The wake left by the financial scandals of Enron and WorldCom has reached every corner of the U.S. business marketplace. The Sarbanes-Oxley Act of 2002, largely a response to these and other scandals, is dramatically changing the way public companies-including investor-owned utilities-manage their assets and do business.
While there are various sections of the Sarbanes-Oxley Act, a lot of the focus is on Section 404, which puts the ultimate responsibility for the accuracy of a company’s annual financial report on the top executive. Basically, he or she has to stand behind it and be able to prove that what is in the report is correct. The buck truly does stop at the top.
“Bottom line, the Sarbanes-Oxley Act means that utilities are accountable for their cash registers-their meters,” explained Karen Sweat, member of the International Utilities Revenue Protection Association (IURPA) and former president of the Midwest Energy Theft Association (META).
According to IURPA, utility companies annually lose up to 2 percent in potential revenue due to energy theft. Those figures include inadvertent usage, or “soft loss” current, such as a new homeowner using power before the billing is switched to his or her name.
“But, no matter how utilities lose energy due to theft or unaccounted usage, it’s still lost revenue, and some organizations are not going after it aggressively,” Sweat said.
Partly in response to Sarbanes-Oxley, utilities are instituting tighter controls. Examples of these tighter controls include meter and related inventory programs, credit policies and refund policies.
In addition to getting accurate meter reading and billing, many utilities are looking at meter security issues.
securing the cash register
A seal on your utility meter is only designed to keep honest people honest. If someone truly wants to tamper with the meter, he or she will. Despite that, a sealing program is still crucial to your operation because security seals alone effectively protect 90 percent of meter installations.
The Sarbanes-Oxley Act calls for accountability and tracking in how businesses operate. Utilities can help themselves in a couple of areas to be Sarbanes-Oxley compliant. They can have an auditing or tracking system for their seals so they will know which employees are using them, and where they are installed, and, they can use quality seals and as-needed high-security locking devices on their meters to deter energy theft.
effective and trackable seals
‘‘By having a good sealing program, we demonstrate that we are putting our ‘cash registers’ (i.e., meters) in the best possible environment in protecting cash flow,” explained John Culwell, security section leader for Arizona Public Service.
A good meter seal program should not only deter theft, but, as noted above, also include an inventory control component. Before today’s self-locking seals were widely used, meters were sealed with lead seals, and the field person had to use a small hand press to seal them. When each seal was sealed, the workman had essentially signed his work.
That level of traceability has been lost because it’s so easy to lock the modern-day seals.
However, with new technologies like bar coding, that traceability can return. In addition to assisting with Sarbanes-Oxley compliance, the ability to track meter seal use has benefits in an automatic meter reading (AMR) system.
United Illuminating, New Haven, Conn., has used bar-coded seals since it started its AMR deployment four years ago. “By having unique bar codes on each seal, and scanning them each time they are used, we keep a database of when and where each seal was installed, and who used it,” explained George Balsamo, meter security manager.
Here are seven qualities of a good seal:
• Tamper evident: Any damage to the seal should be easy to spot.
• Tamper deterrent: Users should not be able to use any type of tool to open the seal without leaving visible or other evidence.
• Long field life: Seals should be able to be deployed for their expected useful life without degradation from ultraviolet rays, moisture and changes in temperature.
• Capable of using latest seal technology. Examples include bar coding, and, in the near future, RFID (radio frequency identification).
• Can be tracked, through bar codes or other tracking means.
• Good value: Offers the features described above at a reasonable and fair price.
• From a reputable manufacturer: A company that is known in the industry with a long, proven reputation for dependability and reliability.
hard-core meter security
While meter seals alone can be an effective deterrent for the majority of utility customers, there are times when utilities simply need to lock up their meters.
“Trying to lock up the meters is a fairly broad endeavor,” Sweat explained. “Utilities need to lock up their meters, or have measures for effective deterrence.”
It’s important to note that using only locking devices can provide a false sense of meter security because an employee or customer could obtain a master key, access the meter and then re-secure it with little chance of detection. With a quality, tamper evident and deterrent seal on the locking device, once it is broken it’s nearly impossible to re-secure the meter without leaving visible evidence.
That clear, visible evidence of seal tampering is important, Sweat added, in particular when utilities work with other companies-like cable television providers-who also provide consumer services. In these relationships, there’s often a mutual understanding among field personnel to keep an eye out for theft because, if a homeowner is stealing energy, he/she is likely to be stealing these other services.
For those with AMR installations, alarms are typically built in to detect dramatic usage changes or meter tampering. However, false positives can occur. Therefore, for meter tampering alarms, using a seal that provides clear tampering evidence helps field personnel to quickly determine if tampering has occurred.
Also, with a seal tracking program, utilities can verify if a certain seal is supposed to be on a particular meter, or if it has been wrongly used on a meter.
“Complying with the Sarbanes-Oxley Act is an ongoing issue,” Sweat added. “Utility companies need to be vigilant about it. As business moves forward with new technologies, you need to keep in mind what controls you have in place and update them so you can remain in compliance.”
You can be assured of your “cash registers’’ only through the quality and capabilities of the seals you use, and the program that controls and tracks them.
Jeff Hanft is vice president of Brooks Utility Products Group. He has more than 22 years experience with Schlumberger and Brooks UPG in the utility sector.