No Bills, No Savings Either

No bills, but more costs ... - © Bernd Biege 2014
No bills, but more costs ... - © Bernd Biege 2014

When I lived in student accommodation in Glasgow, sharing a flat at 33 Petershill Drive (yes, that would be Tower 2 of the notorious Red Road Flats) … the weirdest thing was the electricity supply. As in buying those little cards with a magnetic strip down at security, then inserting them and, hey presto, you had electricity. Pre-paid.

Which, all in all, was a good idea … students being as prone as the unwashed masses to “forget” paying the bills, especially when moving out. Not that the system was introduced for students. It was in place in that area before students ever dared to show there preppy faces in the local Tesco (never mind the local pub … which I was memorably warned off by a very tough-looking drunk in the bus … because it was “a rough place, a really rough place”).

Now pre-paid electricity has followed me to Ireland, it seems. PrePayPower by name, promising “no more huge bills” in a flyer that landed on our doormat yesterday. Sounds good, doesn’t it?

Only … it is a great psychological approach. Because by being told that you won’t have huge bills (which is true, you are pre-paying without a bill), you are tricked into thinking that you will have lower costs. Which, if you sit down with pen and paper, is simply not true.

The brochure mentions an average energy cost saving of 6.5% or so per household. Which would be quite a thing … but not achievable by switching to PrePayPower alone.

Here’s how it works out … taking our bill from Electric Ireland for an average two-month-period (64 days, to be precise), 403 units cost us, everything included, € 118.55. Then out came pencil, paper and the trusted calculator. And after some searching on the website, I found a breakdown of PrePayPower’s tariffs (they are not in the brochure … they ask you to phone in with a bill … more psychology). And started comparing like with like.

And arrived at the conclusion that while we would get no more huge bills, the cost for the same period would have been a whopping € 142.95. Which would not mean a saving of 6.5%, but additional costs of 20.5%. Most of which are actually caused by the daily charge for the prepay metre and system. So you make the switch and, in effect, pay extra for the overheads of the company promising “no more huge bills” (true) and hinting at savings (not true).

Not true? Well … that is up for debate. Because of the human tendency to learn only through suffering and pain.

Using prepaid energy, as using a prepaid phone, will almost certainly lead to savings. Because instead of going ballistic every now and then, when the bill arrives, you will actually be tracking your expenditures on a day-to-day basis. As in “What, another bleedin’ tenner for electricity?”

Try it yourself … walk into a restaurant with your significant other and € 50 in cash instead of the credit card. Than observe how both of you start adding up the bill before you order. And, more than likely, take a more frugal choice.

So, yes … the more unconscious users (or abusers) may get a nice wake-up call by switching to prepaid. Because if you have to pay directly to cook a dinner, just because you left the immersion heater running, you’ll make a note to switch it off next time you leave for work. And if you are in the shower and first the lights go out, than the water gets icy cold, you’ll keep a much closer eye on energy consumption and the metre in future days.

Trust me, I’ve been there, in the dark and cold shower.

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