Complexity in Billing Systems is About to Get Worse
The traditional CIS systems in the electricity and natural gas industries were never built to handle the complexities of the new technologies and evolving business models. As a result, in many utilities, complex billing is handled by dedicated, “special” billing departments–which is usually a busy team of people with hundreds of Excel spreadsheets. There are significant risks involved in this approach:
- Excel spreadsheets and other similar tools have very few audit controls built into them and therefore are highly error-prone and non-standard from one user to another.
- The growth in the number of staff required is directly proportional to the number of accounts, which makes the operation non-scalable.
- Significant expertise is required in crafting each bill, which in the world of aging workforce exacerbates the problem of recruiting and training staff.
- The time involved in the manual processing, and potential room for error affects the cash flow of the entire business dramatically.
In the past complex billing was confined to large commercial and industrial customers–typically 1% to 2% of the customer base. However, recent technological advances and regulatory policies have resulted in expanding the set of customers who are subject to more and more complex rates and tariffs. The current initiatives from the federal and state governments towards decarbonization are accelerating this process. These new candidates for “special billing” include:
- Distributed Energy Resources
- Roof-top solar with net metering
- Community solar with multiple formulae for compensation (e.g. net metering as in Minnesota and Colorado, partial net metering (Massachusetts), and Value of Distributed Energy Resources (VDER) in New York, etc.)
- C&I PPAs on utility-grade (and often owned) solar and wind farms. These are very much like the block-and-index with full pass-through products we are familiar with in the deregulated world.
- Event-based pricing
- Critical peak surcharges, peak time rebates, and voluntary participation in demand response
- Staggered peak hours especially in areas with large solar installations and electric vehicles
- Dedicated storage (batteries) and opportunistic storage (EVs)
- Ancillary Service markets such as spinning reserves, regulation up and down
- Multiple eligible rates a customer can choose from
So, how do you solve the problem? There are some obvious solutions:
- Implement a new Billing & CIS system or make significant upgrades. Given the cost–anywhere from $60 to $110 per customer–it is probably not an option for most utilities.
- Make significant upgrades to the CIS system. While not as expensive as a CIS replacement, it still runs in the millions of dollars. Recent experience with several utilities around the country showed us that their plans for implementing new constructs, like community solar and distributed energy resources, are slated for production anywhere from 18 months to 2 years from now.
- The alternate solution is a distributed systems architecture: software systems that specialize in very specific tasks are integrated via enterprise service buses with the billing and CIS system. This has several benefits:
- Significantly lower cost. Deploying a few of them costs a fraction of the CIS replacement.
- Low risk. Since the new functionality is implemented outside of the core system, it can use newer technologies and limit the interaction thus minimizing the risk of “breaking things” and the need for extensive regression testing.
- This architecture has been implemented successfully in many areas, including customer service via social media platforms, customer preference management, outreach programs, online chatbots, etc. So, why not use a plug-in complex billing module?
The following shows a high-level diagram of a complex billing, plug-in solution:
The complex bill calculation engine has been very successfully deployed in several instances, and they can handle a large number of products and services, including non-commodity contracts.
This “plug-in” architecture offers a strategic and cost-effective tool to implement complex rates and tariffs with minimal disruption of the billing system, and minimal re-training for customer service representatives. The plug-in architecture also minimizes the need to build interfaces. Typical installations require only a handful of interfaces:
- Meter and usage data interface
- Interface with the CIS for contract/premise/rate data
- Interface for sending bill-ready line items to the CIS
All other interfaces–SCADA, GIS, Financial, Accounts Receivable, Accounts Payable, and credit and collection modules, to cite some examples–continue to function as before with the billing and CIS ecosystem. With the plug-in solution, we believe we can accomplish that in less than half the amount of time that upgrades and CIS replacement take.
For more information please contact:
(201) 320 8047