Metering Relationships in the Era of Deregulation

Fortnightly Magazine - March 1 1995
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Deregulation is a battle over metering relationships with commercial customers, not a struggle between competing suppliers of energy.

As long as the local electric utility emerges from the process with exclusive control over its metering, credit, and billing relationships, then deregulation will only cement its position as the customer's primary energy service provider (em and further enhance the "pool" concept by which the local utility acts as agent for the retail customer to purchase energy from independent power producers (IPPs). This outcome will prevail even if regulators adopt retail wheeling.

And there's more. If we assume a totally free and competitive market, then even a cable television or telephone carrier can enter the picture. These telecommunications firms, which can lay claim to a wealth of experience in customer billing and information management, can easily purchase energy services from local or distant electric utilities, acquire transportation and delivery through intermediate providers and local delivery systems, and then build great economies of scale through combined billings along with offsite readings and shutoffs. Their skills can create a bonanza in the synergy that comes from a complete package (em energy, entertainment, and telecommunications.

True deregulation would rest on the bedrock of offsite energy measurement and offsite termination controlled by a distant company. Cable, telephone, wireless or satellite technologies could all play a role. Partial deregulation would permit the local electric utility to act as a billing agent for its customers in reading, collecting, and enforcing service terminations, and acquiring services from any power provider and transporter.

But none of these visions (em whether feasible, intelligent or destructive (em reaches the basic issue: Who will control the billing, measurement, and collection relationship with the retail electric customer? Here are some scenarios.

Scenario #1:

Utility Mails the Bill

Let's assume that the local electric utility wheels power to retail customers (em power generated by an IPP. The IPP sells energy services to customers at negotiated rates, but subject to utility control over the credit and billing relationship with the customer. Competition will bring limited price relief to energy prices, but not wheeling charges, or credit terms. The local wheeler (utility) will read its own meter and bill for all charges and remit to the IPP for its contractual share, whether paid by the customer or not.

In a slight variation, payment to the IPP might depend on bill collection from the customer. Nonpayment forces shutoff, with reconnection dependent upon payment of all energy charges (wheeling plus energy), plus a deposit. The risk is borne by the wheeler but possibly also by the IPP, because the latter holds no right of onsite service termination.

Scenario #2:

IPP Mails the Bill, Too

The IPP, assuming some credit risks, alternatively may substitute itself as the end-use "customer of record" for payment and, perhaps, widescale bargaining of wheeling charges and rebilling the customer for energy charges itself.

Here are more options: The wheeler reads the meter for the IPP and either forwards the readings (electronically) to the IPP or bills the end-use customer directly under the IPP billing label, with directions