The Effect of Prepaid Electricity System on Household Energy Consumption – The Case of Bogor, Indonesia

Abstract

Governments are increasingly seeking low-cost ways to curb residential energy use. This article examines the effect of one such innovative approach to energy savings in Bogor, Indonesia: a prepaid electricity meter system. The Bogor prepaid system requires households pay up front for their electricity as the meter tracks consumption and credit. By enabling users to see the relationship between energy use and costs, the metering system is intended to promote energy savings behaviour. However, the system in Bogor is introduced on a voluntarily opt-in basis. Further, it is still uncertain whether those joining the program will actually save energy. Identifying which kinds of households are most likely to join the program and then save energy are important considerations as policymakers contemplate further reforms to Bogor's prepaid system. A survey was conducted of 600 Bogor households to determine whether certain kinds of households were more inclined to join the voluntary program and self-report energy-relevant behaviour. A seemingly unrelated regression equation (SURE) model was then used to estimate the possible correlation between a series of covariates familiar to the energy savings literature and the decision to initially join and then saving energy through the program. The result shows the family size and recent income changes (during the last five years) were more likely to join voluntary program, while senior citizens were less likely to join. The results also reveal that education level play significant role in changing behaviour of households in the program. The results suggest that the program needs to be made convenient for low-income and elderly households. Accompanying the program with additional information on energy savings might also help make the program more effective.