Plugged In with Steve Hoffman: The Future of Metering
As energy industry players begin the transformation from regulated monopolies to competitive businesses, many are turning toward outsourcing to help meet the needs of a rapidly evolving business model. According to the META Group's Energy Information Strategies department, the industry has widely embraced outsourcing the design, construction, and maintenance of its infrastructure, while other services that are traditionally performed in-house such as customer relationship management are only beginning to be sent out-of-house. Cycle services linked to revenue (e.g., metering and billing) have been moderately outsourced, yet show promise for growth in the next few years.
Approaches to Unbundling
According to a recent article in Utility Automation magazine by Tim Eskew of Schlumberger Resource Management Services, a strong factor driving the trend toward increased cycle service outsourcing is the unbundling of meter functions from energy companies. In an effort to liberalize the market, some public utility commissions are requiring energy suppliers to decouple meter functions from in-house services. In California, metering was unbundled from distribution companies as a prerequisite to competition, and two new types of third-party service providers were defined. Meter service providers are responsible for meter and communications equipment installation and maintenance, while meter data management agents (MDMAs) collect and manage the data that is then sent to ESPs and distribution companies according to a predetermined schedule. This process is carefully regulated, and the third parties must endure a strict accreditation process.
An alternative method of unbundling allows the distribution network operator to maintain metering assets and collected data, but regulates the cost of sharing the information with ESPs.
The Transition to Unbundled Services
Some energy providers have stayed one step ahead of the PUC by outsourcing metering and other services. Through outsourcing their non-core functions, energy companies can streamline business strategies to optimize the core competency services they provide. Once issues of cost, data access, and customer relations are addressed, many energy companies have found outsourcing to be an option that often reduces overhead while increasing service quality. Energy providers can also expect newly formed meter and data management service providers to offer real-time and on-demand access to data as well as value-added services.
Some energy providers such as Georgia's Tri-County Electric Membership Corporation have found much success through outsourced metering. The organization employed a service bureau to collect data on 15,000 RF meters that were installed to decrease the amount of incorrect meter reads. Through use of a secure Internet site, Tri-County is able to inform the service bureau of which meters require reading. This information is accessed by technicians in the field, who take the measurements and send them back to the bureau for verification and validation. The data is then posted on Tri-County's Internet site for downloading to their billing system.
Since outsourcing this function, the organization has reduced incorrect reads from more than 200 per week to nearly zero. As a result of outsourcing, the organization was able to cut meter-reading costs by 75 percent. As a non-profit cooperative, the customers profited from the savings as well.
Steve Hoffman is President of Hoffman Publications, Inc., a California-based firm that specializes in writing for the energy industry. His column appears every Monday on ElectricNet.
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