What is a Prepaid Electricity Meter?
If you live in Texas, you are familiar with prepaid electricity, or pay as you go electricity. But how does a prepayment electricity meter work?
In the US, prepaid energy is made possible by smart meters. A smart meter is an electronic device that monitors and measures your home’s energy usage in real time. These prepaid electricity meters send live data to and from your electricity company.
Most houses, apartments and even mobile home communities have advanced electricity meters installed, making it easy to get your lights turned on quickly.
How the Utility Company Uses Electricity Meters
When you pay for your electricity in advance, your energy provider relies on your home’s smart meter to receive detailed usage data, connecting and disconnecting your power as needed.
When you open a new prepaid account, you are depositing $40 cash, but are not purchasing kilowatt-hours right away. The smart meter registers electricity consumption throughout the day, and the electricity company calculates the charges based off the energy rate you agreed to. The amount deducted from your account is based on your consumption profile and your energy rate.
Prepaid electricity companies send you daily texts and emails with detailed information about your energy consumption. These quick reminders tell prepaid customers when to add money to their account and help prevent service interruptions.
How a Prepaid Electricity Plan Can Save You Money
Technically speaking, a prepaid electricity meter has no effect on the energy efficiency of your home appliances. The amount of energy consumed stays the same if no habits are changed, and there is only a difference in the payment method.
However, a prepaid electricity plan has two features that tend to change consumption habits that lead to less spending:
- You pay for energy upfront, and not at the end of a billing period. Using a prepaid electricity plan is like spending cash on hand, while using a normal postpaid plan is like accumulating debt in a credit card.
- You get daily reminders of how much has been deducted from your account and the corresponding electricity consumption. If people notice that consumption is higher than normal on a given day, they will react immediately instead of waiting for an expensive power bill.
When Texan’s switch to a prepaid electricity plan for the first time, a common concern is running into a negative account and having the power disconnected. However, this is unlikely to happen when there are daily notifications about your kWh consumption and account balance.
Also noteworthy is that choosing prepaid electric gives you flexibility to switch power providers. Since you are paying in advance for the energy used, providers do not impose a early termination fee.