Retailers - Are you losing millions of dollars in unbilled revenue?

There is a lot of publicity around the electricity sector in Australia at the moment. Its either the reporting of power price increases due to carbon tax or gold plated networks or about some billing problem resulting in a pensioner receiving a $90,000 bill.

What's not generally reported on is all the customers who are not being billed at all. A quick scan of the internet discussion forums however and you can find information on certain retailers that are known for being unable to bill solar power. Other retailers appear to struggle to bill interval meters correctly - unable to handle retrospective changes to meter readings and then there are occasions where a customer doesn't get billed since they decided to churn to a new retailer. It appears every retailer has some problem or another  that is leading to customers who are not receiving bills for more than a year at a time.

The problem seems to be getting worse - ask any group of friends about their electricity bill and more often than not you'll find someone who doesn't receive a bill - at least for 12 months or a horror story centered around trying to resolve a billing error only to see the same problem resurface next quarter.

Energy Retailers are losing money, lots of money. Revenue loss is occurring on a number of fronts.

• Retailers are failing to bill customers - sometimes (and incredibly) for years in a row due to account setup issues or operational process failures.
• Retailers may not be billing accurately - for example only billing the peak register of a peak/off-peak meter
• Retailers can't bill because of missing meter reads or incorrectly configured or inaccurate standing data
• 3rd party providers are passing on incorrect costs such as distribution fees which are going undetected
• 3rd party providers are sending different meter reads to AEMO, the distributor and the retailer causing differences across settlements, networks and retail billing.

Energy retailing is a complex business and the generation of a customer's monthly/quarterly invoice is the end result of a number of business processes and data flows that involve a number of different companies. When any of these processes or data flows fail, its highly likely the invoice generation process will fail too. Fixing "billing exceptions" is a costly and time consuming activity.

Its not billing exceptions that lead to the greatest of revenue loss. Its a significant contributor only in the event that a billing exception can not be corrected within the regulatory time frame for invoicing a customer. At that point, each day outside this period needs to be written off. Typically, retailers focus their exception processing efforts on the billing exceptions queue - because of the cash flow impact that results otherwise. The the truth is, this rarely addresses the underlying cause of the exception and so, in time, another billing exception on this account is likely.

What retailers need to be concerned about is the revenue loss that is occurring undetected. Or to use a famous quote from Donald Rumsfeld - "the unknown unknowns" and even the "known unknowns" (we know we have a problem but cant find it!).

Brave has been called in to find these "known and unknown unknowns" on a number of occasions for a number of energy retailers as part of a proof of concept implementation - and the results have been eye opening. Tens of millions of dollars in under billing have been identified using our unique revenue assurance tool sets. Almost every retailer we performed this task for had some significant revenue leakage.

The managers that take the initial proof-of-concept results from our solution and go on to implement a structured revenue assurance process ensure that this sort of undetected leakage never occurs again and in the process reduces their exception handling costs, improves the company's cash flow, improves overall margin and implements an IT solution which provides a positive ROI before it even goes live.

So how do we do it? - Brave's Billing Reconciliation module uses flexible decision trees to analyse the invoicing data against the published market data to identify where problems exist. For each day of the reconciliation period, the system can then categorise the NMI and its revenue and leakage status. When the   process is completed each NMI receives an analysis summary show whether it has leakage issues, when they occurred, for how long and an estimate of the leakage amounts.

A Reconciliation Analysis Summary for a Single Site

Once all this information exists, we are able to aggregate it to executive and operational management levels to provide a holistic view of the total revenue leakage being detected, where in time it is occurring, the reason it is occurring and whether this leakage issue is getting better or worse (trends) overtime.

With Brave's Bill reconciliation module, you can implement a robust revenue protection strategy, move from reactive to proactive exception management, prioritise and co-ordinate exception resolution teams and make the entire process visible to all levels of the organisation to ensure it gets the level of attention it demands.

If you would like to understand how to find the millions of dollars you may be losing, contact Brave for further information.