As the converging forces of deregulation and the Internet are opening competition in the energy, market and customers can begin to negotiate prices and other requirements.
Energy providers are responding in a number of ways, including the development of new and customised billing plans. To manage these complex plans day-to-day, suppliers need IT solutions that allow them to reconfigure their plans without reprogramming their computers.
Take Houston-based Reliant Energy, for example. Recently, it introduced customised billing plans based on “interruptible tariffs” for its large commercial and industrial (C&I) customers.
Interruptible tariffs: Both an opportunity and challenge
Interruptible tariffs allow customers to pay less for electricity if they are willing to take a greater risk that their power will be reduced in a power shortage.
The tariffs also represent a way to ration power, in effect creating a priority list of which customers will be cut back (and by how much). This way, residential and C&I customers that opt to always pay the base rate always receive top priority service.
In addition, customers with huge power needs – particularly those able to plan and manage their power usage – can benefit by paying a discounted rate during periods when their electricity needs are less critical.
Reliant is the eighth largest electricity supplier in the country and has been operating Houston Light & Power, the previously regulated electric utility in Houston, for more than 100 years. The company has been offering customised plans based on interruptible tariffs for decades, accounting for more than 40% of the company’s total electric power revenue. Today, more than 2,500 customers participate.
This figure represents almost half the company’s revenue as well as 2,500 individual plans that have to be customised, administered and ultimately changed whenever the Texas Public Utility Commission (PUC) institutes a new set of tariffs – a process that could take up to a year.
Making the change
After an extensive evaluation of billing solutions, Reliant decided to scrap its existing internally developed billing system – a mainframe-based Cobol application – and replace it with LODESTAR Corporation’s solution, BillingExpert.
Now, Reliant can make changes to customer billing plans faster and more easily. These changes can be made by Reliant’s business planning staff instead of IT specialists, because the software no longer has to be rewritten.
Reliant strongly believes it is in a much better competitive position this year. With the move to deregulation Reliant and other electric companies in Texas are beginning to compete for customers, not only on the basis of price, but also on their willingness and ability to provide customised billing plans.
“We’re saying that switching out a lot of old stagnant software puts us in a much more flexible environment,” said James Reece, IT program manager for Reliant Energy. “With market deregulation, Reliant can move quicker and put changes into place much more easily.”
Reece is confident that Reliant will do well in the new competitive environment.
“If we are going to have an advantage, it will be a technological advantage,” he said.