“The full requirements of customer care in a smart grid enabled world are still emerging and not yet fully known.  It’s not too difficult to realize that the dramatically increased flow of real-time data moving through a real time network will require something different than the old-model, batch-based CIS. At a minimum, time-of-use-pricing will require billing flexibility that isn’t present in systems designed to take a monthly meter read and convert it into a monthly bill. With increased customer choice of rating plans and customer need to view consumption and billing on a real-time basis manifests, billing and usage information will have to be provided essentially real-time.” C.D. Hobbs, 2011*

The years that have passed since C.D. wrote those words, many more technological advances have come into force.  

• The de-carbonization initiatives have pushed customers towards real-time monitoring and management to reduce energy usage – smart meters and analytics are creating smart buildings.
• Distributed generation is perhaps the fastest growing segment in the electricity industry.
• Intermittent energy sources such as solar and wind, storage and electric vehicles are at the same time increasing and decreasing the volatility, reliability and resilience of the national grid.

And we could go on.

The Challenge

The traditional CIS systems, simply stated, do not have the ability to handle either the quantity nor the complexity of rating and billing smart grid-based dynamic pricing. They have two major constraints:

1. Physical Scalability: Typically, a large utility system handles 15 million billing transactions per month. With the new requirement for near-real-time pricing, a small utility with one million metering points will demand pricing for 96 million transactions per day. This “data tsunami” is orders of magnitude higher than the performances achieved by today’s CIS systems.
2. Logical Scalability: Dynamic pricing and the requirements for near-real-time pricing signals to end-use consumers requires significantly more complex calculations and external data feeds (e.g. real-time 15-minute interval prices from ISOs). The current CIS systems have limited capability for handling these calculations which involve many different billing determinants. A utility with 10 million customers is likely to have about 100 rates, with perhaps 1,000 variations (called riders). The new smart grid initiatives call for hundreds of thousands of rate variations based on customer characteristics and the rates they choose (e.g. peak/ off-peak rates, critical peak pricing, critical peak load shedding or usage reduction based on each customer’s historical load etc.). Currently, the large commercial and industrial customers of utilities are billed by “special billing departments”, which sometimes consist of a significant number of billing analysts using spreadsheets such as Microsoft Excel, and the results are fed into the CIS system as a one-line final calculation. This is manageable when 3% of the customer base is subject to those rates – not when 97% are going to be!

Given these constraints, and the future reality of the complexity of billing coupled with the significant utilities are considering replacements of their CIS systems. There are significant challenges that are standing in the way of accomplishing this replacement:

1. Availability of such systems: Whilst many vendors have been promising smart-grid enabled CIS systems, they are yet to deliver one or even demonstrate one that has the desired levels of physical and logical scalability. We believe that the physical scalability is the easier of the two constraints to solve, since we can easily leverage the last 25 years of experience with large volume transactional systems such as telecom and wireless billing systems.  
2. Investment in dollars and time: A typical CIS replacement tends to be very expensive and takes two to three years to complete. Given the total cost of smart grid implementations, it is far from clear whether this is one more initiative the utility wants to take on – assuming of course that they can wait three years to send the bills for the smart meters.
3. Balance Sheet: Many utilities have implemented CIS systems in the last 10 years. The driving forces behind those new implementations were the Y2K problem as well as the electricity deregulation which placed new requirements and regulatory policies on the utilities. A significant amount of that investment is still being carried as assets on the balance sheet. Any decision to replace those systems will trigger large write-offs of those assets and most utilities have no appetite for that.

The Solution

Rather than replace the CIS, a system can be integrated into the existing systems to handle this complex billing.  Essentially, in our example Hansen’s Complex Billing Gateway becomes a pre-processor to the CIS system. The architecture is very straightforward:

1. The meter reads from MDM or similar software are fed into the Gateway and Hansen’s platform will price them, as often as required (near real-time).
2. The Gateway will then feed the priced transactions (near real-time) to a web server or customer-facing portal operated by the utility.  This will enable the user to see their bill as of the last hour (one of the requirements in the Smart Grid Initiative Grant (SGIG) proposals).
3. On a cyclic basis (e.g. once a month, based on the customer’s bill cycle) the Gateway will aggregate all such priced data and send them to the existing CIS system, which can then add on any line items (e.g. taxes) and send the bill to the customer for all subsequent customer care activities. Thanks to the deregulation rules, most CIS systems today are capable of receiving such “bill ready” charges from a third party via a standard interface called EDI 810.

The Hansen Complex Billing Gateway delivers the features that the traditional systems lack:

1. Online near-real-time pricing capability. By near-real-time, we mean that the system should completely price one meter read before the next one arrives from the same meter. Most of the smart meters currently installed are capable of measuring the usage in 15-minute intervals, and potentially communicate them immediately after the read is registered. Therefore, the Gateway has to be active 24/7, pricing transactions as they arrive. There are several challenges in accomplishing this:
   • The traditional batch-based systems are not geared to run this way and will require significant re-writes.
   • There is almost no downtime and therefore system maintenance has to be performed while the system is fully operational–something akin to maintaining race cars during the race without pit stops.
2. Distributed processing. The only reliable and cost-effective solution to massive scalability is distributed processing.  By that, we mean that multiple hardware installations price the meter reads independently, publish the results near-real time to customer-facing portals or in-home devices accessible over the web and transmit the data asynchronously to a central data center.
   • Hansen Billing Gateway can run on modest Wintel hardware, and therefore can be deployed out in the field, for instance in substations.
   • The Gateway can price the transactions, post them to the web portal near-real time, and transfer the rated values to the billing system asynchronously–thus avoiding massive bottlenecks in bandwidth and reliability.

The implementation cost of this solution is a fraction of the price of replacing a CIS (dependent on the number of customers and the number of rates and riders). This presents the utilities with a cost-effective solution, which can be implemented in a matter of months, without the need for replacing their CIS, thus avoiding the entire list of attendant problems described above.  

The Outcome

In implementing this system clients portrayed it as a lifeline, a heart bypass of sorts for an aging (yet experienced!) existing CIS system. One recent experience shows the impact of these systems:

These savings were the measurements made at the end of the first three months after the system went live, and the savings have improved as the users gain a higher level of familiarity with the system. The labor savings in the 95% range, combined with the cash flow impact of timely bills makes the ROI argument a no-brainer.

In summary, Hansen’s software brings you a solution which delivers proven high functionality–the system has been used by Fortune 100 companies for over 20 years–and cost efficiency–the implementation costing a fraction of a CIS replacement.

In the era of rapid technological and regulatory change, it is important to implement agile, flexible and adaptable systems that future proof your business continuity.

*This quote is from an article by C.D. Hobbs, an industry expert, who was previously the CEO of SPL Worldwide, which was acquired by Oracle. C.D. Hobbs was also the former CEO of Gartner Group, an industry analysis and consulting services company.