As the electric utility industry deregulates and its metering and billing functions are opened to competition, numerous disparate entities must aggregate and disseminate revenue cycle information among themselves. Sharing metering and billing data between utility distribution companies (UDCs), energy service providers (ESPs), meter data management agents (MDMAs) and other interested parties requires a standard communication method if the data is to make any sense as it passes from partner to partner. That standardization has been one of many challenges facing the industry as it makes the transition toward a competitive business model.
The electronic data interchange (EDI) format was designed to standardize paperless data sharing between trading partners such as these. But EDI, at least in the early stages of its use in the electric utility industry, has shown its weaknesses-chief among them, its relatively high implementation cost and complexity. Although the Utility Industry Group (UIG) is working to develop nationwide EDI standards for data sharing within the electric utility industry, market participants at this point may be exposed to several “flavors” of an EDI standard. This is particularly the case if they deal with several different trading partners or attempt to do business across state lines. Lack of data exchange standardization was part of the reason direct access was delayed in California as UDCs and ESPs worked out bugs in their data sharing processes (“EDI Requirements for the New Marketplace,” Utility Automation, September 1999).
Despite its shortcomings, EDI does what it is meant to and, for the time being at least, is the standard for data exchange in deregulated electric utility markets. But a relatively new metalanguage has caught the attention of some in the industry. The extensible markup language (XML) works similarly to EDI in that it facilitates electronic data exchange between trading partners, but proponents say it does so less expensively and with greater ease than does EDI.
Looks Like HTML, Works Like EDI
XML is a simple data modeling language similar in appearance to hypertext markup language (HTML). Like an HTML document, XML documents consist of plain text information and “tags” that enable the plain text. Where HTML and XML tags differ is in their functions. HTML tags tell a Web browser how to display certain features of an HTML document; XML tags define features of an XML document. For example, where an HTML document might use the “bold” tag to tell Web browsing software to display certain text in bold, an XML document would use tags to define the parts of a document that relate to a meter’s make, model and other information needed by trading partners in deregulated markets (Table 1).
XML resembles HTML not only in its construction, but also in the method by which documents are transmitted. Like HTML, XML’s transport medium is the public Internet, and that’s one of the factors that makes XML attractive to utility trading partners as they look for cost-effective ways to share metering and billing information. EDI transactions generally require proprietary value-added networks (VANs) to transport the electronic data, while XML leverages a utility’s existing Internet investment.
The World Wide Web Consortium released its XML 1.0 specification in early 1998, but XML’s application within the electric utility industry is still in the fetal stage. One company anxious to spearhead widespread XML use among utility industry data trading partners is Excelergy Corp. The company recently developed and released an XML standard business library for use by participants in energy choice. If at first glance, XML seems to duplicate EDI’s functionality, it’s not a coincidence. Excelergy used EDI as the model when crafting XML partner interface processes for transactions in the deregulated utility market. Table 2 shows some of the subject areas Excelergy has developed or is developing for XML and the EDI standards they imitate.
“We looked at the EDI that exists today, and in some regards we mimic the business rules associated with an EDI transaction,” said Peter Randolph, Excelergy’s e-commerce manager. An example would be the 867 EDI standard, which is the EDI standard associated with sharing customer usage data. “Essentially, we’ve taken what the 867 tries to accomplish, and we’ve said here’s how you would do the same thing with XML. We look to existing EDI to see how to develop for XML. We’ve also identified some processes that aren’t currently handled by EDI.”
That sort of development, though, is but a baby step in getting a technology such as XML adopted as an industry-wide standard. Excelergy spokespeople believe that the metalanguage has its place in the deregulated industry, and the company is working with organizations such as the Coalition for Uniform Business Rules (CUBR) and the UIG in the hopes of getting XML adopted by state PUCs.
“We feel strongly about the potential for XML within the metering and billing processes,” said Randolph. “We want to try to spur some migration to it from EDI. There are a lot of benefits to the technology. It helps bring down at least a couple of the barriers to deregulation and competition-mainly costs associated with data transaction between trading partners.” The data transaction costs Randolph refers to are those inherent in running a VAN. Those costs are considerable, ongoing and may inhibit some smaller players from entering the deregulated electric industry.
“With EDI you have to make a reasonably large investment on the front end to develop an in-house EDI capability,” said Randolph. Besides the initial cost of setting up such a proprietary network, VAN use also results in ongoing costs to utility industry trading partners. “VAN costs are generally determined on a per-kilocharacter-type basis,” Randolph said. “It’s priced based on the amount of data you’re sending, and those costs are passed along to both ends of the transaction-both the transaction sender and the receiver. Those are the ongoing costs you continue to pay.
“In the states that are already down the EDI path, you’re seeing bickering in the PUC meetings about who’s going to pay the VAN costs,” Randolph continued. “XML can be a solution to that.” Randolph acknowledged that it is possible to conduct EDI transactions via the public Internet, but that doing so is not yet a common practice.
As more states open their electric utility industries to competition, the opportunity exists for smaller entities to enter the unbundled metering and billing market. The relatively low cost of implementing an XML-based data sharing network, as compared with EDI-based sharing, makes new opportunities in the distribution side of the business that much more attractive and attainable.
“EDI can be very cost-prohibitive for smaller players,” said Philippe Frangules, Excelergy’s e-commerce vice president. “There will likely be lots of new entrants (in the deregulated electric utility markets) who come in as marketers and come up with different ways to bundle and sell energy. There will be big companies and little companies. We believe that XML will make it easier for those smaller players to be in this game. It will make it less expensive for them, and that’s better for the industry.”
Beyond the costs of setting up a VAN to handle EDI trading partner transactions, EDI has additional costs related to staffing. Put simply, EDI is more difficult to read than is XML. New entrants in a deregulated market will need to staff their IT departments with people who can understand and work with EDI. Frangules believes those costs can be lowered through XML use. “Since XML is more ‘human’-since you can read it-you can get a lot more people up to speed quickly who can understand the data vs. EDI where it’s very hard to learn all the specific vocabulary and understand what is going on,” he said.
Randolph agreed, pointing out that XML can provide an easy-to-read “form-based picture” of a data transaction. “If you’re looking at an enrollment, it looks like an enrollment form,” he said. “If you try to look at EDI, what you’re looking at is electronic data. Somebody has to understand that data. Those are IT folks that need to do that. With XML, perhaps a customer service representative can do that. You can have customer service folks dealing with customer information as opposed to having technical folks-at a much higher expense-sorting out problems that come with EDI.”
Another point in XML’s favor is that major software vendors, including Microsoft and Oracle, are committed to its development. Unfortunately, many of the major developers who are supporting XML are doing so with their own unique versions. Some agreement on XML standards will have to be reached before XML is acceptable for industry-wide data exchange.
Although it is conceivable that XML could work as a replacement for EDI, it’s doubtful that it will happen soon. UDCs, ESPs and other trading partners in already-deregulated markets have heavy investments in EDI, and a good number of players in soon-to-deregulate markets likely will follow their lead. Analysts at industry and market analysis firm AMR Research have chimed in on the XML vs. EDI discussion, but for now, they’re playing the middle ground. While acknowledging that XML is “widely accepted as the future of business data exchange,” AMR analysts in a recent report recommend that utilities not wait for XML standards but instead “select XML/EDI-enabled products that provide immediate competitive value.” They see XML not as a replacement for EDI but rather a complement to EDI.
The AMR Research report goes on to state that “XML and EDI perform different functions and should not be considered mutually exclusive. Users should consider solutions that combine EDI and XML.” In that same report, AMR Research analysts state that vendors working with EDI should begin to “wrap” XML around the EDI formats. AMR Research is recommending that vendors “must be prepared to offer utility companies a transition plan to a true XML standard when it becomes available.”
Randolph and others at Excelergy believe that utility industry partners who have not made EDI investments would do well to consider XML as their data sharing solution, or at least as part of the solution. “Today, if you have already made investments in EDI, you are probably not going to want to hear someone come along and say, ‘Here is another technology.’ But the reality is that XML and EDI can coexist,” said Randolph. “You can look to other industries, such as the automotive industry, where a company might have 27,000 trading partners, and among those partners, there are 2,000 that they do EDI with. Many of those in that area are converting their EDI-or are ‘XML-izing’ their EDI-so they can move away from the VAN costs.
“What we are asking is why should utilities keep going down the EDI path when this other evolving technology is here on the horizon, and other critical industries are looking to go the route of XML. Why not stop going down the EDI path?”