2. Programme
• Overview of prepayment systems
• System components
• Tariff considerations
• Encryption and standardisation
• Implementing prepayment
3. What is prepayment?
A revenue collection and
management mechanism whereby
credit information is transferred
between a point of payment and a
metering device. The metering
device supplies the pre-paid
amount of service to the customer
and then disconnects the service.
6. Fort Wayne K Series
General Electric IP2
Courtesy www.watthourmeters.com
7. Credit (Traditional) Vs
Prepayment
• Traditional
Metering
– Use electricity
– Read meter
– Prepare bill
– Collect money
– Warn late payers
– Disconnect non-
payers
• Prepayment
Metering
– Collect money
– Transfer credit to
meter
– Use electricity
10. Utility Revenue Collection
Challenges
• Expensive internal processes
• Difficulty in collecting payment
from some or all customers using
traditional billing
• High turnover customers
• Internal staff problems – e.g.
Fraud
11. Customer Service Tool
• Customer is in control and can save money -
monitor and understand consumption
• Customer can purchase electricity at any time
and in any quantity - (budget)
• No unexpected bills (month end surprises)
• Accuracy
• No disconnection/reconnection fee
• Privacy - no meter reading
• No deposit
• Prepayment can improve the relationship
between the utility and the customer
12. Win-win Solutions
• Prepayment can offer win win
opportunities to both the customer
and supplier
• However, it is important to
quantify, monitor and analyse the
business case
• Models complex
13. Additional utility considerations
Lower operational costs
No meter readings
No billing
No mailing
Improved revenue
recovery
No credit control
No bad debts or arrears
No disconnection/
reconnection processes
Improved cash flow -
money up-front
Improved relationship
with the customer
• Possible reduction in revenue due
to lower average consumption
Up-front system cost
Implication of substantial changes
to certain utility processes
Complexity of change management
Management of the transition
period during which two systems
(prepayment and conventional) will
be operated in parallel
Customer reaction to the new
system
Reduced flexibility in regard to
tariff structures
14. Prepayment around
the World
• PP sites on all continents
• Largest installed base is in UK and
in South Africa (approx 4 million pp
meters each)
• Most other countries have
installations ranging from 100 to
100 000 meters
16. Communication between Control
Unit and User Interface
• Integrated Meter
• Split Meter
– Wired interface
– Power line carrier
– Radio frequency
17. Meter features
• Emergency credit
• Friendly credit
• Lifeline credit
• Self-decommissioning
• Self billing
• Energy information
• Trip limits, power fail counters etc
• Advanced Tariff functions
• Water management functions
18. Prepayment & AMR
• Prepayment and AMR are complimentary
• Communicating with the meter presents
opportunities
– Token less vending
– Tamper detection and management
– Tariff configuration
• There are a number of systems on the market
that combine these technologies
• Issue of cost vs benefit
• Remote disconnect vs prepayment?
19. Token Technology
• Tokens are used to transfer credit and
other information between a vending
station (POS) and meter
• One way and Two way
• Different types of tokens
– Numeric (Keypad)
– Smart Card/Token
• Contact vs Non-Contact
• Re-usable vs Disposable
– Tokenless
20. Token information
• Different functional types
– Credit transfer
– Commissioning (e.g. key change)
– Management (e.g. tamper reset)
• Credit Transfer Tokens include the following
information
– Credit information (kWh/kl units, monetary units)
– Token identifier
– Checksums
– Control/Miscellaneous
21. Token technology
• Each type of token technology has advantages
and disadvantages. These advantages and
disadvantages are often influenced by the
environment in which the meter is being used.
• Magnetic: Old technology
• Keypad: Flexibility vs No Feedback/Bandwidth
• Memory Device: Feedback/Bandwidth vs
Cost/Flexibility
22. Vending and management
systems
• Diverse implementations/topologies
• Influenced by token technology choice
• On-line vs Off-line
• Use of third-party infra-structure
• ASP model is a possibility
• Vending infra-structure design and
management is the key to a good
prepayment system
25. Tariff issues
• Flat rates (straight line)
• Periodic charges (fixed, service, min, variable)
• Block rates (single and multiple, increasing
and decreasing)
• Power/Current limits
• Time of use
26. Credit transfer types
• Energy transfer
– Transfer kWh from
POS to meter
– Tariff conversion at
POS (periodic
estimate)
– Complexity at POS
– Low cost meter, with
simple tariff engine
– Low meter
maintenance &
support requirements
– Limited functionality
of meter
• Currency transfer
– Transfer monetary value
from POS to meter
– Tariff conversion at meter
(allocation unknown)
– Complexity at meter
– Rich functionality at meter
- clock, load profiles, TOU
tariffs etc
– Higher levels of meter
maintenance & support
27. Tariff implications
• Flat rates
– easy for both transfer types
• Periodic charges
– energy transfer - deduct at POS
– currency transfer - deduct pro-rata
on hourly, daily and monthly basis at
meter
28. Tariff implications
• Multiple block tariffs
– conventional
• Pro-rate
– energy transfer
• Average capping and forward allocation
• Complex algorithm, requiring corrections
• Good communications infra-structure required
– currency transfer
• Tariff conversion in meter with clock
• Tariff update may require visit to meter
29. Tariff implications
• Power limits
– must be supported by meter
– either currency or energy transfer
• Time of use
– can only be done with a currency
transfer meter incorporating a clock
30. Tariff issues
• Tariffs are difficult to change
• Meter comparisons:
Conventional Prepayment
Induction Energy Transfer
Static MF Currency Transfer
• Issues: Cost, Admin, Complexity,
Flexibility, Arrears policy
31. Why token encryption ?
• Tokens rely on encryption for their
security
– token re-use
– Illegal token generation/modification
– Meter specific functionality
32. What is ‘encryption’ and what is an
‘encryption key’ ?
Algorithm
or
method
Algorithm
or
method
Plain
Text
Cipher
text
Key
Key
Plain
Text
Encryption
e.g. at point of sale
Decryption
e.g. at meter
33. Encryption and encryption
keys
• Secret (Proprietary) vs Public systems
(eg STS)
• Key management is an issue
– Prevent generation of tokens by hit & miss
attempts
– Prevent generation of tokens from a stolen
vending station
– Prevent tampering to modify the value of
legitimate tokens
– To allow inter-operability of equipment from
various approved manufacturers
35. Why standardise?
• Different systems not compatible
• Level of cryptographic security not
consistent
• Different maintenance and installation
procedures
• Multiple sourcing and increased
competition
• Minimise switching costs
36. Standardization process
• Token transfer and encryption
• Meter functionality
• Vending and support equipment
• Key management
• Standard Transfer Specification (STS)
• IEC standard
40. Some other questions
• Free choice vs forced use
• Stigmatising prepayment - used as
means of supplying electricity to
customers nobody else wants
• Prepayment vs self-billing and pricing
– do prepaid customers receive a benefit for
paying early
– do prepaid customers make a capital cost
contribution
• Regulators?
41. Marketing
• Target groups
– Internal staff
– Political players
– Media
– Community
representatives/organisations
– Customers
• Customised plans are required
42. Prepayment Perception Mapping
Low High
High
(Champion)
(Subversive)
Low
Influence
Support
Support
Threshold
6
2
3
5
4
1
Mindset Shift Effort
Influence Shift Effort
43. Management processes
• The system relies on strong
management
– Database management
– Audit procedures and reports
– Cash management
– Meter maintenance and inspection
– Arrears
– Revenue protection program
– Revenue Intelligence – eg RAAP
44. Conclusions
• The concept of prepayment is proven to
benefit both customers and utilities, and
customer acceptance is high
• Prepayment systems are mature
• Prepayment markets are growing
internationally
• Innovation in prepayment is ongoing
• Important implementation factors remain:
• careful system design (especially in terms of vending)
• PR, marketing and customer service
• staff training
• ongoing, high quality management processes
