be keyed in on the prepaid meter which are remotely connected and reconnected to the electricity distribution company through a GSM module and microcontroller unit.

Consumers who have converted to the prepaid scheme have found it convenient to go to the distribution utility’s 24/7 kiosks to buy load cards when the amount of electricity they have on their prepaid meters are nearing zero.

Eventually, as with other countries offering prepaid electricity service, electricity load can be paid online and by SMS. The ERC also foresees households and other users to have a choice in the supplier of electricity load.

Pros and cons

Some start-up kinks are still being ironed out after the ERC recently released the final rules governing the prepaid metering system for electricity, but there are already promising commercial applications being eyed especially for rented office and residential spaces.

There are some sectors who criticize the prepaid system as only favoring electricity providers, all of which have cited benefits that range from the reduction of systems losses, pilferage to savings on service disconnection and reconnection fees, elimination of meter readers, and a zero delinquency payment rate.

However, property owners are already seeing the benefit of not being bothered with the unpaid electricity bills left behind by errant tenants. Also, those who are leasing or renting space need no longer apply for electricity connection, which currently could take several days and a lot of paper work.

Given the volatility of electricity rates, especially as the industry moves towards a more deregulated environment, prepaid users may be more exposed to “losses” or “gains” depending on pass-on charges during the time they buy their load, although this is estimated to be minimal.

Some consumers are citing the possibility of a “disappearing load” phenomenon, something that has been the object of much complaint on prepaid mobile phone services.

The ERC, however, has been very specific about prepaid retail electricity meters having the capability to communicate to its users the current balance, time and date, previous 30-day consumption and consumption in kilowatthours, and when the remaining credit level falls below the threshold. So disappearing loads, at least for prepaid electricity should not be a phenomenon.

Meralco’s concern

Although there are still some issues and concerns to be tackled, Meralco has said that it is looking forward to rolling out the prepaid electricity load offering. One of the issues raised by Meralco is the higher cost of prepaid meters, compared to the current postpaid ones, that the ERC has explicitly said will not be passed on to the end-user. The existing postpaid meter costs about P5,000 while the prepaid meter could amount from P7,000 to P10,000.

There is also concern about the continued pricing of subsidized rates for lifeline consumers. Prepaid meters could increase further the number of subsidized electricity users, which could be an additional burden to those already shouldering the subsidized rates.

Lessons from PLDT-Smart

With PLDT’s Manny Pangilinan now actively involved in the electricity company’s business, perhaps some synergies in terms of developing and marketing this new pre-paid product could be gained. And hopefully, costs reductions passed on to consumers.

Actually, it is the Smart side of Manny’s telecommunications business that could give lessons to Meralco’s new product. Smart Communications is the country’s leading wireless services provider as well as the biggest retailer of prepaid mobile phone services.

Will change reduce exorbitant electricity rates?

Amidst all the speculation and pessimism especially among existing postpaid electricity users who have known no system other than a use-now-pay-later scheme, the ERC remains bullish as to the prepaid system’s benefits and successful implementation. The prepaid retailing of electricity is seen as one way of curbing systems losses which has been cited as a major reason for having high electricity prices in the country.

However, in the minds of local consumers the question remains whether the new system will eventually bring down our electricity rates which many considers as ridiculously exorbitant.

In the meantime, we will just have to bear the burden of being the country in Asia outside of Japan with the highest retail cost of electricity.

2009 Philippine Collegiate Championship update

The Visayas Regional Championship games to determine the team that will represent the region in the next phase of the Philippine Collegiate Championship will be hosted by Bacolod City. This was confirmed by Anthony Carlo Agustin, WNU Athletic Director and coordinator of the local organizing group.

Included in the process to determine the qualified participants in the Regional Championship are forty six teams from six “mother leagues,” namely: Negro Occidental Private Schools Sports Culture & Education Association (NOPSSCEA); Iloilo Schools Sports Association (ISAA); Leyte Universities Schools & Colleges Athletic Association (LUSCAA); Ormoc City Schools Basketball Championship; Governor’s Cup (Dumaguete); and Bohol Basketball League. 

The champion teams of these leagues will play at the West Negros University gym on October 8, 9 and 10 and the eventual Regional Champion will represent Visayas Region at the Zonal Qualifying games to be held at Cebu City.

Should you wish to share any insights, write me at Link Edge, 25^th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.