[Read "Peeling The EDI Onion:  Part 1"]

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.

When Texas opened its ERCOT marketplace to choice in 2001, they pushed all their chips into the middle of the table.  The ‘affiliated retail electric providers’ AREP were split from the existing utilities – renamed ‘Transmission and Distribution Service Providers [TDSP]  to reflect their new responsibilities – and these new AREP’s were given a period of time where they served as the default electric provider.  With default rates set high by the PUCT, energy consumers were incented to find a new electric retailer.  Eventually the burden of providing default power was spread across a broader group of REP’s.

When Pennsylvania opened its market in 1998, legislators were not so confident in the hand they were dealt.  They left the ‘default’ commodity providers as a part of the utility, and further hedged their bets with ‘caps’ that served as an ‘emergency valve’ in case energy choice did not work as designed.  After a flicker of hope for choice, higher wholesale costs essentially shut down the PA electric marketplaces.  PA residents benefited from artificially low rates set by these caps, which expire 2010 and 2011.

As these rate caps expire, consumers are getting a taste of what wholesale-market-driven prices are like.  In theory this is not much different from gas for our cars.  The market sets a wholesale price, and retailers offer products based on primarily those wholesale costs.  When prices go really high, people buy smaller cars or hybrids, or they drive less.

The same is true with electricity:  we need to consume less.  Demand continues to grow, and adding supply options in the northeast corridor is difficult , with ‘not-in-my-backyard’ [NIMBY] issues greater due primarily to population density.  Load control and other energy-saving products will grow once customers are more aware of the dynamics of the electricity wholesale markets.

Creativity in solving energy challenges is critical.  Imagine if Bill Gates stuck with his original statement that computers would never need more than 640kb of memory?!  Or if pre-1980 AT&T and Ma Bell’s were charged with deploying nationwide cellular coverage?  We most likely have no idea what the greatest energy saving invention will be in 10 years.   We are more likely to get that invention – and help solve our energy issues – with more cooks in the kitchen, not less.  Relying on a single regulated company – the incumbent default utility – to solve these problems is not the path with the most options.  Instead, let’s have a vibrant, alive, competitive marketplace of energy providers with access to the data and controls needed to offer products that give customers the incentives necessary to change their usage patterns.

Over the next few years we will see if PA’s hedged bet leaving the utility as the default energy provider was the right move.  The proof is in the pudding:  a wide variety of energy providers, products and services to help consumers manage their energy and energy costs, or most consumers on default service from the utility, with state- or utility-driven solutions to energy challenges?

I prefer my pudding with the flavor that comes with lots choices and options, please.

Starting 2/1/2010, Texas meters are moving to the head of the class.  Smart Meter Texas, a website/webservice collaborative of the big four TX TDSPs (AEP, Centerpoint, Oncor, TNMP), goes live that Monday providing energy consumers, REP’s, and other parties access to both data and features that raise the bar in smart grid world.  Where other states and markets are dipping their toes into these future capabilities, Texas is diving head first.

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ConEd hosted a ESCO meeting to announce some initiatives rolling out shortly.

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

Want to sign up a customer in PPL for January 1, 2010?  You will need to start the testing process by 9/4/09 which gets you in production approx. 11/23/09.

The next flight after that has a registration deadline of 11/6/09, with production projected 1/25/10.

Other interesting PPL Facts:

• There are 7000MW in PJM’s PPL zone
• All meters in PPL are interval:  1800 Itron MV90 15-minute interval and 1,400,000 Aclara TNS 60-minute interval.
• 1,200,000 Resi Customers, 200,000 Small C&I, 1,200 Large C&I
• Resi price for 2010: 10.298 per kWh; Small C&I: 10.384 per kWh
• SC&I prices going up 45% in 2010
• PPL’s Energy Analyzer let’s all customers see their interval data, and share that data with 3rd parties (suppliers!)

Resources:

• 2009 Test Schedule

ERCOT resi and small commercial customers will have new switching rules starting 8/16/09 for most territories (TDU’s have until 12/1 to complete changes).  Notes:

• 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

Russia has entered the electric de-regulation world:

[Russia] Electric industry restructuring was essentially completed on July 1, 2008 and 20 of the 21 newly-created generation companies are to be privatized with many of them already having been privatized attracting both Russian and foreign (E.On, Enel, Fortum and other companies) investors. Since September 2006, wholesale and retail power markets have also come into force as wholesale electricity (capacity) market transitioned to regulated contracts concluded between buyers and sellers where prices are regulated by the Federal Tariff Service and a spot market-day ahead (DAM) was launched. In April 2007, regulated contracts were due to be replaced by unregulated ones but not until 2011 will electric power be sold at competitive retail prices.

Call ESG today for market pricing!

PPL rate caps are set to end on 12/31/09, and the choice industry is gearing up to fill the gaps.  On 7/7 PPL hosted a fair with 22 suppliers and 120 end-use customers.  There is clearly excitement – and anxiety – over this milestone.  (more…)