The city of Covington continues to explore different billing options for its utility customers, and the council approved a pilot program Monday to test out pay-as-you-go electricity billing.
The city will solicit 10 volunteer customers for the program, which will allow customers to prepay for electricity in the same way people buy cell phone minutes on an as-needed basis.
Because they would prepaying for electricity, the customers would not have to pay a deposit when starting an account, which would particularly benefit customers with little or poor credit history that are charged deposits of up to $600. A deposit would still have to be paid on other utilities, which would remain on a regular billing cycle.
The council unanimously approved spending up to $5,000 to begin the pilot program with Alpharetta-based PayGo Electric.
However, the pay-as-you-go system would come with other costs that might not make it a good fit for customers who can afford their deposit.
The prepay system requires "smart" meters that can cost more than $300, compared to the city's current meters that cost around $50. City officials are not willing to absorb this cost, which would instead be built the monthly base charge for prepay customers.
In addition, customers will have to pay an average of $3.95 every time they make a payment via either cell phone or web. If customers choose to buy electricity multiple times a month as they can afford it those costs would add up.
Finally, customers will be charged 55 cents per month to cover the cost of the smart meters communicating with the city.
For customers who have are cash-strapped though, these costs could largely be offset by the fact they won't have to ever pay late fees or reconnection fees.
The smart meter will simply shut off electricity whenever the customers' account runs out; customers will be sent alerts when their accounts run low. If a customer's power is turned off, he can simply turn it back on by making a phone call and putting money back into his account.
"One of the things I absolutely love about this is they're turning their own power off, we are not," Mayor Ronnie Johnston said Monday. "That is a huge customer service issue, because they're in control of their own destiny."
Councilman Keith Dalton said he thinks the city will benefit because this system should reduce the amount of bad debt the city accumulates.
City Manager Steve Horton said several people contact the city in the last week that couldn't pay their deposit. He said just because a customer can't pay their deposit that doesn't meant they'll be a bad customer in the future.
The fact that the system is used by Georgia Power and Snapping Shoals EMC likely shows the program has value, Horton said.
An issue for the city that will have to be worked out is transferring money from PayGo, which is who customers will pay, to Covington. Finance Director Leigh Anne Knight said this will cost the city money, but she wouldn't know how much until the pilot program is started.
If the decides to offer the program on a full scale, Horton said customers could start out on the prepay system and eventually graduate to a regular monthly payment plan. Dalton said it might make an even easier transition for them to go to a budget, or levelized, monthly billing system, which the city plans to start up soon.
The 10 pilot customers are expected to be new customers who can't afford their electricity deposit.