Spark Energy, a supplier specialising in the UK lettings sector, wants tenants in social housing to be the first to reap the benefits of smart metering.
“Our strategy around smart is that we’ll be prioritising social housing first,” said Scott Mackay, Spark Energy’s Director of Customer Experience. Why? Largely because Spark wants to give its customers in social housing a better experience of prepayment.
According to Mackay, those living in social housing are more likely to find themselves on prepayment meters, which are prevalent in such properties. So when Spark starts installing its first smart meters over the next four weeks, the majority of those will replace traditional prepayment meters. Spark’s smart prepayment offering is being designed to appeal to the changing demographic profile of social housing tenants, who now span all age groups including younger, working people.
“The experience of having a prepayment meter can be dramatically different if it’s smart prepay,” said Mackay. “We think it could become a nice way of paying for your energy.”
Spark is currently working with a number of social housing providers, who manage around 750,000 homes. Overall, the UK has just over 4 million social households – nearly as many as there are privately rented homes.
More convenient top-ups
According to Mackay, one of the key benefits that customers can expect from smart prepayment is much greater convenience when it comes to recharging their balances, including being able to make payments from the comfort of their homes. “Being able to top up from home is ideal. It’ll be a much, much better experience,” he said.
Initially, Spark’s customers will be able to top up either at the traditional walk-in payment locations or by phoning the company’s call centre and using a debit card. In both cases, the payment will be applied automatically to the meter, eliminating any need for customers to upload the credit manually. “With smart meters we’ll be able to top up the meter remotely. You won’t have to walk back home to recharge the meter,” Mackay explained.
Over the coming months, Spark will add more functionality to extend the range of available top-up mechanisms. Customers will shortly be able to make card payments 24 hours a day by using an automated phone system that kicks in when the call centre is closed. From December, there will also be an online platform, so that customers can make payments at any time from Spark’s website.
Spark also plans to introduce a mobile app early next year. “You’ll be able to download an app from the Apple Store or Google Play Store and use that to top up, which will be even more convenient,” said Mackay. For those who don’t have smart phones, there will be an option of paying by text message.
Better transparency and more control over energy consumption
Mackay thinks smart prepayment will also make it easier for people to budget for their energy usage. Customers will be able to see their live and historical consumption data on their in-home display or eventually via the mobile app, as well as access wider tariff information to check they are on the best deal from their supplier.
“The smart meter will give better transparency and much more control,” said Mackay. “Today people just don’t have that insight, as quite often meters are stuck away in inconvenient locations such as above the main door of the home.”
There could be advantages, too, compared to the popular method of paying by direct debit, which Mackay believes can create some apathy over energy usage and costs. “Smart pay-as-you-go really does put you in control of your energy consumption,” said Mackay.” It’ll make you feel the cost and probably bring about a change of habit.”
To raise customers’ awareness of their energy behaviour and help them budget, Spark is planning to use a variety of notifications and alerts. “When we get to the online stage, customers will be able to set their own balance thresholds, so they can get an alert when they get close to that threshold,” said Mackay.
As well as low-balance messages, Spark expects to introduce seasonal alerts, to help consumers manage their budgets better over the winter. “What you tend to find is that, because of the way prepaid meters are just now, some customers don’t top up for quite a long time during the summer, especially for gas,” explained Mackay. “But in the winter when they go to top up again, all of a sudden there’s a negative balance, as the standing charge has been accruing every day.” Spark is looking at using different forms of seasonal alert to help customers get ready for winter and avoid this type of scenario, including messaging to explain why balances build up and suggestions to top up more frequently.
An energy payment revolution?
Mackay believes smart pay-as-you-go (PAYG) could potentially bring about an energy payment revolution. “Prepayment’s a payment method that just now is a bit stigmatised and doesn’t benefit from all the tariffs that are available, but smart PAYG will really be quite an attractive way of paying for your energy and watching your consumption,” he said.
A smart meter-based prepayment service could also appeal to consumers beyond those who are using prepayment today. “You can relate it to the telecoms market, where pay-as-you-go is a really popular way of paying for your bills,” explained Mackay. One scenario where he believes smart PAYG could work well is for flat-mates or others sharing the household bills. “That’s very difficult for a normal energy cycle to cope with, especially with direct debit,” he added, “but it will be very easy for flat-mates to download an app and each pay a tenner on the meter.”
Communications solution needed for high-rise buildings
One issue for Spark’s social housing smart metering initiative, at least in the short term, is that the industry hasn’t yet finalised the smart meter communications network solution for residential tower blocks, which are very common in the social housing sector in some UK cities.
“To the best of our knowledge, we don’t see there’s a solution available yet in the market to let smart meters communicate in high-rise buildings,” said Mackay. “It’s a blocker for people living in high-rise properties, including the more disadvantaged members of society who can benefit most from smart meters. It’s not an ideal situation for people living 17 floors up in a high-rise building to have to go down the stairs to go and top up a gas card. Those people just can’t be left out.”
Working out an appropriate communications architecture for this type of housing stock is already on the roadmap for the GB smart metering programme and being addressed by industry, but according to the current timescales Spark and the other energy suppliers will have to wait until 2018 to bring the benefits of smart meters to high-rise households. “But we hope it’ll be resolved before then,” said Mackay.
About Spark Energy
- Founded in 2007, Spark Energy focuses on the UK lettings sector.
- It has over 135,000 current customers, mainly tenants in privately rented housing.
- Around 20% of Spark’s customers are on prepayment meters, slightly above the UK national average.
- Spark Energy is working with a number of social housing providers to bring their tenants a better deal.