Becoming Smart Together: The Operational Impacts of Smart Energy
There are many impacts upon the Energy Supplier following the introduction of smart metering and the associated energy efficiency options across their operations and the lifecycle of each customer. The diagram below outlines some of the key operational changes that Energy Suppliers will have to face once smart metering is rolled out.
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For more information hover over any box in the diagram or click on the links below.
To explore some of the sample impacts further across the customer lifecycle, please see below:
Customer Win
A common complaint from suppliers and customers alike, is the time taken to “win” a customer due to the complexity of the quoting, contracting and market messaging process.
It is possible to streamline these core business processes and develop pre-contracts that can be deployed using direct market pricing links and rules, to allow authorisation and documentation to be automatically deployed.
In the future, following the rollout of smart metering, the customer win process will become streamlined as there will be separation of Supplier and Metering agents in the registration process.
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Site Data
As consumers become more aware of their own energy consumption and how their site infrastructure influences this, suppliers will be able to collate this data to create site specific profiles.
This will allow the supplier to provide site specific quotes, extremely accurate estimates and allow them to identify unusual patterns of consumption. It will also allow direct communication with customers - giving pro-active energy advice to reduce usage spikes and in turn reduce settlement imbalance.
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Tariffs
With new metering systems and the rollout of smart meters, each domestic and SME customer will show very different usage patterns. By using new CRM systems it will be possible to construct customer profiles based on a number of factors including:
- customer age;
- number of consumers on site;
- employment profile;
- use of appliances;
- demographic;
- location.
This information will allow suppliers to provide a whole range innovative and competitive tariff options to different groups of customers who fit a particular profile, in order to manage consumption and demand more effectively. Tariff updates can be performed remotely to update customer meters at a set day and time.
This allows accurate price changing and so reducing price exposure and risk. Ultimately, this will lead to a reduction in energy consumption as customers take advantage of the best available tariffs.
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Meter Data
Following the rollout of smart metering, it will become possible to monitor site consumption and map it onto customer specific profiles. Where irregularities occur it will be possible to react quickly. This will reduce the amount of illegal abstraction and reduce the effort involved in CoT processing.
Increased volumes of reads can be collated to create half hourly meter data, which will allow settlements to be based on actual readings, rather than estimates, and in turn reduce the suppliers imbalance costs.
Smart metering will also allow true offsetting for micro generation against consumed energy. The customer will be able to see exactly how much energy they have generated and in real terms how much they have potentially saved, this can then be easily offset against their consumption charges. It is also plausible that the meter will automatically apply a credit if a pre-payment model was introduced.
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Agent Actions
As the market evolves, agents will be required to take on enhanced roles to ensure that the new worlds of smart metering and AMR are working to their full potential.
- Meter Operators: Call outs to reprogram meters will no longer be required;
- Data retrievers: No longer needed to read meters as readings will be sent automatically to the Supplier and Data Collector;
- Data Collector: There will be a significant increase in the amount of meter reading data however data validation should become easier;
- Data Aggregators: There will be a need to move away from industry standard EAC's towards measuring everything half hourly, or by having a greater range of EAC's for the domestic and SME markets.
The future roles for all agents will be based around managing data and ensuring that the industry infrastructure is robust. This in turn will change the Supplier/Agent relationship as the Supplier will have more direct access to the meter and to read data.
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Settlement & Balancing
As consumption and meter read data can be accessed at any time, along with more accurate customer profiling, settlement in its current form will no longer be required. Depending on the meter and the market based tariff it should be possible to align the settlement position.
As readings can be supplied at a half hourly level, estimations in settlements will be reduced along with the imbalance amounts to a supplier. The supplier will also have access to the exact meter data and in turn will be able to validate the settlement charges with ease.
With greater exposure of traded, billed and settlement volumes to a half hourly level, the need for estimated settlement charges will be reduced and the imbalance costs will reduce. Data warehouses and full data reporting will allow a supplier to ensure the charges that are received are accurate and correct - which will reduce their operational costs.
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Billing
The current “Pre Payment” offering in the market is likely to change to a “Pay As You Go” offering very similar to the methods used in the mobile phone market.
Following the rollout of smart meters it will be easier for customers to manage their supply, and make payments directly to their supplier (via internet, phone, TV set-top box etc), reducing suppliers’ costs and late customer payments.
Smart metering and AMR will also reduce the amount of estimated invoices that are produced, giving the consumer the ability to know exactly what their charge will be prior to receiving an official bill. There will also be a reduction in the build up of historic debt, and a reduction in customer disputes over billing queries.
The supplier will also be able to make tariff changes in real time directly to the meter, and in turn change the meter configuration. This could be done to help the customer reduce consumption charges or to pass on price changes with ease, reducing price exposure and market risks.
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Change of Tenancy
Following the rollout of smart metering, it will become possible to monitor site consumption and map it onto customer specific profiles. Where irregularities occur it will be possible to react quickly. This will reduce the amount of illegal abstraction and reduce the effort involved in Change of Tenancy (CoT) processing.
Giving suppliers the ability to remotely de-energise a meter will ensure that any new customer will need to contact the supplier to gain supply; this in turn will improve the change of supply process at the time of change of tenancy.
If a pre-paid smart meter is installed there may be no need for suppliers to record customer details. This almost eliminates the suppliers need to record information about a specific customer, instead they will simply record data about a particular site - releasing information to specific customers for their periods of usage.
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Customer Loss
As the market evolves, customers will be more likely to switch supply if their current supplier is unable to provide smart metering and the associated value added services.
Customer retention will also be easier following the rollout of smart metering as one of the main reasons for customer dissatisfaction (inaccurate billing) will be reduced. Suppliers will also be able to offer value added services, such as energy reduction advice, to improve customer satisfaction.
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Day-to-Day Activities
Historically, billing, collating reads, ad hoc site visits and general customer queries have been the day-to-day activities undertaken by participants in the market.
In the future all these activities will change as each customer will have a relationship with their smart meter which will give them all the information they need about current consumption, meter reads and charges etc.
The main contact with customers will therefore be proactive: managing customer supply, helping them reduce consumption and other general energy advice.
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To explore Utilisoft’s model on the operational impacts of smart energy and our value in enabling operational change, please contact Phil Roberts on +44(0)7825 126140.
To explore bringing your value together with Utilisoft’s to help clients achieve operational excellence now and into the future on smart metering please contact Mark Coyle on +44(0)7876 788695.
For more information about Utilisoft's value in the rollout of Smart Metering click here.