If credit-challenged customers can prepay for a cell phone, why not electricity, too?
That’s a question being raised by Westar Energy, which is asking the state for permission to let some customers pay for their electricity before they use it.
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Customers who opt to prepay for power would not have to pay Westar a security deposit. But they would have to pay the company an extra $4 a month for the privilege.
And if they owe the company money, as much as half of their prepayments could be applied to paying down their debt.
Westar could also use its “advanced metering” capability to throttle back electric usage to minimum levels for customers who owe the company money during wintertime when service shutoffs are prohibited.
Details of the plan are contained in an application filed with the Kansas Corporation Commission, which will decide whether to allow prepaid service. If the commission approves, Westar would be allowed to begin the prepaid service option in a pilot program for as many as 1,000 customers.
“The optional Prepay Service Pilot Program will benefit customers that decide to participate by allowing customers to make smaller payments in advance for service rather than receiving a larger bill at the end of the monthly billing period,” Westar lawyer Cathryn Dinges wrote in the company’s application.
“It will benefit Westar’s customers altogether by setting a foundation for new, optional programs of customer choice from which Westar can build upon to fit service options for its customers that may better fit their preferences for service from Westar.”
David Springe, chief consumer counsel for the Citizens’ Utility Ratepayer Board, said he can see positives and negatives to prepayment.
Prepaying electricity could be a good option for some customers who don’t have the ready cash to pay a security deposit of as much as two months of their estimated usage, he said. Westar can charge the deposit to customers who owe the company money, or who are new customers with no payment history.
The program could also be useful for people such as college students who are used to prepaying for a phone and know they will only need electrical service at a particular location for a relatively short period of time.
But Springe questions why customers should have to pay Westar $4 a month if they want to prepay. He also wants to make sure the program isn’t used to force poor people to pay up-front for power.
He said he’s keeping an open mind, but the key will be “finding a balance that is helpful, but not punitive,” he said.
“A prepayment plan can be used as a carrot or a stick,” he said. “I think we don’t want it to be a stick, or that it gets characterized as being ‘voluntary’ when your choices are you can volunteer to not have electricity or volunteer to prepay. That’s not truly voluntary.”
To be eligible for the prepayment program, customers would have to be currently taking residential standard service, have a home equipped with advanced metering and not owe Westar more than $1,000. They would also have to supply an e-mail address and agree to communicate with Westar through it, according to the company filing.
Customers protected from shutoffs by the commission’s Cold Weather Rule could see their electricity dialed back to a level “sufficient to permit heating, lighting and refrigeration” if they choose the prepayment option, Westar said.
If a customer prepays and then uses more electricity than has been paid for, Westar will keep the power on for a while but will collect the resulting debt from future payments.
If the debt is less than $250, 15 percent of the customer’s future prepayments will go to debt recovery.
Westar will take 25 percent of prepayments for debts of $250 to $500 and 50 percent if the debt is more than $500, the company’s filing said.