Guest post contributed by Eliq’s Lorenzo Alberini and Håkan Ludvigson
Prepaid energy in the UK has long daunted utility customers with expensive rates and dumb top-up meters. Today, innovative companies are transforming the industry by making prepaid energy services smarter, fairer and more engaging.
Smart meters and intelligent apps
The industry-wide roll out of smart meters is one of the main factors affecting the pace of change in the UK’s energy supply sector – and that includes smart prepayment meters. Prepayment customers’ benefits are tangible. For example, while they used to buy top-up cards at the shop in order to add credit to their old meter, now they are able to read their account balance on the meter’s screen and top up online.
Smart meters may well be the primary factor enabling the smart revolution in the utility industry, but they are only one side of the coin. Customers also need innovative digital tools to monitor and regulate their consumption wherever they are, whenever they need to.
While smart prepayment meters will allow customers to top up through online payment services such as PayPoint, customers are still faced with the risk of running out of credit on their meter on a cold winter night.
Software provider Eliq is the first of its kind, allowing customers to deal with the overall prepayment experience in a whole new way. Through a mobile app, customers can carry out a greater range of actions and manage their energy usage according to their preferences, making unexpected black-outs and mid-dinner credit top-ups a thing of the past.
Eliq, based in London and Gothenburg, Sweden, has recently entered an agreement with the British utility ‘E’. Based in Birmigham, the energy supplier serves more than 300,000 customers across the UK. E’s new mobile app will enable prepayment customers to understand and manage their consumption habits, as well as receive notifications when it’s time to top up.
The app, which will be available from the autumn for iOS and Android devices, will give customers access to their consumption history, weekly energy reports, and alerts on consumption spikes, as well as the ability to manage their account balance, payments and set budgets.
A key feature of the new app is its intelligent forecasting mechanism. An algorithm considers each customer’s historical consumption and the current weather forecasts to determine how much gas and electricity each home will need. This forecast is then used to suggest to the user when to top up the smart meter.
New tools for a fairer approach to prepayment
When it comes to energy prices, many prepayment suppliers are not soft on their customers. Prepaid energy rates are usually higher than other forms of payment, but switching to another tariff or a different provider is not an option for an increasing share of fuel poor customers, who are forced to switch from credit to prepayment after contracting a debt with their provider.
Fuel poverty is a particularly sensitive issue in the UK, where an estimated 3.5 million families – roughly 13% of all households – are unable to pay for their heating without falling below the poverty line. Among prepayment customers, fuel poverty is as high as 20%, with many families facing the ‘heat or eat’ dilemma.
Some energy companies want to change this system and empower virtuous customers by letting them regain access to cheaper credit tariffs. Robin Hood Energy is one of these companies. Launched by Nottingham City Council in 2015, the not-for-profit company is the licensed supplier for another nine energy retailers in the UK.
Robin Hood’s offer includes one of the cheapest prepayment rates on the market. Most importantly, the company’s prepay customers are offered to switch to credit billing if they maintain a positive balance on their account for three months. In addition, all customers will soon be able to monitor and budget their energy usage through a new mobile app that Eliq is releasing this year.
This fair approach to prepayment can truly have an impact on the UK’s most vulnerable families. With another nine not-for-profit suppliers already partnering with Robin Hood Energy, their model is gaining a foothold across the UK.
Customer engagement is the way forward
If there is one fact that everyone in the utility industry knows, it’s that customers spend on average nine minutes a year engaging with their energy providers, according to several reports by Accenture. Nevertheless, chances are that this situation may already be changing, because the industry is changing.
Large energy companies used to have a near-monopoly in their respective countries. They had no reason to engage with their customers or to offer them new products and services. Today, new market entrants are shaking the industry and energy as a service is the name of the game.
Not only are customers demanding new products, such as clean energy and distributed generation, they also expect a seamless customer experience through a wide range of communication channels. Smart meters are enabling an increasing share of customers to access their power consumption history, real-time usage and – in the case of prepayment – their account balance. However, for many utilities that’s not enough.
In order to engage their customers and build long-lasting relations, utilities now resort to communication more often and in more ways. And for good reason. Figures show that digitally engaged customers are more satisfied and even more keen on trying new products and services from their providers.
Some prepaid energy companies in the UK are already rushing to offer smart and engaging digital tools to their customers. E and Robin Hood Energy are among them, but more are following suit.
“We think of prepayment as a whole new relationship with energy, one which will be growing over the next decade as millennials grow up and the gig economy sector takes off,” says Håkan Ludvigson, Eliq’s CEO. “Perfecting that experience end-to-end using intelligent smart meter analytics and a user-centric application for customers’ smartphones is key.”