B.C. Hydro's large industrial accounts, or transmission-voltage customers, represent $500 million in annual revenues. That's more than 20 per cent of the company's domestic revenues. Among these industrial customers are lumber, pulp and paper mills, mining companies and a number of large oil and gas and petrochemical companies.
Meeting the Challenge of Producing Timely, Accurate Bills
Producing timely, accurate bills to these varied customers was a continuing challenge under the utility's former billing system. B.C. Hydro's complex rate structure, with numerous transactions involved within each rate class, created a lot of stress for billing analysts and placed significant demands on the old billing system.
"Before the utility installed its Enhanced Billing System (EBS), LODESTAR's Billing Expertª we had no interfaces; everything was done manually," according to David De Yagher, EBS Project Manager, responsible for transmission customer billing. His team of analysts relied on FoxPro and Microsoft Word, as well as a lot of manual time, to issue 131 separate bills each month. This archaic system also kept separate customer data from several departments, including load forecasting, sales and marketing, and accounting. Revenue and consumption data were manually typed into another system for this purpose, but the data entry often took weeks to complete.
In November 1998, the utility began an exhaustive search for a flexible, automated solution, starting with a business process review and followed by RFPs sent to a long list of vendors. LODESTAR's proposal met the criteria and the utility chose that company's BillingExpert software because of its ease in changing rates, writing reports and complete data examination.
"We have a unique set of transmission customers in that there may be only a handful of tariffs but there are a couple of dozen events that could happen within a month that all of a sudden make billing very complicated and complex. LODESTAR had already worked with these types of customers in the regulated and deregulated markets. They had experience and had great billing software to accommodate our needs," said Mr. De Yagher, who came in as project manager after the capital authorization request was approved.
Project cost is usually a factor in any sizable project and it is customary at B.C. Hydro to weigh costs against various criteria.
"We don't necessarily look at payback. We look at shareholder value," Mr. De Yagher said, adding: "We look at different types of non-financial returns and financial returns. There's an array of variables that are developed in this SVA model. Financial is one of the criteria but there are a lot of other examples. We had business analysts develop this SVA model for our business case. The systems integration plan called for minimal interfaces, starting with accounting and sales and marketing.
Implementation of the first phase lasted from April to December of 1999. The current phase, now almost fully implemented, involves integration with remaining internal stakeholders including load forecasting and key account managers."
Coordinating Vendor Participation
Perhaps the biggest challenge of the project was coordinating vendor participation. B.C. Hydro is located on the west coast while LODESTAR is located in Peabody, Mass. LODESTAR's consultant, American Management Systems (AMS), is based in Fairfax, Va. The third major vendor, M&I Data Services, is based in Milwaukee. M&I provided the printing software, custom statement formatter called CSF Open, a product we were already using for the residential bills," Mr. De Yagher added.
The long-distance relationships involved travel time, travel costs and "considerable coordination just to get the consultants out here on site," he said, adding that the process would have been improved by bringing consultants out for longer work sessions.
"Most of the processes were already in place before the implementation, but Y2K constraints challenged the implementation team and tightened the time frame. Nearing completion of the installation, the system is performing well and the bulk of the billing problem has been resolved.
"Our billing analysts are able to go into the program themselves and make changes "on the fly" without having to get a programmer to come in, sit down and make the changes," Mr. De Yagher said.
"It's a massive change. Now our billing analysts are able to look at their rate codes themselves, make the changes or develop a rate themselves, modify accounts, do whatever [they need to do] in the billing system, rather than having to rely strictly on programmers." Training on the new system consisted of hands-on experience and learning by example.
Hand in hand with the new billing system is a concurrent but separate project using BillingExpert as a source to feed a customer-data warehouse system, something the utility has never had before. The utility also has never had the ability to offer time-of-use pricing. It now is engaged in two such pilots, one for industrial and one for commercial customers (limited to 500 participants).
"We wanted to offer a different pricing structure," he said, "to give them an option to use different rates that may be beneficial both to B.C. Hydro and its commercial customers. By switching load, we're able to curtail during high load and thus offer discounted rates. The pilots will run for one year. We took the commercial customers off CIS and put them on Billing Expert to bill them on time-of-use, because our current CIS wasn't capable of billing time-of-use without significant modification."
In addition to using the system for time-of-use functions, B.C. Hydro will soon be using LODESTAR's LodeMap with Bill Calculation, a desktop-software tool that will assist key account managers in calculating "what if" scenarios involving alternate-load and pricing options.
Other Groups at B.C. Hydro Will Use System
Other groups within B.C. Hydro have begun looking into using the billing software. For example, grid operations (within the transmission group), has already implemented BillingExpert as a component in a major project. Although it is premature to name other potential users of BillingExpert, "we're looking," Mr. De Yagher said.
"There are a lot of different groups at B.C. Hydro that do similar activities and we want to have a standard platform. In reviewing his own project, he commented that the rate-structure issue at B.C. Hydro was the cause of some delays in the process.
"We have a very complex rate structure," he said, noting that rate exceptions cause confusion to anyone unfamiliar with them. "When you throw in the variables, like ad hoc requests, curtailment and the typical large-utility anomalies, you find that it's no longer a simple rate structure. The published tariffs don't really tell the whole picture. It is very important that the software vendor have a very clear understanding of B.C. Hydro's business rules.
"A small portion that was misunderstood -- perhaps 5 per cent -- was responsible for holding up the process during the last months of the project, costing both the vendor and B.C. Hydro valuable time.
"We probably should have gone through each of the exceptions in a more detailed manner. We've lived with these rates, and it is difficult for an external party to try to understand them in a short time. We should have sat down and gone through each of the business rules weeks in advance of having the programmer come to the site."
"All the back-room activity has passed unnoticed by the customers, making it virtually a seamless transition. "We had no calls saying, "It looks different....what's going on?"
"While the look of the bill has not changed, we have that option available to us," he said, adding that most customers are also unaware that their data is now stored in a single database.
"There's a repository with all the data, whereas before there was a lot of manual entry. We have lots of potential to create a variety of different pictures on their invoices. We'll be looking at that -- as we'll be looking at e-business in our next phase. Right now, you could think of our system as being on a local-area network [LAN]. At the end of the day, we would like to deliver e-business over the Internet -- all successful utilities will have to deliver this type of information over the Internet. Our next task will be to bring this system from a LAN, over a wide-area network, to a firewall and out to the consumers on the internet. That's where we want to be in the future," he concluded.
Three Technology-Oriented Architectures for B.C. Hydro
"B.C. Hydro is very unique, very sophisticated and very different from anything we have seen in the U.S., primarily because they are very hydro electric-oriented, and yet our infrastructure was able to support that orientation," according to Steve Doroff, Senior VP of Product Development for LODESTAR Corporation.
"We have assisted B.C. Hydro with three technology-oriented architectures:
The first is that our software is 'rules based', so that any business rules can be easily configured for our environment. That means that one company's rules can be different from another company's rules and still work in our environment even though the companies do very different things.
The second technology component that makes this work is that we have something called a 'meta data layer' which means that we are able to add tables and columns of information for one company that are very different from another company and it doesn't impact the application. Right now, B.C.Hydro is regulated but in the future if the utility decides to spin off an unregulated branch, when they do that, they're going to have information associated with contracts and deals so that sales people in the new company will be able to use the exact same application after the meta data changes are implemented.
"The third architecture item that our software offers is called a 'data conscious application'.
"What all these software architectures means is that the product is flexible and adaptive to utility functions and changes in the future.
"We've also been working with B.C. Hydro on the transmission side of their usiness. Essentially, what's going to happen is that they are going to move to a less controlled area orientation to a regional transmission operation. Our software will be able to support B.C. Hydro as the operator of a regional transmission operation.
"Where we also support B.C. Hydro in where they are going with the vision of our company is that we are starting to move away from a product orientation. We don't just sell a pricing and billing solution. We have moved to a more holistic view of our business."
What is the experience of utilities as they face dramatic change, both marketwise and internal?
"Utilities are approaching new software billing technology from a different position than in the past. In the past, they knew their business better than anyone else and they would ask for a specific software product because they wanted to change their billing system.
"Now what is happening is that utilities are moving to an environment where deregulation and flexible rate schemes are new to many utilities. British Columbia is different from Alberta and both are different from Ontario, etc., and so there is a learning curve everywhere you go", Doroff said.
Converting Billing Systems
What are the challenges utilities are facing when they are faced with converting their billing systems from old style to new style software?
"First, the most significant challenge is time frame. Utilities who want to change over have to mobilize a whole bunch of people to first understand what the new environment means and to identify the impact on their existing system. If a utility attempts to build everything from scratch, chances are they are going to have problems. The challenge is to stay on top of the of the latest software and pick solutions that enable them to implement change quickly and easily. If you wait, the changes in the marketplace will leave you behind."
"Canada and the United States are slightly different situations and Canada is moving a little more slowly than the U.S. to deregulation, and that difference is to Canada's advantage because the software will be better. The ability to enable the market for success will be further along than it is now in the U.S. Is change in the utility market creating LODESTAR products or is it the other way around?
"I think in the initial period, we were perhaps responding to change in the market. Right now, we are starting to get ahead of the wave of change and are able to offer products that are helping utilities to switch over their billing systems. We have a lot more experience now.
"We are starting to lead U.S. utilities and in Canada we will have solutions that will help them enable the marketplace faster. We're not really a driver in the market, as such, we're more like a facilitator.", Doroff concluded. ET