City seeks vendors to help offer option to pay utilities in advance
If Denton can find the right vendors, residents may soon be able to sign up for prepaid utility accounts.
Ethan Cox, Denton’s customer service manager, told the council during a work session Tuesday that customers who pay in cash are most likely to opt for prepay. The city staff learned that from visiting with a number of other utilities around the country that provide prepaid accounts. With a prepaid account, a customer can get the lights turned on without having to pay a deposit. Even if customers have a past-due balance to settle, they can use prepay to pay the balance over time.
“It lowers that barrier quite a bit to turn on the electricity, because instead of several hundred dollars to restart, they just pay to start,” Cox said.
Under the current system, which is credit-based, if a customer falls behind on a utility bill and the power is turned off, the person likely faces a bill with 60 days of usage, late fees, a reconnect fee and perhaps even an additional deposit, Cox said.
In addition, they don’t know the exact amount owed, so they have to call and come in to the utility department to make a payment. As a result, it often takes a customer more than one day to get the power turned back on, Cox said.
But if a prepaid customer forgets to pay and comes home to find the lights out, they can pay online, on a smartphone or at a payment kiosk and have the power back on soon after the payment goes through.
That is made possible by smart meters, Cox said.
Currently, about 28,000 of Denton Municipal Electric’s 48,000 customers have the advanced meters, which allow for daily usage monitoring and remote connections. DME started the conversion on apartments and mobile homes, according to Phil Williams, general manager.
The Denton City Council agreed with a staff recommendation to pursue the prepaid option, which would include not only electric bills but also water, wastewater, solid waste and drainage bills. Cox said the city would use daily averaging to bill other utility accounts for the prepaid option.
City staff would still have to read the water meters, “which would require some true-up of the bills, but the vendors we talk with say it can be done,” Cox said.
The city’s first step would be to get bids from software vendors and businesses that operate payment kiosks.
The city staff estimated the cost to set up the system would be about $84 per customer per year, Cox said, which would likely be calculated out monthly or daily as a facility fee for the customers who use the option.
Council member James King wondered whether that would be too high for some people to pay, but Cox said the hope was the prepaid option would save people money in the long run because they would avoid late fees and other costs associated with credit-based accounts.
The city could expect as many as 5 percent of its customers to convert to prepay right away.
“Those with a deposit on file could begin with that as their prepaid balance,” Cox said.
By the time the system is well-established, Cox said as many as 15 percent to 20 percent of customers will likely have prepay accounts, based on what other utility companies have reported.
Council member Jim Engelbrecht asked whether the accounts could be linked to debit or credit cards. Cox said that the city accepts all forms of payment, but the staff hadn’t worked on that option because so few other utility companies see it exercised.
“This really is for cash customers,” Cox said.
Council member Kevin Roden said he thought the option would be helpful to local charities, too, which might want help someone get their power turned back on and would be able to do so for a small amount of money.
The city could still order a moratorium on disconnects during weather emergencies. Customers who need power for life-sustaining equipment wouldn’t be good candidates for prepaid accounts, Williams said.
The staff also recommended that if suitable vendors can be found, the city pilot the program to make sure it works for Denton before adopting it systemwide.
“Maybe we start with some of the staff, or a small group of residents — or all the council members,” Cox said.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.