European utilities should increase cosr reduction efforts


Recent research has shown that European companies still have some way to go to reduce costs across metering, billing, payment and collections and the call centre before full market liberalisation takes place in 2007, according to Datamonitor, an information solutions provider. Datamonitor’s research reveals that current operational performance within residential supply suggests a cost to serve of 31.96 euros for suppliers with a customer base greater than 2.5 million, rising to 36.78 euros for a supplier with a customer
base of less than 500,000 accounts. The most sensitive key performance indicators affecting a reduction in operational supply costs were the introduction of AMR, labour costs, and the volume of bills sent out
by utilities. Findings regarding the latter were particularly interesting – to reduce cost to serve by just 10% would require a 67% reduction in total bills sent out by a large supplier.
The percentages for medium and small players are 66% and 60% respectively. The figure of 67% represents 25.8 million bills.
Datamonitor’s model is able to perform sensitivity analysis to determine which levers can reduce costs, and by how much.