March 28, 2024

How Green Is Your Billing System?

by Guerry Waters, Vice President, Industry Strategy, Oracle Utilities

Around the world, utilities face increasingly strong pressure to help mitigate the negative environmental effects of electricity use.


This pressure is not entirely new. Over the past several decades, utilities have developed a number of programs aimed at environmental preservation. They have controlled power plant emissions. They have promoted appliance efficiency. They have added renewables to their traditional fossil-fuel generation mix.


Emissions controls have, of course, proved popular and widely accepted. The same cannot be said, however, of programs that raise prices significantly or that lower—in the consumer’s mind—comfort or convenience. Despite consistent utility educational efforts, consumers rarely if ever choose a new home based on the efficiency of its appliances or insulation. Many consumers appear unwilling to invest in technologies like programmable thermostats, despite their high return on investment. Surveys consistently show high levels of public support for renewables, but when it comes time to buy them, few do.


In the face of customers’ unwillingness to participate in environmental programs, utility employees can hardly be faulted if they exhibit a certain skepticism about today’s renewed calls for environmental action. There is some evidence, however, that rising concerns about global climate change could trigger real change. Confronted by the potentially dire consequences of global warming, political leaders and industry regulators are once again turning to utilities for environmental leadership. They are asking for new and effective conservation initiatives, and they want utilities to do more than encourage conservation. This time, they want programs like demand response and critical peak pricing—programs reinforced through the billing system.


We Have Been Here Before

This is the third time in a decade that utilities have come under pressure to change their billing systems.  Should they respond with significant changes in billing practices and business processes? Should they create a “green billing system?”


Ten years ago, utilities faced the challenge of ensuring that billing did not succumb to the Y2K problem. No sooner had they addressed that problem than the drive toward competitive retail markets began.


Not all utilities, of course, responded to the call for new billing systems designed to foster competition. And because competition developed slowly or not at all in most states and provinces, a number of utilities found reward in ignoring the pressure to change. Many, in fact, are happily using the same billing systems that have served them well for the past ten or even twenty years.


Are greenhouse gas concerns merely another fad? Should utilities ignore current calls to change billing fundamentals to accommodate new and rigorous conservation and efficiency programs? Or will those who attempt to ignore environmental pressures find themselves scrambling later to catch up?


Climate Change

It is tempting to downplay the potential effect of global climate concerns on the utility industry. The sometimes overblown rhetoric and doomsday predictions can seem almost silly to those who grew up with 1950s predictions of The Coming Ice Age.


It is increasingly clear, however, that global warming is not a fad. It is resulting in national commitments to dramatically reduce greenhouse gas emissions. Canada has already made such commitments. All three leading candidates for the upcoming U.S. presidential election have pledged reductions that vary across only a relatively narrow range.


Even these commitments appear increasingly inadequate given new estimates that greenhouse gas emissions after 2050—little more than 40 years from now—will produce permanent and catastrophic climate change.


Barring practical technologies that can remove carbon dioxide from smokestacks and tailpipes, then sequester it permanently, the only path to slowing climate change lies in a massive and permanent reduction in fossil fuel consumption. As a primary user of fossil fuel, the electricity industry finds itself a major focus of public concern. Calls to action can only increase.


An Emerging Utility Agenda

Few utilities will find themselves able to ignore calls for their significant participation in the quest to slow climate change gains. Most will face increasing mandates to make major changes in fundamental relationships with customers.

In the last century, the utility mission focused on reliable universal service at just and reasonable rates. In this century, the mission is changing to accommodate products, services, and pricing that result in significantly lower energy use.

Few utilities—if any—will choose to gamble on the possibility that new scientific and technological discoveries will remove the conservation burden from their shoulders.


Search for Leadership

For the most part, neither regulators nor customers are clear about the best path to dramatically lower greenhouse gas emissions. They seek utility experience and help in evaluating and implementing programs to alter historic electricity consumption patterns.


Help is clearly needed. Anyone who has tried to stop smoking or keep a New Year’s resolution to lose 10 pounds knows that behavioral change requires an initial catalyst, a plan of action, and continued positive reinforcement. Without all three, efforts to change will almost always fail.


We already, of course, have the catalyst: the threat of climate change. Few consumers, however, can readily define the correlation between reducing personal energy consumption and slowing global warming. Fewer still have access to the positive reinforcements that will make behavioral changes permanent.


The Role for Billing

What is most clear to utilities from experience is that half-hearted “education” programs have little if any permanent effect on electricity consumption. To make a difference, utilities must weave the conservation mission into fundamental business processes. And utilities’ most fundamental customer-related process is billing.


The utility billing system or customer information system (CIS) can, in fact, play a key role in providing customers with a clear picture of the relationship between consumption and climate. It can offer options. It can help customers turn behavioral alternatives into habits.


Not every CIS, however, is capable of playing this role. In most cases, the customized legacy systems of the 1980s and 90s are far too inflexible even to begin to address conservation and efficiency programs in a meaningful way. Some of the lower-end vendor-produced billing systems are little better. Meeting emerging conservation and efficiency demands requires a robust and flexible CIS that changes readily, without customization or programmer assistance.


Evaluating Your CIS

To help customers maximize opportunities and motivation to reduce energy-related greenhouse gas production, your CIS should be able to handle:



  • Multiple sources of supply so that customers can choose to purchase “green” electricity in whatever amounts they choose.

  • Rates that vary frequently. Some studies suggest that varying flat rates monthly rather than annually1 or semi-annually can substantially reduce peak demand. You can readily explore this option if your CIS permits rate changes without programmer intervention; ideally, rate changes can be “plugged in” via configurable tables that do not require extensive testing before the rates take effect. One of the most limiting aspects of a legacy CIS is rate-change inflexibility. Systems that require months to develop and test rates are simply untenable in an environment that increasingly requires utilities to help and encourage customers to conserve.

  • Penalty rates. No one wants to force a neighbor into an asthma attack because the cost of running air filters becomes too high. But electric utilities will increasingly need to reexamine their long-standing practice of lower prices for high-volume consumers. As environmental concerns rise, a growing segment of the public may begin to advocate penalties on consumption deemed careless or excessive.

  • Submetering. Both studies and common sense show consumers use less when they must personally pay for water and fuel. Single bills for apartment houses and condominiums encourage waste. Your CIS should not limit your ability to address customers individually. 

  • Time-of-use pricing,2 which encourages customers to shift optional electricity use to off-peak hours. Time-of-use pricing maximizes use of base generation that, by definition, is always “on” and therefore always producing the same amount of greenhouse gases whether or not the resulting electricity is used. When customers make better use of base electricity, they almost always rely less on peak generation—generation that can be readily ratcheted back in response to lower demand. For utilities that rely on fossil fuels for peak generation, the result is almost invariably fewer total greenhouse gas emissions.

  • Historic usage graphs. The CIS should be able to develop and insert these onto bills so that customers can track their progress over time in reducing consumption. Graphs should cover a minimum of 13 months. Even more useful for reinforcing long-term efforts is a CIS that can document two years of consumption and calculate averages that identify each customer’s trend line.

  • “Carbon footprint” analysis. The CIS should be able to show customers graphically the relationships between greenhouse gas emissions, their personal choice of supply, and, if appropriate, their time of use.3

  • Bills in multiple languages so that all customers can be included in conservation and efficiency programs.

  • Incentives and rebates. Utilities have long been involved in regulator-mandated rebate programs for, for instance, energy-efficient air conditioners or compact fluorescent light bulbs. Increasingly, however, regulators are requiring utilities to withhold payment until customers demonstrate an actual reduction in consumption. In these cases, the CIS must be able to analyze bills before and after the installation of the equipment subject to the rebate and release payment only to consumers who meet the minimum expectation of reduced electricity use. It is particularly important that the CIS offer the option to include incentives either as a subtraction from the monthly bill or as a separate payment. There is currently no “best practice” as to whether such payments should be included on the bill or delivered separately. Utilities report varying responses to varying plans. Some see greater participation when they include the incentive on the bill. Others get better results by highlighting the conservation effort through a separate payment. As you gain experience with different programs and different customers, you will want to try out alternatives and compare results. Your CIS should not restrict your options.

  • Customer analysis that accommodates demographic inputs from non-utility sources. While utilities almost invariably make incentives available to all customers in a class, there is far more pay-off in marketing incentives heavily to those most likely to use them. An apartment dweller using electricity only for lighting, home entertainment, and a few landlord-provided appliances is unlikely to respond to home insulation incentives. In contrast, utilities will obviously get better results when they market pool heating incentives to those whose county property records indicate that they have pools.

  • Web portals. A CIS that populates individual customer Web portals helps customers identify use trends. Portals can then provide tools that let customers explore “what if” scenarios that demonstrate the effects of various conservation and efficiency strategies on their bills and their carbon footprint.


Interval Billing

The checklist above represents an array of relatively small changes likely to be required as regulators, utilities, and customers move forward with programs to reduce greenhouse gas emissions. Far more dramatic is the requirement now being addressed in California, Ontario, and elsewhere to implement interval metering and pricing for all customers including residential consumers.


Few if any utilities can accommodate universal interval billing with IT systems currently in place. Many lack even the software to handle interval or “complex billing”—a name that only hints at the depth and sophistication of its underlying software algorithms. And those with complex billing software in place—now typically used for large industrial customers—will likely find themselves overwhelmed by the onslaught of terabytes of new data that arrive when hourly meter reads replace twelve annual customer data points with more than 8,000. Most will want to offload the data into a Meter Data Management system that can make data available to many departments for use in outage restoration, dispatch, supply portfolio refinement, and other business processes.


Despite the challenges posed by the need to handle massive amounts of additional data, interval billing greatly enlarges the scope of conservation options by enabling programs like:



  • Demand response, which encourages conservation and appliance time shifting by increasing electricity’s price during peak periods. A variation of demand response is critical peak pricing, which raises the price only occasionally, during periods of exceptionally high demand.

  • Help with high bills. Graphs of interval bills readily reveal patterns of use. By training customer service representatives in the likely causes of and remedies for high usage during different times of the day or days in the week, utilities can help customers identify sub-optimal electricity use and adopt conservation alternatives. Utilities can make similar services available through individualized Web portals.

  • Anomaly detection. Utilities that actively monitor hourly reads can readily expose and halt attempts at theft. They can also detect unusual consumption patterns that, for a household, might indicate a refrigerator inadvertently left running in a garage or a break-in at a supposedly vacant vacation home or rental property.


The Strategic CIS

Billing has always been a mission-critical operation for utilities. Today, it is rapidly becoming a strategic instrument that helps utilities and their customers address emerging environmental imperatives.


About the Author

Guerry Waters joined the Oracle Utilities Global Business Unit (previously SPL WorldGroup) in 2000. Previous positions include Vice President of Energy Information Strategy at META Group (now Gartner) and CTO and Director of Technology Strategy and Engineering at Southern Company. He focuses on IT strategies that help utilities meet their goals amidst changing customer demands, regulations, and market structures.