The deregulation in the gas and electricity markets is gradually resulting in horizontal consolidation from a traditionally vertically integrated organisational model of different corporations in the region.
Figure 1 – Industry operator interactions
The RGMA (Review of Gas Metering Arrangements) was a significant step towards deregulation. This project’s go-live on 12th July 2004 has opened up gas metering services in the UK to competition by separating metering processes from gas distribution. This event, though limited to the gas industry, could have a far-reaching impact on the entire energy and utilities metering business. Breaking down and separating each link in the chain of source to end consumer has its own advantages; at the same time it poses a number of challenges to various business operators within this chain.
Figure 2 – Common organisation structure
Deregulation in general, and industry separation in particular, is redefining the collection, aggregation and processing of data requirements of different organisations. All operators within this industry are required to interact with the other operators, each with its own systems. (See Figure 1)
All these operators are managing their data management infrastructure and other information system overheads.
It is interesting to note that the various constituents making up the metering industry have data requirements around the same metering assets. The data, surrounding processes and overheads are repeated by all the players – suppliers, asset owners, asset managers and asset services providers.
If we combine the common threads throughout the entire systems model, and if all these systems were to be combined, it would make sense for a common organisation to provide these data services to all the metering industry players. The structure could take the shape shown in Figure 2.
This model is slightly different from the conventional application service provider (ASP) model, in so far as it relies on commonality of data and services used, whereas the ASP model relies on commonality of application shared.
Such an ‘on tap’ shared information systems service can have many advantages, some of which are:
- . Reduced Cost: Since the data generation and maintenance is shared by all, it will obviously result in reduced costs. Assuming that the cost of establishing, maintaining and supporting services overheads constitute 8 to 10% of the overall operating costs, the potential of having such a shared information system is great. Secondly the data centre and related service-providing organisation can be established wherever it is most cost effective.
- Simplified exchange of data: Since the data will not pass between different systems, there will be no need for an elaborate data interchange mechanism.
- Reduced redundancy of data: All the industry players are required to maintain a similar common set of data. When a shared system holds this common data and supporting services, there is no need for duplication of data; neither is
there any room for conflicts between different systems, nor a need for the overheads involved in resolving such conflicts.
- Uniformity of information systems efficiency: Since all the competitors get the same quality and efficiency of data services, their information systems will no longer be a differentiator of their service. They can then focus on their core competence and improve efficiency in their core business processes, allowing customers to obtain the best service.
One can list many other obvious advantages of such a mechanism. For example, it will substantially cut down duplication of information systems and provide a common, standard platform for all industry players to offer optimum customer services. This central body can either be formed by a consortium of all the industry players, or the government regulator can sponsor it. There are, however, some drawbacks that need to be overcome before this becomes an industry norm:
- Information separation and security: With competition, data
security and reasonable separation of data becomes mandatory. In addition to clearance by the government regulator, there will be a need for very well defined codes for what data will be entered by whom, and who will extract what data from such a common system.
- Long gestation period: From the point where all industry players arrive at a common understanding and appreciate the cost and other advantages of such a system to full implementation can be a long process. This will increase the time it takes to realise a return on investment.