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MLGW News Release
Smart Talk: Helping our most vulnerable customers
May 29, 2013

A North Memphis resident, Velma, is 86 years old. She lives alone on a fixed-income. Velma pays a portion of her bill faithfully each month, but never the full amount. Her bill ballooned due to a bad water leak, and she’s never been able to catch up. MLGW donated repairs to fix the leak, and agencies donated funds to keep her utilities on, but the financial damage was already done. It’s because of Velma, and customers like her, that MLGW is proposing the deployment of smart meters.

Smart meters will automatically detect leaks, so homeowners can take corrective action and avoid the financial hardship leaky water pipes can have on their utility bills.

Leak detection isn’t the only benefit. Smart meters afford many other advantages that provide monetary relief to impoverished customers without any change to their energy consumption habits. Reduced fees and the ability to offer a prepaid option have the potential for huge savings. Here’s how:

  • Prepaid eliminates security deposits—$2.025M saved

Smart meters would allow us to provide customers a prepay or "pay as you go" option, similar to what cell phone companies offer. Prepay would eliminate the need for security deposits. Inherently, prepay limits MLGW’s risk and provides customers with more flexibility. For disadvantaged populations, eliminating the security deposit requirement would release dollars that would otherwise be held by MLGW in escrow. Currently, the deposit required for new service is $150. MLGW has 100K new connection orders annually. Using Memphis’ documented 27 percent poverty rate as an estimate, the potential savings if only 50 percent were to take advantage of prepay would be $2.025M. In addition to wiping out the security costs, pre-paying customers wouldn’t have to worry about reconnection fees either.

  • Lower Connection fees—$500K saved

MLGW connects about 100K customers a year for $54 (same-day service) or $44 (next-day service). With smart meters, that fee is reduced to $25.21. Again, using Memphis’ 27 percent poverty rate and assuming conservatively 27K customers pay for next-day service, that’s a collective savings of more than $500K annually.

  • Reconnection fees—$228K saved

MLGW disconnects approximately 100K residential customers for failure to pay. Seventy thousand customers will reconnect and pay the $25 reconnect fee the next day. Of the 100K whose utilities are turned off, 20K will have their power off for two or more days. With smart meters, the fee drops because of the streamlined process. The new fee would be $11.44 for reconnects. If we assume the 20K group are impoverished, the potential reconnect savings is about $228K per year.

In summary, smart meters can help customers like Velma avoid financial disaster and keep more money residents’ pockets.

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