Fortnightly
The ULTRA Award Fortnightly and IBM Honor Infotech Leaders FP&L is first with Internet solution; LG&E subsidiary takes second with real-time energy tracking service
November 01, 1998
CUSTOMER SERVICE LINKED THE FIVE FINALISTS OF THE 1998 ULTRA competition, with all addressing, and improving, some aspect of serving end users.
The contest winner, Florida Power & Light Co., combined old hardware with new software and other innovations - such as using the Internet - to address a problem that plagues many utilities: how to cut the number of just-paid delinquent customers who call for power reconnects.
Second-place winner LG&E Retail Access Services, a subsidiary of LG&E Energy Corp., faced a new problem posed by deregulated markets: providing highly efficient management and electronic commerce capabilities demanded by energy service providers and industrial customers. LG&E RAS developed real-time consumption-measuring equipment for energy requirements forecasting, electronic billing and site-specific load management.
Sponsored by Public Utilities Fortnightly and IBM, the ULTRA award recognizes energy companies that develop the most innovative applications for information technology. Judging focused on how the solution addresses a corporate need, is unique, has quantifiable results, offers productivity savings, is cost-effective, integrates with existing solutions, and is flexible to adapt to growth.
First Place: FP&L's OPAL
As with many complex technological solutions, Florida Power & Light first began with a straightforward problem. Each year, FP&L's Customer Care Center receives more than 800,000 calls from customers who have made in-person payments at agent locations - kiosks at bus stations, check cashing stores, even jewelry stores and pawn shops. These outsourcers recently replaced the utility's 30 district offices, which were closed to cut costs.
"The people who tend to use the in-person payments are people from a lower economic strata who are more likely to be disconnected [from electric service] and who are more likely not to have checking accounts," says Steve Reed, FP&L technical project manager. "So if they don't have checking accounts, they don't feel comfortable mailing a payment and we ask them not to mail cash."
FP&L sends out 10,000 final disconnection notices to customers per day; some 420,000 customers are actually disconnected each year. FP&L logs 340,000 reconnect orders annually. The utility counts 3.6 million customers and processes 160,000 payments daily.
Research shows, however, that half the 26,000 payments made in person each day are made by good payers, Reed says. "It's convenient to them. They like the routine of dropping the payment off. They like the idea of not using a postage stamp. We've tried our best to discourage good-paying customers from using this service because as a regulated utility, we pass on costs to all customers."
The utility's preferred method of payment is electronic funds transfer, automatic debit. Its second favorite is through a service called CheckFree, made over the World Wide Web.
But this project's goal was to reduce the costs related to in-person payment - the most expensive way to pay an FP&L bill.
"We couldn't do too much about the transaction costs because that's a fee paid to the payment agent," Reed says. "But we could handle some of the associated costs. It turns out about half the customers who use the payment agents ¼ are delinquent."
Under the old system, the utility had no way of immediately knowing that a customer made a payment, and therefore could not quickly turn on power. The old equipment printed out a receipt. By reciting "a magic number" on the receipt to a care center operator over the phone, the center was assured the customer had made a payment and then could order a power reconnect.
Ending these phone calls was the business benefit of this project, Reed says.
A 40-member team went to work on the problem in Spring 1997, led by Reed, Theresa Quintero, the project manager on the business side, and Karen Oei, another technical leader responsible for the project's Internet component.
By fall of 1997, there was a pilot, with 12 payment agents on line. By February 1998, 160 agents working at 140 locations were using the OPAL - Online Payment Agent Locations - system.
Results came fast. Because the system automatically posts the payments to the utility's mainframe and quickly dispatches field agents to turn on power, there were 184,000 fewer calls to the customer care center by July, generating a savings of $297,000. The new system allowed the utility to drop 12 part-time, on-peak customer service reps. By August the utility logged 4,600 fewer returned checks.
Besides the savings from a decreased call volume, the project has meant a $650,000 savings from discontinued use of a third-party vendor system. And a change in the design of an original plan, partly to accommodate the Internet technology, meant FP&L saved an additional $1 million.
"Never before in the history of business computer system projects at FP&L has this many innovative, leading-edge technologies been implemented by so few project developers in such a short span of time, and with a fast, two-year payback," Reed says. "In many projects, the technical risk is [due to] one or two factors. In this project, we had probably 12 things ¼ to overcome.
"I'm thrilled to have received the recognition ¼ so many people have made contributions."
What's unique about OPAL is that it uses the Internet for payment transactions. It also relies on older computers, much cheaper than top-line technology. The agents' PCs are recycled from ongoing upgrades at the utility. The software is a custom application written by FP&L. The system uses a "thin client" application, meaning that there's not much in the way of business logic on the user's $400 486 workstation. The workstation is upgraded with 32 megabytes of RAM to run Windows NT. A Raptor firewall protects the utility's server from the Internet. In fact, it is because the business logic is upstream that FP&L can use 486s. The utility spent less than $6,000 per workstation, with scanners and printers being the most expensive outlays. Operating costs are limited to the cost of a dedicated phone line and $15-$25 a month for Internet access.
Runner-Up: LG&E RAS
LG&E Retail Access Services, the second-place winner, nominated by its utility parent company LG&E Energy Corp., developed its RAS system in response to energy service providers and to commercial and industrial customers seeking efficient ways to manage energy and electronic commerce. As a result, RAS now offers solid-state meters, a sophisticated telecommunications network and a customer information system that enables energy service providers and industrial clients to monitor electric consumption on a near real-time schedule.
RAS also acts as a clearinghouse to track transaction details to ensure payments are accurately assessed and paid on time.
Christopher Hawkins, company general manager, says energy savings for customers using the system have ranged from 5 to 20 percent.
"One of the great mysteries that retail consumers of electric energy find themselves facing ¼ especially in the industrial-commercial realm, is to have a detailed insight behind the numbers that are often presented to them by their local utility," he says. "Typically their only interaction with the utility is ¼ if the energy stops flowing for some reason [and] ¼ when they receive a bill.
"There's typically no detail, no insight, nothing that can be used on the part of the retail consumer to better understand, and really control, how they consume the energy so they can better orient their business processes ¼ in a way that allows them to either reduce their costs or ¼ direct their energy usage.
"[RAS] changes it dramatically," Hawkins says. "Because what we have done, at the core of our business, is 'architected' ourselves around what we think customers demand in today's world and that's real time information."
The multimillion dollar project started in early 1997 with a contract to provide back office services to allow New Energy Ventures L.L.C. to compete nationally as an ESP. With the California market initially set to open Jan. 1, 1998, the development team had just seven months to put the necessary systems in place. (It later gained three months when the market's opening date was moved to April 1.)
The team partnered with Price Waterhouse on the customer information service component and customized PW Service 2000 software for customer information and billing services.
The team soon decided that the presentation of the bill and the payment methods would be made via the Internet. It contracted with Per Se Technologies to develop this application. Internet security was a major concern. With consulting help from The Meta Group, RAS installed firewalls, secure socket layers and digital certificates.
Rather than hire and train meter installers, LG&E partnered with Schlumberger and selected the Schlumberger Vectron meter for the project.
Capturing the consumption data from the meter needed to be done electronically and remotely to keep labor expenses down, so a partnership between RAS, Schlumberger and MCI provided a proprietary solution. While most remote meter-reading involves dialing the meter via modem, the RAS solution allows the meter to call in and deposit data. This solution eliminated the need to place servers and other network components throughout the service area.
RAS also contracted with Rapid Clip Neural Systems to accurately forecast load scheduling and minimize balances. The forecast accuracy is averaging about 2 percent. Industry norm is 5-7 percent. Forecasts are produced each morning showing an hourly forecast for each of the next 10 days. Hourly forecasts also show an updated forecast for the remainder of that day and the following day.
Scheduling software purchased from Unified Inc. runs on a client server platform using Windows NT and Oracle. Day-ahead schedules are submitted electronically to the independent system operator each morning and then tweaked throughout the day based on updated forecasts.
RAS runs on a mainframe platform using MVS, COBOL II and DB2. Enhancements include storing and processing hourly consumption data; bill calculations based on hourly pricing as opposed to tariff rates; three bill mechanisms; bills produced on selectable calendar month cycles; and summary bills.
LG&E believes it is the only company that can provide full-cycle services in California - from meter installation, through usage collection, billing, scheduling and settlement.
Three Honorable Mentions
Receiving honorable mentions were Boston Gas Co., Empire District Electric Co., and The Southern Company.
Boston Gas was recognized for its Field Work Management System, a component-based architecture for distribution resource management. No single solution met the utility's requirements, so it developed a hybrid system to include Project Software Development Corp.'s Maximo Work Management System, a compatible unit estimating system developed by IBM, and various customizations.
The solution was designed to track the status and cost of all construction and maintenance work - about 30,000 jobs annually. It also enabled continual productivity improvements in operations. Some results of the new system: Field coordinators were able to schedule more work crews and the company was able to eliminate geographic regions while also reducing divisions and construction regions.
A low-cost customer information system won mention for Empire District Electric Co. Its Centerion system manages accounts, premises, products and services. One of Centurion's distinguishing characteristics was its innovative use of a client/server architecture using Java and Internet technologies. The system was built on a n-tier client/server architecture that can be ported to various hardware platforms or relational databases. Using Centurion, Empire claims a customer information system can be created in matter of weeks or months by a small team, after a business model is defined. Centurion was developed by six employees working part time over two years. The small investment yielded advanced CIS that helped the utility adapt to a deregulated environment.
Another customer service system, designed by The Southern Co., was singled out by ULTRA judges for honorable mention. The project involved hundreds of people, from six subsidiaries, and Andersen Consulting. The project reduced operating costs and provided more customer-focused service. One of the largest hurdles was the 10 legacy customer accounting and billing systems developed in the 1960s and used by 5,000 reps in 370 locations. The new system needed to process 45 million payments annually. Hundreds of business processes were standardized and new software was implemented. A client-server application, CSS software is deployed to the workstations using Microsoft SMS. Windows NT was used along with CICS DB2 and UNIX gateways. The technical architecture of Southern's CSS allows it to extend customer service to the Internet in the near future.
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