Not long ago, the decision to pursue an automated meter reading (AMR) project was straightforward to describe and quantify. The business case was essentially one of justifying the cost based on the potential labor savings (the classic “feet off the street” argument), and the limited technologies available were, for the most part, one-way in nature, with data flowing … [Read more...]

For the first 50 years following the passage of the Depression-era Public Utilities Holding Company Act, governmental regulation of the electric utility industry largely restricted investments in electric generating facilities to highly regulated utilities.[1] But beginning with the enactment of the Public Utilities Regulatory Policies Act of 1978 (PURPA), various … [Read more...]

Since the enactment of the National Energy Policy Act of 1992, there have been approximately 90 announced mergers between, or acquisitions of, publicly traded gas and/or electric utility companies. This consolidation activity has reduced the number of independent, publicly traded utility companies during the past decade from approximately 160 to 100 (pro forma for … [Read more...]

Who would have predicted that significant help in managing operational risks would come from such an unlikely source: Section 404 of the Sarbanes-Oxley Act? But, by voluntarily extending the Sarbanes-Oxley model by stretching management’s study and evaluation of controls beyond financial reporting and control to operational reporting and control, forwardthinking … [Read more...]

The term asset management has taken center stage for most utility transmission and distribution, primarily because of cost pressures resulting from limited capital and O&M funds, and customer/regulatory pressure to improve network reliability. While definitions may vary, asset management is commonly characterized as maintaining the “health” and “wealth” of the … [Read more...]

Utility bad debt is increasing year-on-year according to market research group Chartwell in its 2004 report, Credit and Collections in the Utility Industry. Chartwell estimates that more than $1.7 billion in revenue was written off by North American utilities in 2003, an average of $8.50 uncollected per customer. Bad debt ratios for individual utilities can vary … [Read more...]

Most utilities view their interactions with customers – mainly monthly billing and payment – as highly routine, with neither party giving a second thought to the value at stake in the relationship. Deregulation and new service offerings increased the opportunities for utilities to enhance their performance by determining customer valuations and using them for … [Read more...]

Selection bias can be defined as “a nonrandom participation in a program offer leading to damaging financial results.” It can affect the profitability of any product line where a group of consumers is offered products or services with varying profitability among the customers. Selection bias may occur when consumers have insight into the relative desirability of … [Read more...]

Organizations today are challenged with simultaneously improving performance and lowering costs. Many are discovering that the key lies in “reinventing service” by adopting a service delivery management (SDM) strategy, which enables optimization and effective management of customers, assets and workforce. By focusing on operational business flows across … [Read more...]

The embryonic field of nanotechnology, which has been receiving much attention of late, aspires to the control of matter at molecular and near-molecular scales, in emulation of the capabilities of biosystems. Element separation technologies are both an obvious early application of nanotechnology and an obvious motivator for its funding, as high-value economic … [Read more...]

The production of electricity and gas, the primary sources of revenue for most utilities, requires a wide variety of assets. Most of these assets are mechanical or electrical equipment – pumps, generators, transformers, regulator valves, etc. – that have an expected service time before degraded function or failure occurs. The potential financial losses due to a … [Read more...]

Pick up any current periodical – from CIO magazine to Fortune to BusinessWeek – and you only have to skim the table of contents to find articles titled “Getting the Most Out of Your IT Dollars” or “How to Improve the ROI on IT Projects.” Furthermore, the literature is full of disappointing statistics, such as between 60 and 80 percent of all IT or business … [Read more...]

Poor financial performance in 2001-2003 has led utilities to re-examine their management approach. Utilities that are making it out of the slump have implemented new management techniques such as Six Sigma, balanced scorecard and centers of excellence; and others have adopted business process outsourcing (BPO) as part of their strategy. These companies have also … [Read more...]