Containing cost is the first of five stages of our Smart Metering Maturity Model. As a Utility, you should start this stage way back when you are first defining the scope of your program and tendering for your solution. It is at the point of putting ink to paper that you are signing up for a series of service levels with your vendor, but do you understand their implications?
For example, say you sign up for 98.0% of all meters to be read within 24 hours and 99.5% within four days. If you have 1,000,000 smart meters, you are agreeing to 20,000 meters going unread each day, with 5000 of these still not being read after five days. Remember, this is 5000 every day. What do you do about these 5000 unread meters, especially when they cross a billing cycle? Have you priced the management of these exceptions into your operations?
The above example is just one of dozens of scenarios that we cover in a lot more detail in our book. My point is, you must go into a smart metering program with your eyes open. Your costs will initially go up. You will be running two sets of operations which can go from a few years to a decade or more. One set of operations for manually read meters and one for remotely read meters. Your objective must be to get your cost to serve back to where it was pre-smart metering as quickly as possible.
Outsourcing does not allow you to escape your responsibility. You must carefully describe the services and service levels you require. You must have a clear understanding of how you will resolve failures that are within an agreed service level. Finally, you must understand what you are responsible for as part of the day to day operations. Even in an outsourced model, there are plenty of tasks where a Utility remains responsible.
There are some game-changing opportunities available to you with smart meters, but you must make sure you have the right foundations in place. Increasing customer rates to cover runaway operational costs before you have introduced any value-add services, is a sure-fire way to lose the support of your customers and your regulators.
Do you understand the implications of the service levels you are signing up to?
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