Prepaid electricity, natural gas service on the horizon

Customers of local utility companies may soon be able to go to the local convenience store to buy blocks of gas or electrical service, just as they purchase long-distance calling with phone cards.

Proponents of prepaid commerce say the deregulation of the utility industry should lead to more opportunities for buying gas and electric service in advance.

Representatives of Southwest Gas and Nevada Power say that while mechanisms are in place to offer prepaid service today, there are no plans yet to sell cards in local stores.

"The prepaid long-distance phone card has opened up long-distance service to a lot of people that haven't had it before," said Bob Wiggins, president of Vancouver, Wash.-based WorldCom Prepaid, which will be the second largest provider of prepaid phone cards when the company is taken over by MCI, a merger announced earlier this year.

Wiggins was in Las Vegas recently to address the Nevada Minority Purchasing Council.

People without credit history -- young consumers or immigrants -- or people with poor credit ratings are no longer shut out of the long-distance market, Wiggins said.

Prepaid services are popular in Europe and Wiggins said their appeal is growing in the United States as more people become familiar with them.

"Debit cards are now moving into areas that traditionally had been left to credit cards," said Wiggins, who added that prepaid calling got started in the United States in about 1993.

Pushed by deregulation and competition, the prepaid calling card industry has grown to a $2 billion-a-year enterprise, experts say.

Wireless phone service is also growing as a prepaid industry, he said, noting that Las Vegas is one of the largest markets for cellular phones because of its healthy convention business.

Other industries have begun dabbling in prepaid services. Blockbuster Video, Wiggins said, jettisoned its gift-certificate program in favor of a prepaid card.

Gasoline companies also are experimenting with prepaid cards that can be read and deducted from after a purchase. The Mobil Go Card is one example, Wiggins said. The next step, he said, should be utilities.

But how could consumers buy electricity and gas from a local store?

Wiggins said the process would be easy because it would be a matter of applying credits purchased at a store to billings on a utility's data base.

"It probably wouldn't literally be a card, but some kind of piece of paper or plastic with some codes and a toll-free number," Wiggins said. "All a person has to do is plunk down 50 bucks for it. You'd call an 800 number, get a voice prompt, punch in an address and a PIN (personal identification number) and it would credit your account with $50 worth of electricity."

Laurette Veres, president and chief executive officer of Intele-CardNews, a trade publication that follows the prepaid industry, said prepaid utility services are in their infancy, but the technology is available today and deregulation should lead to further innovations.

"There's been talk about prepaid dialtone service, and not as much on energy or utilities," said Veres. "But if you think about it, I don't see how it couldn't work. It would just follow the same model as telecommunications."

The two dominant utility companies serving Southern Nevada have some of the technology in place to handle prepaid utilities.

"We're in the preliminary stages of investigating it," said Tom Henley, a spokesman for Nevada Power. "We've looked at it more from a gift-certificate perspective. You can pay someone's electric bill as a gift. But a ton of places in Europe have prepaid electricity already, so we know it's possible."

Gift certificates also are available from the dominant natural gas company, said Sharon Rorman of Southwest Gas.

"A lot of people don't know about it because it isn't widely advertised, but it's been available for about two years," Rorman said. "During Customer Service Week, through the Chamber (of Commerce), we give it a push."

Rorman noted that both Southwest Gas and Nevada Power have other pay-in-advance plans of sorts -- equal payment programs. In those, customers sign up to pay the same amount on their utility bills every month, evening out the peak months when costs jump.

While the experts are convinced prepaid utilities are on the horizon, they're just as sure their arrival won't be problem-free.

"There have been some horror stories in the prepaid arena," Wiggins said. "Any time you have a new industry, it's going to attract some entrepreneurial players. Some may not be well funded. Some may not be ethical players. That's why consumers should look for a product branded by a major telecommunications carrier or a major retailer."

"There have been a few bumps in the road," said Veres. "A prepaid phone card is just a piece of plastic with some words and numbers printed on it. You need a computer system to back it up and some people who got in early were there to make a quick buck."

Veres said some of the entrepreneurs who meant well didn't see the industry taking off as quickly as it did. In some cases, people holding phone cards got busy signals when they called and thought they had been victimized. Actually, systems were overloaded because use was so popular.

Utility companies and others moving into prepaid commerce should learn from that, she said.

"Competition always makes things better for the consumer," Veres said. "They'll get lower prices and better service as a result."

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