Statistical relationship between electricity prepayment and conservation

DEFG’s “Prepay Energy Working Group” has been studying the potential for energy conservation as a result of prepayment. Using billing data from Oklahoma Electric Cooperative, an economist hired by DEFG applied econometric techniques (statistics) to estimate the effect of prepayment on electricity usage. Cindy O’Dwyer, DEFG’s lead for the Prepay Energy Working Group announced, “The major finding is that participation in prepaid electricity service results in an average reduction in energy usage of 11%.”

This is huge! A white paper released on March 20, 2013 explains that the cost savings are due to reductions in energy use, and not disconnection (“service disruption”). For more information on prepaid electricity, click here.

This finding implies that better informed consumers make better decisions. Customers at the Oklahoma Electric Cooperative can check their usage daily and adjust usage accordingly by paying closer attention to energy waste. The daily feedback is thirty times more information than we normally receive from a monthly utility bill, and it is more timely.

This writer receives prepaid electricity at his home in Houston (since May 2012). Each day I receive a text on my phone indicating the daily usage, daily cost, account balance, estimated days remaining, cost per kWh, etc. That’s a lot of information packed into a simple text. I ignore it or review it daily depending on my need. I learn what it costs to power my major appliances.  I note the savings when I am out of the house for a day, and learn the value of adjusting my thermostat.

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