Consultant blasts national effort, says standards themselves are the problem.

Concerted efforts by utilities, retail marketers and metering companies to establish uniform business practices by implementing national electronic data interchange standards, or EDI, as part of retail competition, are being undermined by the EDI standard itself, says Doug Houseman, director at Cap Gemini Hagler Bailly.

"It is a very big, nasty, complicated monster. There are a lot of people that do not know what they are doing," he says.

Houseman says that EDI is not living up to its promise of giving marketers and delivery companies a single set of procedures for determining who gets what customer and billing information, in what format and how fast. In addition, EDI further complicates uniform practices on how customer switching and payments are conducted, he adds.

Utility industry EDI standards were formed by the Utility Industry Group, which is funded by the Edison Electric Institute and operates under the umbrella of ASC X12, the Accredited Standards Committee formed by the American National Standards Institute to set standards for EDI.

"[The public utility commission] says I have to be able to do them, but inside the 810 [EDI transaction] are 15 flavors of 810s, and inside those, 15 [more] flavors of 810s in the California market. There are about 400 options. Every company has decided that some of those options are not applicable to their piece of the market. They are just not going to do them," adds Houseman.

In addition, the plethora of EDI options is helping to vary business practices from state to state and creating costly barriers to entry for those wanting to compete on the retail level.

"To date, no two utilities have implemented things the same. When you end up dealing with multiple utilities, you end up dealing with multiple layouts and so on and so forth in the state. There are no central certification and testing authorities. You have to test with everybody individually," he says.

For example, if a company goes to Pennsylvania as a supplier, Houseman explains, it will have to test with PECO, PP&L and Allegheny individually to adjust to every company's particular business practice, as it relates to EDI.

Houseman estimates a retailer or energy service provider wanting to do business in a particular state must spend $500,000 to comply with a region's EDI standards before selling the first megawatt. In addition, the company will have to spend another $50,000 per utility in the region to meet varying EDI standards.

"Utilities are on their own schedule for whatever updates and changes [to EDI standards]. So I just can't go bing-bang and put in the 4010 standards for Pennsylvania because Allegheny is not going to be ready to do that at the same time the other folks are," he says.

Houseman does not believe utilities are trying to sabotage competition; rather, standardizing EDI has become problematic because utilities across the nation are on varying timetables to implement EDI. Fragmentation of business practices from state to state has been the result, he says.

For example, a utility wanting to comply with EDI standards by a specific date may ignore certain options within the standard in order to meet its deadline, he observes.

"So you end up with problems such that no transaction in the Illinois standard set where both supplier and deliverer account numbers appear in the same EDI message. The delivery companies don't want to ever have to know or care about what the supplier or account numbers are. By making sure they don't appear on any message, they don't have to worry about crossing the two. So they don't have to fix their customer information systems," he says.

The consequence is that the marketer or energy service provider has to keep track of the utility account number and any changes thereof, he says.

"The reality is that as long as we keep going down, the [ASC] X12 standard we will never get anywhere," he says.

He explains that EDI was designed back in the days of the teletypes to make sure data was not lost and procedures were done in a certain way. Later, the attempt was made to make EDI universal for every industry, but EDI is not utility-industry specific and crosses many industries.

Houseman says, "We have yet to get in four years to the point where we have a national model from UIG. It took the Gas Industry Standards Board seven to eight years to get a national model.

"There are a lot of standards out there that can get us to a common standard a hell of a lot quicker," he says. For example, Open Financial Exchange, or OFX, is a better standard than EDI, Houseman says.

OFX is a unified specification for the exchange of electronic financial data over the Internet. By eliminating connectivity as an issue, OFX enables financial services companies to make choices about the platforms, processors and systems they work with, according to press material on the OFX website (www.ofx.net).

A spokesperson for financial software company Intuit says the creators of OFX did not envision it as a standard to replace EDI. Furthermore, OFX, developed by CheckFree, Intuit and Microsoft in close concert with financial services and technology companies, was created to streamline the process financial services companies use to connect to transactional websites, thin-client network computing systems and financial software, the OFX press material says.

New York, Standards and the Holy Grail

"No one is going to come up with a national [EDI] standard. It is like the Holy Grail; you never quite reach it," says John D'Aloia, power systems operations specialist at the New York Public Service Commission.

D'Aloia believes that EDI standards will vary from state to state, but similarities will be shared within regions.

"In New York, I expect the commission will rule for a general EDI implementation as the next step because the commission had never formally ordered its implementation. The implementation itself should take place around April of next year. EDI will not be fully phased in by the target, but we will be able to start initial enrollments with EDI by April," he says.

"There are a lot of technical implementation details. We have to define the data sets for these transactions. What exactly are you going to pass back and forth when you do an enrollment or customer switch or a meter read or a bill? There are major things in play; the business rules have to be defined. You are seeing some baby steps nationally," D'Aloia says.

New York has chosen the ASC X12 transaction sets, which are very similar to Pennsylvania's, he says.

"What is different is where you get into different business rules and different requirements that the public utilities commissions have set or that different utilities have agreed to. The details of these transactions are very different from state to state at this point," D'Aloia concedes.

Big marketers like Enron can program their systems to meet the individual standards, he explains. If New York opened tomorrow, those marketers would have to set up New York programs, though states will piggyback other states, making Pennsylvania and New Jersey similar, he says.

Notwithstanding the state-by-state differences in EDI standards, D'Aloia believes that EDI will create a level playing field. Of course, many market participants, especially the small players, remain concerned about the cost, he says.

Furthermore, he notes, there is a lot of pressure for EDI, which require transfers of or access to interval usage or meter reads, to be conducted on the Internet. That would force the so-called value-added networks, or VANs, for data communications to desegregate because the costs of EDI on the Internet are much lower.

Uniformity: At the Meter or At the Server?

Even as EDI standards are prepared in anticipation of metering competition, some meter data providers still question whether competition at the meter is necessary for retail competition.

"We typically will argue that we don't need a specific meter. You don't have to go out and replace every meter to facilitate competition," says Randi Neilson, director of solutions marketing at Itron. Itron is a provider of data acquisition and wireless communication for collecting and analyzing electric, gas and water usage data.

"Where we work without utility customers, such as utility distribution companies, they get concerned if they open up competition for meter reading if they have put a system in like ours and then a particular customer goes to someone else. What happens to that meter? What happens to their asset? They get nervous about making investments in our technology, occasionally, if they are concerned about that asset," she says.

Neilson says there is a cost at the meter level associated with customer switching of energy service providers. "There is a tradeoff. You can look at leaving that technology in place and doing the meter data information exchange at the host processor level rather than the meter level.

"She suggests, "If you came up with an information standard rather than a meter standard, that would be simple and straight forward."

Meanwhile, some utilities have bought Itron's system for automated meter reading and data collection via public or private networks to have a competitive advantage over incoming energy service providers, she says.

"From the consumer perspective, if a utility goes out and buys a network to automate meter reading, the cost to all market participants is much lower. Putting in metering technology on a customer-per-customer basis could cost energy service providers $1,200, otherwise," adds an analyst.

"In a lot of cases, meter reading is not a core skill for energy service providers. They will continue to use the utility to collect meter reading data. This is why EDI standards are needed," Neilson explains.

Tom Lofgren, director of application software development at CellNet, a rival to Itron, agrees, adding that varying EDI standards in different states has been expensive.

"We are re-implementing systems in states that we have already worked on. [Furthermore], CellNet is implementing systems that are unique to six states," he says.

It is not uncommon to see the same EDI transaction doing two different things in two different states, adds Bill Vogel, vice president of marketing at CellNet.

Furthermore, due to competition in metering, CellNet has had to adapt its systems to interface with 90 format classes of meters.

A standard meter design would make setting EDI standards and meter reading cheaper and easier, says Lofgren. Moreover, CellNet has published its design and sent it to meter manufacturers, he says.

"We have given them electronic and physical designs for a standard to evolve," Lofgren says. "Three data providers are building our compatible devices," he says.

Meanwhile, the Edison Electric Institute in mid-August launched an industry-wide, collaborative effort to develop consensus on uniform business practices around the country.

"We hope to have established uniform business practices by the end of the year," says Mike McGrath, group director, customer and energy services at EEI.

McGrath notes that a separate organization, the Coalition for Uniform Business Rules, is nearly done with the formation of its uniform business rules. CUBR is a coalition of marketers and vendors.

"The CUBR consists of 25 companies representing a diverse cross-section of the industry, including energy marketers, meter service providers, meter data management agents, billing and collections companies and other mid- and back-office service providers," says Jeff Brown, director of government affairs at Enron and a member of CUBR.

The CUBR's goal is to develop a consensus document based on best practices in the industry by September 1999. According to Brown, the document will include two parts: (1) the business rules and processes, and (2) the standard electronic transaction for each business process.

The EEI effort will include regulators, regulated companies and customers that have not been a part of the CUBR process. "We would like to put a process that includes everyone," McGrath says.

McGrath says his process will focus on the how and not the what when it comes to uniform business practices, "otherwise you will never get anywhere." Furthermore, there would be separate business practices for states that have competition in metering and those that do not. It is McGrath's hope that PUCs around the country will rubber-stamp the uniform business practices developed by EEI.

Of course, not everybody will agree on all the proposed practices. There will be sticky points, he predicts.

"Who gets paid first? Let's say the marketer is doing the billing for itself and the commodity sale, as well as the delivery. Does it pay the utility its share when it gets paid or does it pay in any event?" he asks.

In addition, there have been conflicts where business practices differ from one state to another.

"New Jersey requires a 'wet' signature from a customer to switch. The customer has to actually sign something. It can't be done by phone. has resulted in Green Mountain Energy saying OK, we are not going to play in New Jersey," McGrath says.

"We would hope in time [national uniform business practices] would work backwards within the states that have made decisions."

McGrath says the EEI effort will start with the ASC X12 umbrella of EDI standards. EEI will submit a set of draft practices by mid-September. The draft practices will not have gone through a consensus process by that point, he adds.

Richard Stavros is the senior editor at Public Utilities Fortnightly.

Metering: Just Tip of the Iceberg

National standards are needed for many areas of the utilities industry.

Enrollment and Customer Switching - Involves the initial switch from the utility to a competitive supplier, a switch from one supplier to another, and a switch from a competitive supplier to the default provider.

Access to Customer Information - The process by which suppliers obtain historical usage information and other applicable customer data.

Customer Billing - The process, including the interface between the utility and the competitive supplier, necessary to bill customers.

Metering - Includes the standards for meters; installation, testing and maintenance standards for meters; transfer of meter reading data; and meter reading performance requirements.

Load Profiles and Retail Electric Settlements - The process of estimating hourly usage for customers without hourly meters in order to determine each competitive supplier's share of the total energy delivered in any given hour.

Licensing and Creditworthiness - The license, including creditworthiness and technical fitness provisions, necessary to qualify a competitive supplier to provide services in a state.Compliance and Audit Provisions - The market needs a swift and predictable audit and dispute resolution process.

Supplier Agreements - A contract between the delivery utility and the competitive supplier that establishes the terms and conditions of the commercial relationship.

Standard Electronic Transactions - The standard data set and format for exchanging information between the competitive supplier and the utility.

Source: Coalition for Uniform Business Rules, white paper

Validating Customer Enrollment

Which data fields to check? It's easier said than done.

The problem in a nutshell.¼

"When exchanging data electronically, two parties are involved in the process - a sender and a receiver. In an EDI environment the receiving party validates the data contained in the transaction.

"For example, when a Utility receives a request to enroll a customer with a specific ESCO/Marketer TS814 [Transaction Set 814, used for enrollments, account status changes, etc.], the Utility must have in place a process for determining the validity of the transaction. Specifically ¼ the Utility would compare certain customer data in the EDI transaction to customer data in its Customer Information System to verify the identity of the account to be processed."

What about shortcuts. ¼

"It has been suggested that ¼ EDI enrollment transactions could be validated based on a comparison of two data elements in the transaction, whereas all subsequent transactions could be validated using only one data element.

"But some utility systems can't adapt.¼

"In New York, Utilities differ in their use of unique customer account identifiers. ¼ [F]or many it may be necessary to use more than one data element for validation. [M]any utilities believe that ¼ relying on a single element may not be adequate. ¼

"ESCO/Marketers, on the other hand, believe that it would be preferable to standardize the validation process across all Utilities. ¼ They believe the use of a single data element should be sufficient for all post-enrollment transactions."

So you've got to have four different standards.

¼"Based on these concerns, the Utilities agreed to minimize the data elements to be used such that all transactions would be validated in one of four ways. ¼"

1. Acct. No. + Check Digit (if any).

[Con Ed; Niagara Mohawk; Orange & Rockland; National Fuel Gas]

2. Acct. No., Check DIGIT (if any) + Meter Number(s).

[Central Hudson; New York State Elec. & Gas]

3. Acct. No., Check Digit (if any) + Bldg. No. (service address).

[KeySpan Energy/Brooklyn Union]

4. ESCO/Marketer Acct. No. + Delivery Pt. No.

[Rochester Gas & Elec.]

Source: Excerpts from Report of the New York EDI Collaborative, pp. 19-20, Electronic Data Interchange Proceeding, Case 98-M-0667, June 30, 1999 (N.Y.P.S.C.)

Acknowledging a Change in Service

A reply to each data drop? Why marketers and utilities disagree.

What marketers think. ¼

"In this new world of restructuring and EDI, mistakes will occur. ¼

"[For instance], a Drop/Change Request is sent by the Utility to the wrong ESCO/Marketer, or a Drop/Change Request is sent by the Utility that includes incorrect information regarding the customer's name or account number, thus making it difficult or impossible for the ESCO/Marketer to properly identify the customer.

"Thus, the ESCO/Marketers believe that the drop/change response from the ESCO/Marketer to the Utility either confirming [and] accepting the drop, or rejecting it, is critical for (1) "customer care" purposes; (2) efficiency of operations; and (3) accurate and timely information flow between the Utilities and the ESCO/Marketers. ¼

"Although the mistake may have to be addressed via a followup telephone call, both the Utility and ESCO/Marketer will be given an immediate "heads-up" in the EDI transaction ¼ the drop/change response adds an extra layer of efficiency ¼ [u]se of the drop response has the potential to minimize instances in which customers are switched erroneously. ¼ Requiring the parties to verify all correspondence relating directly to the customer makes good business sense.

"The costs associated with upfront development and ongoing transmissions are small relative to the benefits gained ¼ [and] ¼ will be much less than if developed as an after-the-fact retrofit.

What utilities think. ¼

"The Utilities support building the New York model without Drop Responses. The Utilities contend that, among other things, Drop Responses transactions [will]:

1. Obscure the accountability of the business partners.

2. Lower the efficiency of the process.

3. Provide little or negative business value.

4. Add to data transmission costs.

5. Add to up-front development costs. ¼

"[Instead] each Utility will process enrollment and switching requests by ensuring that: (1) the account number provided belongs to a valid customer; and (2) the customer is eligible, by the Utility's standards, to be switched to a new service provider. A Drop transaction will be sent to the ESCO/Marketer who is currently on record with the Utility as the customer's supplier. ¼

"[T]he ESCO/Marketer's system will send a TS997 Functional Acknowledgment back to the Utility indicating that a valid EDI transaction was received. ¼ [A]ny dispute from there forward should be handled "off line" with, for example, a phone call from the ESCO/Marketer to the Utility.

Source: Excerpts from Report of the New York EDI Collaborative, pp. 47-50, Electronic Data Interchange Proceeding, Case 98-M-0667, June 30, 1999 (N.Y.P.S.C.)

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