Billing system changes topped the list of the most costly backroom operations function for utilities and suppliers preparing forcompetitive energy markets, according to a study by XENERGY Inc.Utilities report spending from $1.22 to $22 per customer, with oneutility reportedly spending up to $82 million, to make billingsystem changes to accommodate retail access.

Billing, while the most costly, also has the potential to wreakhavoc if not adequately addressed, the study says, noting that in anumber of cases, billing problems have led to lawsuits orbankruptcy. Consolidated Edison has had legal troubles resultingfrom billing problems, and Georgia gas marketer Peachtree NaturalGas attributed cash flow problems that led to its bankruptcy tobilling delays.

“Having the right systems in place is critical to the success orfailure of competition,” said Jill Feblowitz, XENERGY projectmanager for the study. “The study identifies specific approachestaken by utilities and suppliers in deregulating markets across thecountry. There’s a lot to learn from other utilities and suppliersthat have already gone through the learning curve. The report alsopoints the way for vendors’ entry and positioning in thesemarkets.”

In the deregulating energy industry, a growing outsourcingmarket has emerged as an alternative to handling costly back roomoperations in-house. Different business rules and requirements ineach state and uncertainty about retail activity make outsourcingmore attractive to suppliers, while cost and time are majormotivators for utilities, according to the study. Outsourcing isalso expected to play a role in the resource-intensive setup ofelectronic data interchange (EDI), the information system thatallows communication among utilities and their new tradingpartners, retail energy suppliers.

Except where customer switching rates are high, restructuringhas not yet significantly impacted call center activity. The studypredicts that another back room function – metering and meter datamanagement – will be affected as competitive metering unfolds andload profiling comes under close scrutiny.

Full results of the study are restricted to those who buysponsorships, which are still available. XENERGY is an energyconsulting, information technology and energy services firmheadquartered in Burlington, MA.

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