Case Study: DTE Energy Combats Energy Theft

Energy theft is a serious financial issue as well as a major public safety concern for many utilities, costing them an estimated $6 billion annually. Numerous utilities across North America are struggling with increasing theft occurrences and many, such as DTE Energy, are employing intelligent analytics to help mitigate this costly and dangerous problem.

Headquartered in Detroit, Mich., DTE Energy is one of the nation’s largest diversified energy companies and is involved in the development and management of energy-related businesses and services nationwide. Its principal operating units are Detroit Edison, an electric utility serving 2.2 million customers in Southeastern Michigan, and Michigan Consolidated Gas Co., a natural gas utility serving 1.2 million customers in the state.

Detroit Edison has been addressing energy theft issues since the 1930s–the difference today is the magnitude of the problem. Energy theft goes by several names, but typically occurs as either diversion or tampering. Meter diversion involves bypassing energy around the meter such as tapping into utility conductors before the meter or jumpering around it. Tampering causes the meter to report false consumption information.

“First and foremost addressing energy theft is important to DTE Energy due to the potential safety hazard it creates. This illegal activity can create safety hazards for both the residents at the location engaged in the theft and those in the surrounding neighborhood should an explosion or fire result,” said Mark C. Johnson, DTE Energy’s revenue protection manager. “Product losses can also impact DTE Energy’s earnings and the rates paid by our customers.”

As part of stepping up its efforts to combat theft, the utility turned to San Diego, Calif.-based solutions provider Detectent, a company that provides customer intelligence solutions for utilities. Its analytical tools and services analyze energy use patterns of utility customers to help electric, gas and water companies identify energy theft. By complementing DTE Energy’s theft process with its energy use modeling and peer consumption analysis, Detectent helps DTE Energy identify theft cases that otherwise would go undetected. Detectent’s solution continually improves as more cases are investigated and more intelligence is integrated into the analytical tools.

Most revenue lost to energy theft is in the small commercial account sector. For many small businesses, such as restaurants and laundromats, the cost of energy may be one of their largest expenses–and some see energy theft as a creative way to improve their bottom lines. Understanding consumption patterns and other vital information helps utilities assess potential theft situations.

Some solutions such as those that consider only tamper codes focus on the meter. Sophisticated energy thieves however understand how to divert energy around the meter and bypass protection tamper codes. The only way to identify theft in this situation is to clearly understand how each customer should use energy and focus on those who deviate from expected consumption. Detectent has significantly increased the number theft cases delivered to DTE Energy as the utility firmly executes a zero tolerance policy toward energy theft.

Using information from many sources, advanced analytics and proven processes, the energy theft solution focuses utility resources on cases that have the highest likelihood of uncovering theft and the maximum potential for revenue recovery. This repeatable process allows DTE Energy to collect more revenue and obtain more intelligence about its customers year over year. “DTE Energy has a very solid energy theft program and what they receive from us is a means to focus their resources on the highest value and highest probability theft cases,” said Wayne Willis, Detectent’s sales and marketing vice president. “The result is a more efficient use of back-office and field resources and increased revenue recovery.

Theft of energy is not going to go away, but by deploying intelligent systems, processes and analytics, today’s utilities can better mitigate this costly and dangerous activity.

 

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