Mayfield Electric & Water Systems Increases Customer Satisfaction and Lowers Financial Risks with Exceleron’s MyUsage
Exceleron Software’s MyUsage Prepay has helped Mayfield Electric & Water Systems (MEWS) of Kentucky better serve its consumer base by eliminating the need for high deposits and providing a simple way to reduce bad debt and write-offs. Their experience demonstrates how MyUsage Prepay can benefit a municipality offering utility services in a multi-service environment.
Key Takeaways
Business Challenge
To protect itself from the financial risks, MEWS had extremely high deposit requirements for renters – in some cases up to $400 for electricity and $100 for water and sewer. The housing authority and even elected state representatives began expressing concern and anger regarding the large amount of cash required upfront for new residents to establish service. Yet MEWS needed to have a way to protect itself from the risk of customers leaving with large unpaid balances.
MEWS realized that if customers could prepay for their utility services, they wouldn’t need to pay a deposit. So MEWS began searching for a prepay alternative, ultimately selecting Exceleron Software’s MyUsage. MyUsage Prepay is a web-based, hosted solution that is fully integrated the utility’s existing AMI and CIS systems,making it a low-cost and no-risk turnkey solution.
“Our proposal to offer prepay utility accounts really wasn’t a difficult sell,” said Marty Ivy, General Superintendent of MEWS. “Our board determined prepay would be worth a try if we could relieve some of the pressure being placed on us by the community, especially by rental property owners and their tenants.” Launching a prepay program presented MEWS with an opportunity to improve customer service, make it easy for new residents to establish service, and address the concerns of the property owners without any investment in new hardware or in-home devices.
MEWS selected Exceleron’s MyUsage in January 2011. After a two-month pilot, MEWS made prepay accounts available to all customers, and the program grew quickly.
Outcome
MEWS and its customers are reaping many benefits from the prepay accounts. Customers are better informed about their energy usage and empowered to manage their own budget. MEWS has lowered bad debt and write-offs, and is even collecting thousands of dollars in outstanding debt that was incurred prior to the rollout of the prepay program.
Customer Education & Empowerment
“Our customer service representatives have done a very good job of explaining to customers how to access their prepay accounts and monitor the balance,” Mr. Ivy noted. “We still have to hold hands for a few customers, but we really haven’t had any trouble with people not understanding how to manage their prepay accounts.” He notes that the customers with the greatest understanding of their prepay account are the ones who get the most value out of the program.
When customers sign up for a prepay account, MEWS representatives take the time to make sure they know how to use MyUsage.com and monitor their usage. Ivy notes that this is especially important in a multiservice environment like that of MEWS, where the service provider is billing for water. If a customer has a leak and doesn’t know it, the prepay account balance can be exhausted very quickly. So MEWS asks prepay accountholders to monitor their account balance and report any sudden changes. MEWS also helps customers set alarm parameters, so that if they use more than a certain number of gallons of water per day, they’ll receive an email notification and MEWS can work with them to address the problem.
“People with prepay accounts know more about their usage and demand than those with postpaid accounts,” explained Ivy. “They know how much it costs to run dishwasher or dryer and can relate that to a dollar amount per day for electricity, and they use that to create a budget that works for their family.” He notes that, from the customers’ perspective, one of the main advantages of having a prepay account is that they can choose the amount and frequency of their payments and are no longer beholden to paying for the entire month on a specific date.
MEWS’ prepay program allows customers to make payments online, with MoneyGram, via phone, and at the front counter. One of the biggest surprises has been that most customers still pay with cash. Ivy reports that, in the last fiscal year, the average prepay customer paid about three-and-a-half or four times per month, with an average payment of $46. So MEWS has seen an increase in foot traffic simply to make payments in person. MEWS is considering installing a payment kiosk to make cash payments easier for customers and reduce the workload for MEWS staff members.
MEWS has also noted an important change in how customers interact with staff members in the office. “In the past, angry customers would come into our offices to argue about the need to pay a large deposit, but now our customer service representatives can offer prepay accounts as a viable alternative.” Opening a prepay account doesn’t require a deposit, but new customers do have to fund their account with a minimum starting balance of $50. “Whereas in the past struggling customers would go to churches and civic organization to obtain the funds they needed to make a deposit, now they can apply those charitable dollars directly to their usage,” said Ivy.
Reduction in Bad Debt, Write-Offs & Interest Payments
Before the prepay program, customers sometimes left with an outstanding balance of between $200 and $300, but now with the prepay program, a typical outstanding balance is just $15 or $20. As a result, Ivy reports that MEWS has observed a reduction of approximately $20,000 in charge-offs per year.
MEWS is also taking advantage of the MyUsage Prepay Debt Assist feature, which can be used to apply a portion of each payment to outstanding debt. MEWS uses a 25% factor, so for each $40 payment, $30 is applied to the prepay account balance for current usage and $10 is applied to the outstanding debt. “As long as our customers keep their account active, the Debt Recovery feature is a very good tool for recapturing bad debt,” said Ivy. “To date, we’ve recovered several thousand dollars in bad debt that otherwise would have been sent to collections or written off.”
In late 2012, MEWS reached out to existing customers, letting them know that they could open a prepay account and use their existing deposit as their initial balance. “About 200 customers responded to the offer, which essentially gave them a month or two when they didn’t have to make any additional payments for utility services,” noted Ivy. “In addition, we no longer had to pay interest on those deposits we’d been holding, so it was beneficial for everyone.”
Ivy urges other utility providers to consider offering prepay accounts, regardless of whether they operate in communities with a high renter population. “If you’re looking for a way to reduce charges and eliminate the pains of high deposits, prepay accounts are a very good solution.”
About Mayfield Electric & Water Systems
Mayfield Electric & Water Systems (MEWS) is a publicly owned utility governed by The Electric Plant Board-City of Mayfield serving customers in the city of Mayfield, Kentucky. MEWS is committed to providing customers with the highest quality electric, water, wastewater, and internet services at the lowest possible prices. MEWS operates in a multiservice environment and as of January 2014 had approximately 4,600 residential accounts.