Customer feedback from British Gas’s ‘Smart Pay As You Go’ electricity and gas trials has been “overwhelmingly positive,” said Steve Briggs, Head of Smart Metering Customer Operations, speaking at the 6th Smart Energy UK & Europe Summit in London.
British Gas kicked off the smart meter prepayment trials last summer and now has over 3000 customers on the pilot programme. The positive response is no surprise, as the existing prepayment proposition is not aligned with consumers’ experience of prepay in other markets, said Briggs.
A more attractive consumer offering
The Smart Pay As You Go offering from British Gas introduces several new features aimed at making prepayment service more attractive to consumers. For a start, there are more flexible ways to top up, including online and by phone as well as at the traditional physical pay-points. This removes a need for prepayment customers to go out to buy credit and allows them to top up from the comfort of their homes. So far, 40% of the smart prepay users have taken up the more flexible options of recharging their accounts online or over the phone, said Briggs.
Customers are given a smart energy monitor, which displays their electricity and gas usage in real time, as well as their credit status and consumption and top-up histories. Users can set their own budget in the displays and track their progress day by day. ‘Traffic light’ indicators on the monitor show at a glance if their usage is on track, or higher or lower than planned. There is also an audible warning to alert customers if their credit falls below a chosen threshold.
Smart Pay As You Go customers can also benefit from GBP5-worth of emergency credit per fuel, which gives them more time to top up when their credit runs out. Emergency credit is activated from the in-home display and repaid when the customer next tops up. Friendly credit is also available, which stops consumers from being disconnected if their balance dips below zero out of office hours.
Historically, prepayment energy tariffs in the UK have not been the cheapest on offer, but with Smart Pay As You Go customers pay the same as the standard British Gas credit tariff. The utility plans to launch a number of innovative smart prepayment tariffs in the future.
Smart meters tipped to transform the prepayment segment
Research carried out for Smart Energy GB – the independent organisation tasked by the government with engaging consumers during the smart metering programme – has already shown that there is a big appetite among UK consumers for smart pay-as-you-go energy services. Almost half of those surveyed wanted to use smart pay-as-you-go to buy their gas and electricity, and among young adults interest levels were even higher at 59%. The findings suggest that a smart pay-as-you-go service could appeal to nearly three times as many people as are currently on prepayment meters (around 16% of households).
“What we’re seeing is a change in pay-as-you-go and how people are perceiving it,” said David Brown, Vice-President Europe for Gentrack, a utility billing and CRM solutions provider. “In the past you worried that prepayment was perceived negatively. Now we’ve got Generation Y who are used to managing their world on a prepaid phone.” Gentrack’s software is in use at several rapidly growing alternative suppliers in the UK, including Flow Energy, LoCO2 and OVO Energy.
During the current Foundation Phase of the GB smart metering programme, the energy regulator Ofgem has been working with industry and consumers on how smart prepayment will be implemented. “We genuinely believe that smart meters will transform the prepayment market in a really positive way,” said Bart Schoonbaert, Senior Manager Consumer Policy, Ofgem. “We also need to be realistic that some of these remote functionalities come with risks and we as a regulator need to address these and make sure we have the right protections in place,” he added.
Ofgem supports making smart prepayment available as soon as it is ready, because of the benefits it can bring, and will monitor when suppliers are replacing traditional prepayment meters with smart meters.
Ed Davey, the Secretary of State for Energy and Climate Change, has previously urged energy suppliers to make smart pay-as-you-go services available by the end of the 2016. Only a few suppliers in the UK, notably prepayment specialist Utilita, already offer smart meter based prepaid energy services.