Slide 1 Outsourcing Metering Service from the perspective of the Net Operator Frank Barz- Business Development Utilities Viterra Energy Services AG Slide 2 Agenda Nordic Electricity Market Viterra Energy Services Group The role of metering and the present situation Key Drivers Pros and cons of outsourcing Lessons to be learned Demands for a Metering Service Company The future development 2 Slide 3 Nordic Electricity Market Market 100 % deregulated since 1997 Hourly measurements and load profiles are applied Network company is responsible for the metering and balance settlement Network Companies in Sweden 236, in Finland 96 and in Norway 165. Customers in total 10,5 million. The Biggest players on the market: Vattenfall, Fortum, Sydkraft, E.ON Real price of electric energy has decreased substantially About 15 % of customers have changed their supplier in Sweden and in Norway. In Finland about 4 %. 3 Slide 4 Nordic Electricity Market Network Companies tend still to be self-sufficient in metering Business enviroment is however changing more positive to Metering Service business. Increasing focus on outsourcing. Number of Network Companies who have fully or partly outsourced their metering activities to Service Provider in Sweden is 95, in Finland 34 and in Norway 41 Number of active Service Providers in the market in Sweden 4, in Finland 3 and in Norway 7. New metering legislation in Sweden promotes to invest in hourly measurements and AMR systems in all Nordic countries in the near future 4 Slide 5 Swedish proposal Meter reading must be done monthly by network company New legislation will come into force in two phases Customers with consumption over 8000 kWh /a from the 1st July 2006, 1,5 million customers The rest of the customers from the 1st July 2009, 3,5 million customers Automatic break registration shall also be implemented Oblication to energy consumption reporting Limit for hourly measurement will be decreased from 200 A to 63 A with effect from the 1st July 2006. After that all customers with the fuses over 63 A shall be hourly measured. Investment in total about € 1 billion during 6-7 years 5 Slide 6 Swedish proposal cont. Total economic savings are estimated to be € 65 million / a. Customer benefits in average € 16,5 / a Savings for Electricity company (distribution + sales) in average about € 22,5 / a 6 Slide 7 Viterra Energy Services Group World market leader in sub metering and metering services Metering and payment systems with read, bill and collection services for heat, water, gas and electricity to domestic and commercial properties Metering services for deregulated utility industry and property management companies A Neutral Player on the market, not beloning to either Network Companies, Suppliers or End Users Head office in Essen, Germany. Revenue in 2001 € 418 million Meter readings per year 45 million Employees 3.686 Operation in 28 countries. 7 Slide 8 Key drivers High customer service Costs efficiency Core competence Development and measuring of core business processes Networking subcontractors with our core business processes To develop Automatic Meter Reading (AMR) To develop customer change data administration To develop Customer Information Systems To develop Call Center services To develop measurement data administration 8 Slide 9 Pros and cons of outsourcing Good experiences of outsourcing We can concentrate on our core business Need not to learn dedicated expertised know-how Optimise software and hardware costs Customer change administration done well Get new features in operation faster than if handeled by ourselves Higher development drive Things to be done otherwise We didn’t have professional contract superviser Mounting and installation work should be outsourced more Costs follow-up should be more systematic 9 Slide 10 Lessons to be learned You can outsource activities only if you know them well Arrange the supervising professionally Leave skilled personnel in your own organisation Be active developing the outsourced businesses Require the partner to participate process development Be more cost sensitive Create new markets by right way competition Don’t underestimate the partner/contractor Change the strategy along market development 10 Slide 11 Demands for a Metering Service Company Active to develop new products and services Understands grid company’s business processes Flexible and cost-efficient service provider Can act as a total service provider … or concentrate only few product areas Clear value creation targets for grid company Has ability to connect to client’s processes => networking 11 Slide 12 The future development Automatic Meter Reading (AMR) realisation in large scale Shall develop as an own business area New products for metering solutions and invoicing Better customer service through Call Centers … real-time information of customer behaviour Supports network planning through real-time data gathering Help for fault localisation and disturbance analysis 12 Slide 13 Conclusions Still fairly new business area Still unstable and immature markets Both clients (grid companies) and contractors can destroy the whole market Needs specific products for specific needs Only flexible and dynamic companies survive Yet good possiblities to gain new markets 13 .