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Load Aggregation: The Wolf at the Door?

Fortnightly Magazine - January 1 1997

Public Service Co. has begun working with IBM to provide a centralized phone service to provide a any type of customer service (billing, service changes, repair information) with only one call.

Opportunities and Pitfalls

The path does not lie wide open. Public utility commissions appear unlikely to allow utilities or their affiliates to flex their "market power" (e.g., via confidential customer lists and data), and will probably require equal access to customer information for all marketers. Thus, aggregating subsidiaries will probably be left to compete with independents on a relatively level playing field, just as they do with other ESCos. The use of existing goodwill does, however, grant an edge to a utility, provided it offers services comparable to-or better than-those offered by independent aggregators.

Nevertheless, most independent aggregators presently operate with very limited resources and staffing, their shoestring budgets dependent on shoe leather. Beyond a slight price break, most are not offering much in the way of innovation, making them a manageable threat to strong utilities that can bank on good customer relations. t

Ben Blumberg and Jonathon Shaevitz are principals with InSITE SERVICES, L.P., an information and billing company headquartered in New York City. InSITE has begun offering billing and information services to the energy services industry.



Customer Profile

Matching Services to Scale

Customer size and profile affect the opportunities and benefits offered by aggregation.

Large customers, for instance, may benefit when regrouped to create large load blocks served by a variety of power suppliers.

On the other hand, customers that exhibit a dispersed set of smaller loads (such as chain stores) present different needs. These customers may prove unable to manage complex multi-sited purchasing across numerous service territories. Aggregation of these loads under a single contract-whether by marketers or unregulated utility affiliates-would likely provide a different set of benefits:

• simplified billing

• easier internal invoicing among dispersed facilities

• lowered coincident demand charges

• reduction or reassignment of some accounting staff

• enhanced usage information to help manage costs.



Billing Services

Billing Services

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The Utility's Trump Card

Leading-edge Customer Information Systems at utility companies can play an important role in customer aggregation. Not only can they gather data from all sites onto one bill (which is all aggregators usually do), but can then provide analytical tools to help customers determine if they are getting the best deal on transmission/ distribution charges (e.g., by showing the customer's true coincident load across a given utility's system).

This analytical data can reveal which facilities are consuming an inordinate amount of energy, thus skewing the customer's general energy price structure. Such information can lead to corrective measures with immediate paybacks.

Billing services could even aggregate bills for customers with multiple sites outside the utility's present territory, or provide internal billing for the customer's own subgroups.

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Customer size and profile affect the opportunities and benefits offered by aggregation.

Large customers, for instance, may benefit when regrouped to create large