Revenue Assurance for Energy Retailers - what does that mean?

Brave Energy Systems finds millions of dollars in unbilled revenue every year for our clients using our Revenue Assurance products. When Brave started developing these products, "revenue assurance" within the energy retailing industry was a rarely used term. We are now starting to see organisations create new roles - such as Revenue Assurance Managers within their business. This is great to see. The telco industry has been performing this function for years and it's great to see our industry begin to put robust systems and processes around this critical function in place.

Brave has thrown the term revenue assurance around for a number of years but there is no real definition of what it is in the context of energy retailers - so we'll give you our view of what it is and how we go about securing those cost and revenue streams.

Revenue Assurance is about validating that your input costs and revenue streams are accurate. For energy retailers in Australia the costs and revenue streams are shown below.

The core input costs for a retailer are the wholesale costs (approx 30%) and the network costs (approx 50%). The revenue stream is simple - its the bills we send to our customers (100%). The key to revenue assurance is to have a strong reference point for cross checking the operational systems. At Brave, our Standing Data repository and our Meter Data repository which are maintained by market messaging, provide the majority of what we need to detect revenue leakage.

With this independent set of data we can now begin the process of reconciliation. Each line in the diagram above is a reconciliation point. The following points of reconciliation can therefore be defined;

Bill Reconciliation - The auditing of the billing system. We compare the output of the billing engine - the customer invoices (say from a print file) to the independent data set. This comparison is performed using models which perform thousands of tests on each bill and bill line. The outcome of these tests determine if the bill is correct or contains revenue loss. Where no bill exists, the models determine whether a bill should have been produced or not.

NUOS Reconciliation - the validation that the NUOS Invoice from the distributor is accurate. It should be noted that what some retailers call NUOS reconciliation is in fact NUOS Pass-thru reconciliation because its more about sanity checking the retail bill against the NUOS invoice. This largely becomes a simple check of KWh comparison and whether they are in fact the retailer or not. This is not validation of the NUOS invoice by any stretch of the imagination. NUOS Reconciliation involves confirming the distributor has invoice according to their published tariff. This means checking Time of Use splits, Demand charges, Blocking (or usage steps), their rates, metering charges, solar credits and more.

NUOS Pass-thru Reconciliation - this is a check that the retail bill contains the pas thru network costs. This is often difficult to do accurately because in the case of Mass market customers, the billing system rarely separates the network and retail calculations so that means we are comparing retail bill lines with different rates and potentially different structure (time splits, steps etc) to that of the network invoice. Its not an apple and apple comparison and so this largely becomes and exercise of confirming consumption is the same. Its a very simple set of tests and Brave implements these tests as part of Bill Reconciliation.

Settlement Reconciliation - this is a reconciliation of MSATS Settlement invoices against the independent data set. Settlement reconciliation is really more about meter data alignment (and standing data) than anything else. Because the meter read data involves an MDP sending different sets of data to MSATS, the Distributor and the retailer, the differences in wholesale settlements are predominately due to consumption differences.

Standing Data Reconciliation - This is the confirmation that our independent sets of data are maintaining alignment with what MSATS is storing. Brave also uses this component to enable reconciliation of other back office systems' standing data against the market.

All of these processes combine to provide a comprehensive revenue assurance process as outline in the diagram below.

We hope this overview goes some way to defining what revenue assurance for energy retailers means. Brave are are experts in revenue assurance. Our solutions are unique in this market, and if you have a feeling that you are not billing everything you should, or that your input costs are not being validated to the degree that they should then our revenue assurance modules will certainly assist your business. Contact Brave for a demonstration or for further information.