FERC's rational response to violations

In today's issue of APPA's Public Power Daily there's a brief article by Robert Varela on FERC's "rational responses" to violations and fines, in order not to jeopardize smaller utilities. This is consistent with our own experience with FERC on behalf of clients. We've also seen a similarly constructive attitude from RUS, which offers a bi-annual educational conference on accounting for utilities. Everyone seems to recognize that complying with FERC and other regulatory reporting requirements can be a challenge for resource-constrained utilities; the financial data needed either isn't readily available, or it's there but not in the right format. Stay tuned in the coming weeks for a special report on best practices for FERC and NERC compliance. Or take a look at our enterprise solution, which was recently certified by SAP.

GIS and SAP for Utilities

One of the presentations at SAP for Utilities that we enjoyed greatly was Elizabeth Mueller's on "GeoSynergy." The City of San Diego uses Geographic Information Systems (GIS) to improve customer service and increase operational efficiency.

By integrating GIS into its SAP EAM infrastructure, San Diego is better able to anticipate potential maintenance issues even before customers call to report problems. And when people do call in—for example, to report a street light outage—the City can pinpoint the specific lamp that's broken based on the customer's address, determine if it belongs to the City, and then repair it and close out the work order promptly. Huge ROI here.

GIS also helps field teams to work more efficiently by presenting the relative location of different work orders spatially; instead of relying on a basic list of addresses, crews can see their target sites overlaid on detailed maps, thereby making it easier to understand where to go next to make the best use of the day. We'd expect to see more utilities integrate GIS with their SAP systems to capitalize on opportunities like these, as the business case for them seem highly compelling.

SAP for Utilities conference 2010

We attended the SAP for Utilities conference in Huntington Beach last week, and were please to run into many colleagues and industry acquaintances. In the upcoming blog posts, we’ll discuss a few hot topics from the show that we found compelling.

In the meantime, allow us a bit of shameless self-promotion. SAP presented its new utility customers at the event, 25% of which HPC America helped win. This is a real testament to the fact that utilities trust our counsel and experience, and that we're able to collaborate effectively with SAP software sales teams.

SAP Certifies HPC Utility Financials Accelerator

We're pleased to announce that after several months of rigorous testing, SAP has certified our Utility Financials Accelerator (UFA) enterprise software as powered by the SAP NetWeaver® technology platform. HPC UFA is in operation at Navajo Tribal Utility Authority, Arizona Electric Power Cooperative, Trans Bay Cable, and Tacoma Power, and this latest validation of its effectiveness is gratifying. Read our full announcement about the SAP certification or learn more about UFA.

Adding new lines of business to SAP

We previously wrote about how ARRA has provided millions of dollars to utilities, which presents recipients with the challenge of accounting for those grants. Beyond that, many utilities in rural parts of the country are not only considering investing in their existing infrastructure, but also expanding into new lines of business, such as broadband services, which the FCC has specifically encouraged.

Adding a new business means that SAP will be asked to handle even more data, so its reach needs to be extended for both internal financial and external regulatory views. While every such project will entail customized steps, we see a few that are worth considering:

• Apply existing business processes to the new line of business. For example, in CCS (now CRB) add the new utility service to the customer's bill, while maintaining the existing services. Likewise, keep your existing reports, but simply add a new line to them covering the latest service offering.


• Turn on SAP's Business Area functionality, to subdivide the Chart of Accounts and create General Ledgers for each line of business


• Create dashboards for each line of business with Business Intelligence (BI) to put key financial and operational metrics within easy reach—including non-SAP data that management values for decision-making. Also consider pushing this information out to mobile devices for selected users who are often away from their desks.

We'll report further on this matter in the coming months as we assist HPC customers who are themselves expanding into new ventures.

Smart Meters and SAP AMI Integration for Utilities

Smart meters have been a controversial news topic during the last year. While the idea of monitoring and pricing energy usage by time of day as a means to foster conservation sounds good, in practice it's generated concern and even backlash. Allegedly inaccurate meters make the evening news, and consumers' lack of understanding of what the technology really means precludes a clear connection between their consumption and their meters.

While raising consumer awareness and managing expectations about smart meters will take time and concerted effort, one tool in particular stands out as being integral to that process. SAP AMI Integration for Utilities holds real promise for improved communication. It can be tied into billing to provide residential customers with more information about their energy consumption and resulting costs. It can be used to identify areas for improvement, for example by advising customers on ways to adjust their usage to decrease costs. Likewise, if the system detects a spike in usage, consumers could be notified and asked to identify the cause in order to understand, if not prevent, its future occurrence.

We're also expecting utilities to have to replace outdated systems with more sophisticated solutions that are compatible with unbundled services (and their associated costs). As regulators require a greater diversity of rate plans to support conservation, and as consumers come to expect utility options that meet their individual needs—much as they do from cell phone and cable television plans—utilities will need to measure, manage, and market their services in increasingly more granular terms.

You watch: we'll bet that 20 years from now we won't even remember how it was done before.

Sustainability and SAP - Start Measuring Now

In June, we outlined three different sustainability-related products from SAP: Carbon Impact, Sustainability Performance Management (SuPM), and Environmental Health & Safety (EH&S). We're anticipating that regulatory, political, and community expectations will drive utilities to increasingly embrace carbon reduction, and the first step to doing that will be to establish benchmarks based on historical data. (You can't change what you don't measure!) Utilities therefore need to start tracking generation and spend, ideally on a functional department level, and then get that data into SAP. It's not unreasonable to expect that management will be evaluated on its sustainability performance, such that IT, Power Plant, Fleet, and other department heads will have a vested interest in measuring their respective carbon footprints.