Transport

The Internet has enabled anyone to throw up an FTP or HTTP website to move information.  But most of these types of solutions require people touching the data, driving up the cost of the solution.  In its origins in the 1970’s, EDI introduced mechanisms such as the Value-Added-Networks [VAN] and inner/outer envelopes that enabled parties to automate the transport of their transactions.  Computers could now reliably send transactions to other computers without people being involved.

The Internet in the 1990’s took EDI practices into new domains.  The first step was to replace the middle-men VAN’s.  Solutions like the North American Energy Standards Board’s [NAESB] (formerly Gas Industry Standards Board’s [GISB]) Internet Transport, and the Internet Engineering Task Force’s [IETF] AS2 provide transport of transactions across the Internet that assure privacy, authentication, integrity, and Non-repudiation in sending transactions.

The second step still in progress is the adoption of ‘Service-oriented architectures’ [SOA], including use of WSDL and SOAP.  SOA enables real-time exchange of information, speeding up the batch-oriented world of EDI.  You no longer need to wait a day to find out the disposition of your transaction.  Wholesale and smart-meter energy marketplace demands make real-time exchange of information critical.

Best practices

One of the most common statements we hear is ‘the cost of EDI is too high’.  The reason costs of EDI are high is classic ‘pay me now or pay me later’:  you pay higher EDI upfront costs by fully automating a process, eliminating people touching transactions and eliminating errors (which cause people to touch transactions).  Making computers speak to other computers can be expensive; the downstream savings is usually worth it.

The transactions of an energy marketplace translate into real money.  The enrollment transaction turns on a meter for an energy retailer.  The usage transaction converts into actual dollars that a customer will pay.  These transactions are extremely valuable to a retailer, and are tracked that way.  Like inventory at a warehouse, they need to be able to pull a transaction, to remove a transaction, and to view the lifecycle of each transaction.

One best practice that EDI people live by is the transaction ID.  Each EDI transaction has a unique number attached to it, enabling a company to track this information as it comes in to or leaves their organization, and the downstream actions taken on that transaction (e.g. ‘was that usage billed’).  Many non-EDI markets do not include this convention, making it difficult for energy retailers to track and maintain ‘usage’ and other inventories.

Another best practice learned from EDI world is the ‘acknowledgement’, the ‘997’ in X12 EDI world.  Non-repudiation concepts include the receiver not being able to claim they did not receive it, the proverbial ‘return receipt’ in snail mail worlds.  People with low-budget hosted FTP or HTTP sites don’t normally provide receipts/acknowledgements, opening the door to claims that trading partners never received the transactions.

These practices often mean the difference between a computer taking action or a person taking action.  They represent true cost-saving measures in an organization.

Conclusion

The real costs of ‘EDI’, no matter X12 EDI or XML EDI, is not that you have to pay someone who knows what ‘REF*12’ means.  The real cost is that you need to pay attention to the gory details that enable you to eliminate errors and people touching transactions.  There is no magic bullet or magic WSDL or magic FTP site or magic HTTP site to do this.

Fortunately if you are an energy retailer, there is ESG.

Unlike other competitive marketplaces, a ‘default’ supplier of energy is required since nearly everyone needs energy:  if all the competitive suppliers left a marketplace, who would supply energy?  It is not a question of “POLR or not”, but rather “how do we POLR?”

Several models exist:

• Legacy model.  The utility controls the bulk of energy supply so they set the price using some kind of formula.  In the old days of silo energy solutions, this usually hinged on the utility’s cost of generating power.
• ERCOT model.  In the mid 2000’s Texas broke ground with a POLR option that made competitive energy suppliers the POLR.  Using a formula that hinges price of retail POLR supply on the price of wholesale energy made it cost effective for suppliers to be POLR suppliers as well.
• NJ Auction model.  Also in the 2000’s NJ introduced their ‘BGS Auction’, which invited energy wholesale suppliers in to bid on ‘tranches’ of customer supply.  NJ developed a model where 1/3 of energy supply was purchased each year, helping to ‘levelize’ the cost of fuel.  Several other markets, including PPL, have adopted similar auctions.  PPL’s default price changes quarterly.

Competition shines light into previously hidden processes.  With wholesale markets in place, there should be little magic into how the ‘default’ price is calculated.  One even can question why the LDC should manage this process, moving closer to the ERCOT model?

Many legislatures and commissions originally hedged their competition bets by capping POLR rates.  The use of wholesale ‘auctions’ is another hedge to protect consumers.  Yet these ‘auctions’ may be sucking the life out of the competitive marketplaces, making it too difficult for suppliers to compete.

In a time where all hands are needed on deck helping consumers conserve energy, and increasing supply for ever expanding energy needs, is now the time to eliminate competitive energy suppliers:  job-creators, entrepreneurs, innovative thinkers, investors?

We think not.

Over the next 3 years ending 2012, nearly all TX meters will replaced by smart meters – meters capable of both (a) recording data at 15-minute intervals to give a detailed picture of energy consumption, and (b) enabling Home Area Network HAN capabilities that move energy controls into the 21st Century.  HAN’s will enable load control and other features state-wide using a single standard.

As with any large deployment, features are being deployed gradually.  On 2/1, REP’s will be able to:

• Get interval data for ESIID’s that have smart meters.  This will most likely be automated through existing usage data feeds.  Contact ESG for more info.
• Establish administrative users that can go online and add ESIID’s, view ESIID usage info, request ad hoc usage information and more
• Establish and manage HAN devices, and control basic features of HAN devices

In Q4 2010, REP’s can throw away their Letter of Authorization LOA devices used to qualify new prospects, and turn on an SMT tool that will enable them to get detailed interval profiles with only the ESIID and the Meter #.

Demand-side management, time-of-use pricing and much much more are in our future, limited only by the imagination of the REP’s and energy providers.  Get out your crayons, and don’t bother staying inside the lines, because the lines are yet to be drawn!

Mandatory Hourly Pricing [MHP]

• MHP for accounts 1000kw – 1499kw total peak demand (not just one meter) begins Nov 2009, meters installed by Apr 2009 (300 customers)

• MHP for accounts 500kw – 999kw begins May 2011, meters installed by Apr 2010 (1400 customers)

PowerMove Expansion

• Allows Customer to choose supplier when they enroll, getting 7% savings immediately

• Expect Jun 2010 implementation pending PSC approval

Automated EDI Testing

• New automated testing process will reduce testing timeline to 10 days
• Web-based testing interface for trading partners; see progress; interact; email updates when files posted, etc.

• Implementation Jan 2010

Miscellaneous

• 600k accounts switched (3.1M total)
• 60 ESCO’s, 15 electric only, 28 gas only, 15 E&G

Summary:  FirstEnergy-UCBRR-Summary-20090917

Links:

• Website, Rate Form for Met-Ed/Penelec:  http://www.firstenergycorp.com/supplierservices/files/Supplier_Registration/Ratedesignform%20rev%206%2021%2007.xls
• Website, Rate form for Penn Power:  http://www.firstenergycorp.com/supplierservices/files/Rates_and_EDI/suprates.pdf

• PA markets Duquesne, PennElec, MetEd, Allegheny Power and Penn Power all provide Rate Ready already.
• Most expect the new RR solution to look alot like the existing RR solutions already in place in PA
• PPL and PECO started with Bill-Ready in 1999
• To join the fray, contact Bruce Bolbat at PPL.
• A report is due to the PA PUC by 11/9/09.
• ESG is helping to coordinate Suppliers in this effort.  If interested, contact ESG at 800-773-3298.

• Mayor’s proposal to charge the sales tax on ESCo charges and raise $83 million dollars was passed by the City Council in June
• New taxes for NYC go to the state legislature as well, known as a ‘home rule’.

KED

• In KED, ESCo’s have to calculate a 4 1/2% tax on charges and submit them for bill presentation as a separate line item.
• In KED POR program, KED purchases this tax along with the rest of charges.
• In KED POR, ESCo’s remit full tax amount to proper taxing authority.

ConEd

• In ConEd, the new tax is for both gas and electric.
• As in the past, Con Ed will buy the new NYC local taxes receivables as part of POR
• In ConEd, ESCO’s need to send in an 814 Change file to change the tax rate (use AMT*9M)
• As in the past, the ESCO is responsible for reporting and paying taxes to appropriate tax agency.

Miscellaneous

• If the meter is read on or after August 1, 2009, and the number of days from August 1, 2009, to the date of the meter reading is more than half the total number of days covered by the bill, report sales of these services at the new residential rate of 4½% or the nonresidential rate of 8 7/8%.  If the meter is read on or after August 1, 2009, and the number of days from August 1, 2009, to the date of the meter reading is more than half the total number of days covered by the bill, any sales of the services of transporting, transmitting, distributing, or delivering gas or electricity, even if made by someone other than the vendor of the gas or electricity, must be reported at the new rate of 4½%.

Related Resources

PSC Notice: http://www.tax.state.ny.us/pdf/notices/n09_12.pdf

• On ’standard’ switch (formerly ‘on-cycle’), a customer’s first-available switch date FASD will be set 3 business days after switch received at ERCOT.  No special fees, no ‘waive notification’ option,
• If the normal read date is -3 or +3 days after FASD, that read will be used.  If outside that 7 day window, then a physical read will be made on one of the 4 days after the FASD (TDSP’s have until 12/1/09 to implement).
• The standard switch will be made 4 days after ERCOT receives the switch.
• On ’self-selected’ switch (formerly ‘off-cycle’), a customer is switched on the date selected by the REP, and TDSP fees apply.
• The rescission postcard to customers is replaced by a notification postcard (no option to rescind).
• TDSP’s must have a certain percentage of actual reads (reducing estimated reads) by 12/1/2009.

UPDATES:  above includes updates noted by Mike at TES Energy Services

The full order is here:  http://www.puc.state.tx.us/rules/subrules/electric/25.214/36536adt.pdf

Also see:  http://www.puc.state.tx.us/rules/subrules/electric/25.475/25.475.pdf

PPL starts off the show, with rate caps expiring at the end of 2009.  PPL is bracing for a slew of new suppliers entering the marketplace.  The PUC has stated that success in this period – that is lots of retailers with lots of energy options and savings – is make or break for retail energy in PA.

Join the fray:

• PPL Retailers Website:  http://www.pplelectric.com/Business+Partners/Electric+Generation+Suppliers/
• PUC Suppliers Website: http://www.puc.state.pa.us/electric/electric_suppliers.aspx
• PUC Elec Data Exchange WG [EDEWG]: http://www.puc.state.pa.us/electric/electric_electronic_data_exchange.aspx
• Great Resource from Richards Energy here:  http://www.richardsenergy.com/reg/presentation/REAPAnnualMeetingPresentation2008.pdf

Over 5 million customers in the Ameren/ComEd IL markets are in play as these markets implement SB1299-driven Purchase of Receivables [POR] and Utility-Consolidated Billing [UCB]. Ameren (1.2M customers) has completed pilot testing with Energy Services Group and is preparing for their test with remaining suppliers, targeting a Sep-2009 go live.  ComEd (3.8M customers) has put a stake in the ground with respect to implementation schedules, testing in 2nd half of 2010, with go live in Jan-2011.

Prior to SB1299, Ameren and ComEd only offered consolidated billing in ’single bill option’, where suppliers put utility-provided T&D charges on their bills to customers.  For retailers, UCB makes it easier to bill customers, and POR helps stabilize revenue flow.

In a recent call, other SB1299 issues like Utility-driven Supplier Referral programs and Purchase of Uncollectibles were tabled.  A group of retailers will meet with the IL Commerce Commission [ICC] to try to frame a referral program to move that issue forward.  Given the design/standards/construction lead times associated with these market enhancements, further delays could push implementation well past 2012.  As always, cost recovery remains high on the list of ICC critical issues.  If interested, contact Torsten Clausen at the ICC.

Links:

IL CPWG Website:  http://www.ameren.com/CPWG/adc_CPWGHomepage.asp

ICC Website:    http://www.icc.illinois.gov/electricity/ and 
http://www.icc.illinois.gov/electricity/ares.aspx

Public Act 95-0700 text (SB1299):  http://www.ilga.gov/legislation/publicacts/95/PDF/095-0700.pdf