by Karen Blackmore, Energy Insights
Utilities struggle to balance budgets through cost savings while continuing to look for ways to maximize their revenues. U.S. utilities bill $300 billion each year for services, but are unable to collect on all of the billings. Additional potential revenues are never captured because of other losses such as non-billed energy and line loss. Revenue assurance is a way to help maximize revenue while keeping costs low and customer satisfaction high. Every utility should be examining the benefits of revenue assurance and should make these programs part of their future strategy.
Utilities with the highest success in revenue assurance have used traditional practices, but have combined them with new technology offerings made possible by smart metering to make those practices even more effective.
What is revenue assurance?
Energy Insights defines a revenue assurance policy as a means to:
* Correctly target and bill for all products and services the utility offers, billing each service rendered on time and at the correct tariff for that customer.
* Prevent erosion of collection of revenue from utility services and products, minimizing time spent to collect and reducing losses from delinquent or bad debt.
* Eliminate unlawful transfer or use, such as theft or incorrectly applied rates, of the services or products the utility offers.
Revenue assurance is most effective when used throughout the meter-to-cash process, with built-in information technology and appropriate human touch-points.
Revenue assurance practices and the meter-centered technologies that support them
Anti-tamper hardware improvements
Physical meter enhancements work on the principals of meter movement and meter stops or starts. These meters can send signals when a meter has been shifted upside down or is opened or manipulated to turn off or slow down. Newer meters often have built-in anti-tamper features, and new patents show evidence of greater functionality and design to come. Prosecuting theft cases costs more than stopping the theft altogether, and a few countries have laws that make it much more difficult to prosecute theft cases, which raises their costs even higher.
Pre-payment metering can be offered alone, although more meter vendors now offer it as part of their smart metering offering. For example, pre-payment gives customers options to pay for energy usage on a schedule that fits their budgets or can be a way to easily turn on service for vacation homes or pay for energy usage for children at college. This service not only provides customers more options to purchase energy, but it gives a utility an effective method to reduce administrative expense and cut theft, with remote connection services available through smart metering. Pre-payment is widely used in the United Kingdom, Africa, some areas of Asia Pacific, and South America as well as the U.S.
Meter data analytics
Analytic applications use algorithm-based meter-detection systems that filter and analyze energy usage patterns based on assumed and expected norms. These applications work through analyzing typical users’ data to detect energy usage pattern variations by comparing them to norms for energy usage. Analysis can also detect unusual read times and meters left un-read due to faulty installs and even compare customer types to tariffs. All of the algorithm-based meter analytics products are very complementary with smart metering to detect theft and fraud and can be highly tailored for a given utility’s client base and location.
Energy efficiency and management
Some utilities have now added energy efficiency education as a way to help customers understand the impact of their energy usage and then mitigate it in areas where they are able. Energy usage control and monitoring are available online through various applications and also through the use of in-home displays and devices aimed at helping consumers reduce their energy usage. Utilities who can combine energy consumption reductions with decoupled rates can achieve current levels of revenue retention. Decoupled rates break the link between a utility’s earnings (gross sales) and a residential customer’s energy consumption by structuring rates so that a utility’s profit margin can rise when consumption declines.
Meter data management
Smart metering meter data management (MDM) systems work by themselves and also in conjunction with physical meters, pre-payment meters and the analytical applications listed above. MDM applications can aid in detecting usage abnormalities in cases such as vacated or suddenly occupied premises.
Billing accuracy and meter re-reads
First-time bills set a standard for payment and are important to maintaining customer satisfaction. If customers receive their first bill on schedule and that bill includes one billing cycle’s worth of energy usage, they will most likely not be startled by future bills. This helps guarantee the customer will pay in full and on time. Smart metering can aid in getting billing disputes settled promptly, by allowing customer service representatives to do on-the-spot re-reads while the customer first connects with them.
Collections deterrents using smart metering programs
Utility ease in disconnections and fees for re-connections can help in revenue assurance. Once customers understand how easy it is to disconnect service with smart metering technology in place, customers will be more likely to pay on time. The MDM provides the data for applications that can trigger remote disconnects, connects and reconnects, keeping service crew costs down.
Actions to consider
Utilities can focus on developing a comprehensive program that encompasses the areas described above, based on their key pain points:
Examine the entire meter-to-cash process. Using an approach of looking at all of the meter-to-cash process, with revenue assurance as a wrap-around, will help ensure the entire process is assessed and corrected.
Further analyze the areas with the greatest impact to the bottom line of the utility. After the analysis is done, it is easier to justify the initial expenditures for automation and business improvement and put those benefits into the smart metering business case.
Take advantage of new technologies available with smart metering. Utilities can take advantage of the newer CIS that offer revenue assurance features not found in earlier versions, as well as using smart metering. Revenue assurance alone will not be sufficient to invest in a new CIS, but adds to the benefits in a comprehensive look at meter-to-cash.
Smart metering lends many tools to revenue assurance and utilities can make the most of those with practices that use those tools to full advantage. Revenue assurance completes the meter-to-cash circle by building operational capital or improving cash flow. In addition, revenue assurance practices can also build customer satisfaction by enabling services such as discrete disconnects and pre-payment options. This makes revenue assurance a strategic enabler in a utility’s financial and customer satisfaction goals.
Karen Blackmore, as research director of Energy Customer Operations Strategies at Energy Insights, provides research and advisory services to business and IT executives involved in customer operations and meter to cash processes. She helps them maximize the value of their technology investment and drive technology-enabled business innovation. See www.energy-insights.com or email her at email@example.com.