Why you shouldn't pre-pay or fly-buy

My first thoughts on hearing about the Genesis pre-pay power fiasco this week was 'why would you want to give a power company money in advance?'.

I can understand that cash-strapped electricity consumers might want surety of supply - and didn't that work out well - but as a budgeting measure the pre-pay option seems incredibly clunky.

One of the 'victims' on the radio this morning explained how she "went down to the local BP" to recharge the bit of plastic that would then have to be punched in or swiped into the pre-pay machine at home.

She probably had to drive down too - consuming expensive and allegedly planet-warming petrochemicals, maybe even splashing out on a two-for-one Mars Bar/Bounty Bar combo as she waited to find out the machine was broken. I'm speculating here.

But the entire process seems a crazy way to manage long-term power needs. Is it really that hard to estimate you might need $200 at the end of the month for your power bill and not spend it?

Isn't it better to hang on to that money as long as possible and earn whatever pittance you can in interest (or just for the sheer pleasure of not giving it to someone else) before paying the power company on the final due date? In time, of course, before the horrendous late penalty fee kicks in.

This is how corporates manage cashflow, to maximise their own benefit.

The pre-pay card maximises the power company benefit and its seems administratively complex - why would any rational consumer want to use them? But it's not all about being rational - how else could you explain the existence of Flybuys?

How many checkout chick hours are wasted every day asking customers 'do you have a Flybuys card', when they should be scanning those items? It's about time someone carried out a cost/benefit analysis on maintaining the Flybuys fantasy versus, you know, selling stuff at competitive prices with no tricks or loyalty cards require.

 

David Chaplin

 

 

photo: Mark Mitchell