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Prepaid Energy: Choice, Technology, and Consumer Protections

DEFG’s research regarding the potential for prepaid energy service has revealed some differences among stakeholders. These differences parallel the approaches people take with regard to utility service. Is it a monopoly with costs and services shared equitably? Or is it a service provided in the market place with consumers exercising choice.

Some stakeholders consider prepaid energy service a positive innovation for consumers — a 21st century payment channel that uses the investments in advanced meters and leverages the capabilities of the smart grid. Others view prepaid energy as potentially predatory and discriminatory toward low-income consumers. A new DEFG white paper (in the “Series of Regulatory Choices”) discusses the low-income issues.


There appears to be a common desire to see low-income consumers pay fair rates for electric service. There is also a universal desire to protect consumers during dangerous weather periods (moratoria on disconnections). Despite these common concerns, the biggest barrier to prepaid energy service seems to be that industry stakeholders do not see eye-to-eye. There are significant differences in how they frame the issues, and this make it hard to resolve policy differences.

Can DEFG identify a basis for trust to address the challenges, concerns and opportunities presented by prepaid service? DEFG has four screens that create an analytical framework to examine existing regulations. Let’s see whether a fundamental principle involved, such as “everyone must be served equally”? A rule formulated decades ago may be based on a practice that could not anticipate 21st century technologies. New technological capabilities may allow a change in the rules without giving up our basic principles. To what degree will consumers be permitted to make choices and express their preferences? How will be balance equity and efficiency?

In some cases, a rule or practice may be rooted in an ideological difference, such as supporting or opposing the role of competition in energy markets. A more rigorous analytical framework may allow us to identify an underlying motivation, and thus advance the discussion and possibly narrow differences.

Electric Vehicles to Connect Texas Cities

It was over thirty years ago that a sketch on a napkin led to the creation of new airline — the “national airline of Texas.”  Southwest Airlines was conceived as a means of speeding up business travel among the major Texas cities. Dallas, Houston and San Antonio are separated by three to five hours of drive time. Today, SWA offers 25 flights each day, each way, between Dallas and Houston.

Before and since the famous napkin drawing, the proponents of high-speed rail have envisioned a more energy-efficient means of travel in Texas. They have probably sketched similar maps in an effort to promote ideas for cleaner alternatives to air travel.  If Texas is known for its limited intra-city light rail, it may be even better know for its lack of an inter-city rail system. Jet fuel, not electricity, moves the business traveler within Texas.

This may change. There is now a move toward electric vehicles to help improve air quality in Texas. Most city commuting involves less than 40 miles per day, well within the range of existing battery technology. Recharging EVs is cheap. The intra-state electric grid has become more competitive during the past fifteen years as a result of electric industry restructuring. Electricity prices may continue to remain low, reflecting the benefits of a competitive bulk power market, the value of new natural gas finds, and the value of Texas wind power.

But what about getting from city to city?  Recent announcements for electric vehicle charging stations in major cities may make it practical for electric vehicles to travel among the cities shown above on the “Southwest napkin.” We may soon use electricity between Dallas and Houston and back again.

The electric industry structure may have something to do with innovation and risk taking. The electrification of Texas fifty years ago had a lot to do with the economic and population growth of Texas. Air conditioned buildings are a necessity in the hot and muggy months of June, July, August and September. Now, the maturation of the electric industry may lead to the electrification of the transportation sector as well, or at least portions of it.

As the Texas electricity market matures, its value to society may extend to new end-use applications that we did not anticipate even a decade ago. The process of reform began in the 1970s with the creation of a state regulatory agency, and continued in the 1980s with the growth of cogenerated power. In the 1990s we opened the transmission network to merchant power plants, and in the 2000s we showed the nation how to add renewable resource capacity. Will the 2010s be the decade of the electric vehicle in Texas?

Survey: Smart Grid Communications

Take the survey by clicking here.

For a short time, the Distributed Energy Financial Group is soliciting expert opinion on communicating the value of the smart grid. Our utility clients understand that they must meet or exceed consumer expectations regarding the value derived from investments in smart grid infrastructure.  As the industry rolls out the advanced meters, it has become clear that different stakeholders have different expectations regarding the function and purpose of the meters. Some stakeholders do not fully understand the operational value of the smart grid to utility operations, or how those values will reduce grid outage frequency and length.

Most experts agree that advanced meters, innovative rate/pricing options, and new devices will present retail electricity consumers with new opportunities, choices and risks. Some view these oportunities as providing immediate value to some consumers, and merely the promise of future value to others. Therefore, it is important that utilities and regulators communicate effectively with consumers, and meet or exceed their expectations.

DEFG’s Demand and Energy Technology Research Consortium has designed a survey to collect facts and opinions about effective approaches for communicating the benefits of the smart grid to consumers and other stakeholders. For about 15 minutes of effort, experts can take the survey and later receive the aggregated results from about 300 energy professionals. Individual answers will not be shared.

The Demand and Energy Technology Research Consortium brings utilities together for research focused on energy efficiency, demand response, distributed resources and the smart grid. For more information about DETech go to

Do not delay to take the survey on communicating the benefits of the smart grid. The survey link closes on April 22. If you visit this page after that time, contact me about the survey report.

Take the survey by clicking here.