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DEFG: Prepaid Energy Contracts Lower Use 11%

March 26, 2013 By Jessica Lyons Hardcastle

Participants in a study by management consultants DEFG reported an average reduction in energy use of 11 percent when using prepaid energy services compared to traditional “post-pay” contracts.

The 11 percent decrease is attributable to usage reductions while service is connected and is not a consequence of service disruption, the report says. With an average monthly bill for Oklahoma Electric Cooperative’s – the utility that participated in the study – customers running $146.00, the 11 percent savings implies a $192 annual reduction in a customer’s energy bill, according to The Effect of Prepayment on Energy Use.

Relative to other common energy efficiency measures, DEFG calls the results “a large number” that is achievable without a significant outlay in equipment by the customer. No other current energy efficiency technique really compares to prepaid energy in regard to the size of the impact, speed and cost effectiveness, the consultancy says.

For example, of the 15 other common energy efficiency measures used as a comparison in the report, only a ground source heat pump, a project that requires significant capital outlay, returns a larger average percentage energy savings (13.4 percent,), the report says. Replacing an old refrigerator – the next best energy efficiency project results in, on average, a 6.7 percent energy savings. Installing compact fluorescent lighting results in, on average, just a 0.3 percent savings, the report says.

DEFG, which specializes in energy consulting, worked with an economist, Oklahoma Electric Cooperative, and an array of market participants and public stakeholders through its Prepay Energy Working Group to carry out research for  the project.

A report released earlier this month that covers energy efficiency in the southern US found that those states were interested in energy efficiency, but they want a neutral source of information they can trust about what activities and behavior changes best suit their needs and industries.

The American Council for an Energy-Efficient Economy report also found a lack of effective energy efficiency policies in the South hurt businesses and residents who may pay lower rates but have some of the highest electricity bills in the US. The study says there is a large potential for energy savings in the South and behavior change is one of the keys to unlock it.

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