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Meralco’s prepaid energy: a two-year retrospective

October 31, 2016 7:00 AM

Category: Happier Subscribers Pricing Innovation | by Stefan Henss

The Philippines is an exciting country. It is home to over 100 million people inhabiting approximately 2,000 islands with some of the most beautiful scenery in the world. In recent years the Philippines has been heralded as an Asian success story for its fast economic growth. In fact, in mid-2016 CNN reported that the Philippines was the fastest growing economy in Asia, expanding by 6.9% in Q1, 2016 – faster than China. The fast paced economy and strong population growth means that energy consumption in the Philippines continues to grow with Wikipedia suggesting demand for electrical energy increased by over 40% in just 1 year - between 2012 and 2013.

Meralco is one of the largest energy providers in the Philippines, operating in and around Manila – one of the largest cities in the country. As economic growth brought greater prosperity and increased energy accessibility for many, it also posed a number of problems. As Meralco faced strong demands on existing infrastructure, it also faced very different consumer groups with and different consumption patterns and this caused issues when forecasting demand and cash flow. Meralco therefore needed its consumers to become more energy conscious to help manage the demand across its existing infrastructure and make consumption patterns more predictable. Meralco pro-actively ran mass media campaigns focusing on daily energy consumption and conservation tips, while investing in next generation infrastructure.

Now that Meralco’s Prepaid Electricity Service has achieved the two-year milestone, what are the tangible impacts has the program? What impact did it have on the life of the energy consumer?

Mr. Tony Valdez, Meralco’s Vice President and Head of Marketing, Customer Solutions & Product Development, suggests the campaign was a success as “Customers understand their consumption better and they don’t think of their consumption on a currency basis – now they do so on a daily basis.”  He explains that a typical family consumes about $1 USD of prepaid energy a day.  When a family exceeds their usual usage, they will be notified that same day by SMS.  Then, they will be able to take immediate corrective action – commit to conserving energy consumption for a period – to get back on budget for the week. “It’s a totally different experience,” beams Mr. Valdez. 

For Meralco to successfully implement a prepaid energy solution, it needed a real-time and agile monetization solution that was flexible enough to offer different tariffs to different consumers. Redknee was able to provide a solution that provided real-time monetization functions combined with a user-friendly multi-channel payment and recharge solution to allow consumers to quickly recharge in real-time and access their energy moments after recharging, regardless of channel used.

Executives were reservedly optimistic, but 24 months after the launch of this new program, Meralco has proven that customer satisfaction of a prepaid electricity customer is three significant points higher when compared to their postpaid customers.  This positive momentum has prompted Meralco to roll out usage notification to its postpaid customer base, further leveraging existing advanced metering infrastructure (AMI) investments.  Meralco said it plans to install 3.3 million smart meters by 2024 to be able to have real-time insights on how the grid is operating, help the country stabilize its grid network and avoid power outages.

To learn more about Redknee’s role in Meralco’s Prepaid Electricity Service project, stay tuned to the next blog post in the series, or contact us at