Power utilities in the US are facing unprecedented challenges,
some of which, for many, stem from outmoded billing and payments
systems. This is the message from a study undertaken for payments
processor Wausau Financial Systems (WFS) by consultancy Sierra
Energy Group.

For the study, Sierra analysed payment
processing trends in the utility industry based on responses from
more than 100 power utilities.

“In a stressed economy, smooth payment
processing and timely information about transactions is crucial,
yet that’s not what many utilities are experiencing,” said Mike
Tallitsch, WFS vice-president, corporate.

“In fact, their performance is handicapped by
outdated technology,” he added.

In this regard, key findings of the study

• Billing and cash flow are major
concerns impacting utilities’ ability to make accurate business

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• There is a lack of information
about daily investable dollars, driven by the fact that 85 percent
use dated, legacy systems; and

• Utilities take more than three
days to process 10 percent or more of payments.

In addition, WFS’ study highlighted that
utilities face another looming challenge in the payments arena:
smart grids.

In short, smart grids are now under
development and are designed to enable utilities to levy charges in
accordance with, for example, a household’s electricity consumption
at various times. Higher prices will be charged during peak demand
periods and discounted prices offered during off-peak times, a
development that WFS believes will place considerable additional
demands on utilities’ billing capabilities.

Also of note, the WFS survey revealed a third
of utilities reported that the mobile payment option is rapidly
emerging, with customers increasingly demanding the service.

Spurred on by a harsh economic environment and
increasing complexity of billing and payments, WFS noted that
utilities are more likely to buy or switch to a new system that
guarantees lower transaction costs and requires minimal changes to
existing infrastructure.

However, WFS also found that, largely because
of the complexity of utilities’ billing and payments functions,
outsourcing of payment services by utilities has been slow to gain
momentum. According to WFS, only about one third of utilities
currently outsource any part of their payments processing.

As a solution WFS offers its UtiliWorks
payments hub which is capable of collecting and processing all
payments types and automates imaging, routing and validation. In
use by, UtiliWorks is now in use with 45 utilities and processes
some 500 million transactions annually.

Indicative of the impact of UtiliWorks, WFS
provided the example of PSE&G of New Jersey, which, with 2.1
million customers and annual revenue of over $13 billion, is one of
the US’ 10 largest electricity utilities.

Following adoption of UtiliWorks, the utility
reported it had reduced employment, processed all payments within
24 hours, eliminated courier costs, enhanced security and increased
daily investable dollars by 31 percent to $8.8 million.

According to the US Department of Energy, in
2007 retail sales of the 3,273 utilities totalled $344 billion of
which households accounted for 37 percent, the commercial sector
for 35 percent and the industrial sector for 27 percent.