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City explores prepay utility program

COVINGTON -- City officials agreed Monday to initiate a pilot program that would allow customers to pre-pay for electricity usage.

While all the details of the program have not been hashed out, it would essentially work like this: Customers will pay for electricity as needed. There may be a minimum amount required, but beyond that it would be up to the customer how much to spend, and that would determine how long the electricity stays on. Once they have nearly used up the electricity that their payment covers, they would be notified via email or some other method and then make another payment.

"It's much like filling up a tank on a car -- you go in and buy however much gas you can afford and then come back and buy more later," said Utilities Director Bill Meecham.

"It would be up to the customer to make a large payment to have power for a longer time or a smaller payment and they could come back more often and purchase more," he added.

About 10 customers will participate in the pilot program, which could run up to a year, and if it's successful, the city could implement it long-term and open it up to all customers.

"The benefit is the city gets the money up front much like the folks at the gas station do," Meecham said. "The benefit to the customer is they no longer have to make a significant deposit."

Currently, customers with a bad credit history must pay a deposit of up to $600. The pre-pay program would not require deposits or fees when the power has to be reconnected after being cut off due to non-payment.

"The deposit assures the bill gets paid or you have some means to pay for electricity used if you didn't pay the bill. The prepay system doesn't need that because you receive the money up front," Meecham said.

There would be other charges, however. The special meters that would need to be purchased for the pre-pay system could cost as much as $300, versus the approximately $50 cost of meters currently in use. While the city will absorb that cost for the pilot program, it would be passed along to the customer if the program goes long-term.

The city would also need to buy new software and the associated credit card fees would also be higher. Those costs would likely be passed on to customers as well.

Councilman Chris Smith said he's not sure those fees will go over well with customers.

"The thing I hear constantly is 'I can't pay any more utilities,'" Smith said, adding that the additional fees would be tantamount to an increase in utility charges.

However, Mayor Ronnie Johnston said he has heard from constituents who say they would be willing to pay the additional charges over time in order to be saved from a large lump sum deposit.

The council unanimously agreed to move forward with the pilot program at a cost of up to $5,000.

Meecham said participation in the pilot program will likely be offered to new customers applying for an account.