It started with pay-as-you-go mobile phone lines, I believe, and seems to have caught on to domestic electric power. Here in Sudan, every household has an electric meter, just like any other country. Except that it doesn't just show how much power is consumed, but rather how much credit you still have left, before your electric power is cut off.
The way it works is that you go to the electricity place with your meter serial number, go to the lady behind the window and hand her your meter number and some money (however much you want loaded onto your meter). Electricity costs roughly US$ 0.15 per kilowatt hour. The lady will then hand you a receipt with a 16 digit code, which you just type into the keypad on the meter. Your credit will be automatically entered. Now you can enjoy air conditioning and hot water!
What's amazing about prepaid electricity (besides the fact of being an extremely efficient way of collecting electicity bills) is that it gives the user an unprecidented awareness of electricity consumption. I can tell you exactly how much my fridge consumes (about .12 kw/h) or how much my a/c consumes (2.30 kw/h) or even my water heater (1.7 kw/h). And I also know that light bulbs (especially the new power saving ones) consume next to nothing. So it's true what they claim.
Maybe prepay is the way!