It’s not about selling more energy
The energy companies are about to experience a massive data influx due to the roll-out of smart meters. M2M Now’s deputy editor, Georgina Elrington, sat down with Miguel Mendes, director of utilities market at WeDo Technologies, to find out about harmonising the integral sources and platforms responsible for revenue.
M2M Now: So, what exactly is the issue currently?
MTM: Well, one example is when you look at the billing part of the value chain you have to make sure that every invoice is sent to every active customer. Occasionally, for some reason, this doesn’t happen and that’s a direct hit to the utility.
When you consider its overall revenue even a small percentage of missed billing, like 1% or even 0.1%, represents a notable loss. If you then drill down another layer, and address a single invoice, every item needs to be billed but some get missed – which is another direct impact. A business assurance approach can help spot inaccuracies like that.
Business assurance is a very simple concept. We take raw data from the operational systems and compare it between the systems, checking for inconsistencies. When we find these, and we do, we analyse it and find out what impact those
irregularities will have in terms of business and operational aspects. Another way to put it is, when you find and address the inconsistencies in raw data, you will harness more revenue.
M2M Now: What other benefits are there from a business assurance approach?
MTM: Smart meters are set to increase the data flow to the utility companies by 2,000%. That’s 32,000* meter readings per customer per year. But it’s not just about the smart meter data deluge. For instance, when a utility gets a new customer, licence obligations stipulate that a new meter must be installed within a certain timeframe or penalties
will be incurred. We’re discovering that sometimes the subcontractors, who go out into the field to read, install or repair meters, are being paid twice for the same job. Of course this shouldn’t happen, but it does.
By having all the right information flowing seamlessly, utility companies can ensure that everything at every stage gets done – and done just once – which saves money. That’s why we evolved our approach from ‘revenue assurance’ to ‘business assurance’, because we look at both elements.
M2M Now: How else can the utilities turn new data into profit?
MTM: At the moment the utilities are largely concerned with selling more electricity or gas. To extract more value – aside from existing opportunities in the system – they will have to offer more services. To do that, they need to understand more about their consumers and look to their needs. So, from the information that will be available from smart meter data, we will probably start to see the energy companies developing some very complex tariff clients as they learn more about their users’ habits.
However, while some are really trying to build and test some intricate plans, their billing systems are not well-prepared so the impact on the customer is noticeable, usually resulting in dissatisfaction. This is what happened in the telco sector some 10 to 15 years ago. With mobile phones we saw lots of complex tariff plans that were difficult to unravel. Customers didn’t really understand what they were being offered or what they were getting.
I believe that the utilities will have a similar learning curve. This is a very interesting challenge that needs to be addressed, and another example of how a business assurance approach can help.
M2M Now: What can the utilities learn from the telecom sector?
MTM: There is much that the telecoms sector can lend to the energy companies. Take segmentation and bundling as an example. This is a well established approach in the mobile phone industry and is just getting interesting for the energy
Here in Portugal, the traditional gas utility is selling electricity as well as bundles with some services. For example, if a customer has a problem with an electrical installation or a heater, they can access a paid-for service with a hotline to the utility that will get someone to fix the problem, without additional repair costs for the user.
Also, consumer associations are concerned about privacy issues arising consequentially from the utility sector. Once smart meters are installed in a house, a lot more information will be gathered regarding what’s going on in that particular abode. But, you know, data privacy issues have been handled well in the telco industry for a long time. The utilities can look to that sector for good case examples of how issues surrounding data privacy have been handled in the past, to ensure that their customers are protected.
M2M Now: Do any utilities stand out today as being progressive with their data?
MTM: Well, each country is developing at different speeds and within that, the utilities within those different countries are going at different speeds. There are a couple of utilities that are really moving forward in terms of trying to better understand what they can do in terms of smart meters and learn from experiences. EDP in Portugal has a very good programme, as has Endesa in Spain, as well as British Gas or E.ON in the UK. There’s a lot going on!
I was discussing how things will evolve in smart meter data, regarding segmentation and customers, with the director of a European utility only the other day. He told me: ‘Today, my utility doesn’t know its customers; we just send them a
bill. We don’t know how many people live in the house, what their habits are or anything about their needs. This is not about selling electricity or gas, we have to sell what they need and want, and so we have to understand what that is. We need people in our marketing departments that are equipped with this kind of thinking to help us better understand the consumer.’ He even said that he was looking for anthropologists to address this!
I told him that he was absolutely right. An important message we take to the utilities is that, currently, they don’t know much about their customers; they just read the meter and send a bill. Now, if they had more information about customer consumption patterns there could be more segmented offers. With smart meter data, you will have more information from which to better understand what the consumer wants, and then build revenue generating services around that.