revenue

Non-technical losses affect utilities of all types and sizes around the world and to swiftly identify such losses can be a major challenge. Additionally, these flaws differ tremendously based on regional characteristics, customer demographics, and utility service type. Therefore, utilities must constantly adapt their revenue protection practices.

This article first appeared in ESI Africa Issue 2-2020.
Read the full digimag here or subscribe to receive a print copy here.

One international case study in utility transformation is EPM, a group of 48 companies from six countries – Colombia, Chile, Mexico, Guatemala, El Salvador and Panama. The Group is owned by the Municipality of Medellín in Colombia and serves more than 20 million consumers of public services in energy, water and natural gas. Thus, the scope of the EPM Group places it as the second-largest economic entity in Colombia and second only to the oil group Ecopetrol.

The EPM Group has been building its vision concerning the achievement of
operational excellence and business sustainability with competitive rates in the provision of services that are strategic objectives. This programme seeks to reduce and control the loss indicator from 9.25% to 8.00% by recovering 183GWh in a period not exceeding five years in the national energy companies through four fundamental pillars:
1. Culture and legality
2. Access and purchase service
3. Technical excellence
4. The most advanced computing solution, with state-of-the-art
analytical technologies

The programme for the reduction and control of electric energy losses was
established with the participation of the following companies nationwide:
EPM with its energy, water and gas services, CaldasCHEC Hydroelectric
Power Plant, Quindío-EDEQ Energy Company, Santander-CENS North
Power Station, and Santander-ESSA Electrification Plant. Internationally,
Elektra Northeast-ENSA Panama also joined.

As a short-term goal, EPM started with an evaluation process, which led it to
implement a contractual partnership between Choice Technology’s Revenue
Intelligence system and the SAP HANA in-memory database, to provide the processing speed necessary to give agility to the algorithms. This partnership led the technology company to branch out of Brazil and establish a branch in Colombia, which allowed the engagement and training of Colombian consultants in CHOICE RI solutions on SAP HANA.

Since its inception in 2015, the utility has improved and achieved the standards of overall operational efficiency while reducing nontechnical losses (NTL) and increased recovery of eroded revenue. After a very detailed project implementation, with several control points, the solution went live within one year. At the end of the first year of operation (2017), EPM recovered $6.1 million and today the results keep steadily increasing.

The economic benefits are being ensured through the detected cases with irregularities, plus the additional energy consumed after the removal of the irregularity and the normalisation of the installation. The components of
energy and the value have increased since 2016 – a growth of 163% and
132% respectively for the last two years, representing a total benefit of
136,7GWh and an estimated worth of $53 million.

The total scope of investments for implementation and commissioning
correspond to approximately 14 months of benefits – a very fast payback. Juan Carlos Duque, manager of Energy Transmission and Distribution Antioquia Region EPM Group, explained: “The results we are achieving with the use of Revenue Intelligence in EPM Group exceeded our expectations and are even more successful than we considered in the business case. The
influence of the system and the project is not only beneficial for the increase of the recovery results, but also in the optimisation of the processes to combat losses, as well as the consolidation of a methodology and processes that were developed.”

The main challenge of the project was to align the expectations from each
member of EPM’s team, which was achieved through an effective change
management and communication plan. This was fundamental for the success of the project as buy-in from C-level decision-makers was key due to the long-term success of this project.

Implementation and start of operation

From July 2015 to December 2017, the focus was on addressing inspections
and genetic algorithms for fraud detection. New features related to some operational balances and data critique. The group implementation strategy followed ‘go-lives’ per company with maximum differences of one month.

The operation started in two phases: First, four months by the Brazilian firm and the participation of the group companies to carry out the selection
and sending of field inspections under the Laboratory modality, which
allowed the process to start the machine learning and the maturation of the models implemented through operations directly addressed by Revenue Intelligence. Subsequently, the co-operation phase began, where a joint working group was formed between the CHOICE team and the EPM business experts, to initiate the official process of addressing inspections
through the software.

Evolution and operation

From 2018 through to 2020 the solution continued to evolve. Under the modality of customisations for the business group, mature and stable functionalities were achieved with the quality of data required for monitoring and leveraging of the inspection addressing the functionality of energy balances per transformer and circuit, automatic macro-metric critique, operational sustainability indicators, and telemetry critique – laboratory studies with new variables in risk models and financial impact. The efforts are now focused on achieving data and formulations with the quality required to have balances at levels 3 and 4, the inclusion of the unregulated market and large clients for inspection addressing energy balances; as well as the incorporation of other variables related to the Portfolio Scoring.

Challenges and achievements

The opportunity for improvement of internal processes that manage the
activity, improved data quality, and the permanent tuning of the models
supported by the solution, play an essential role and are critical success
factors in the strategy of detection of non-technical losses.

Likewise, it requires permanent work with people who use Revenue
Intelligence on change management, skills generation and training, the
analytical capacity for innovation and critique, and the rethinking of
strategies.

The EPM group created a working group for each of the companies, to become the RIHANA Centre of Excellence coordinated by EPM, and formed by analysts in the roles of business experts on losses, energy balance, telemetry critique, and data analytics. The benefit of a greater rapport of energy companies within the EPM Group was obtained through open teamwork scenarios that share strategies and experiences, and thus achieve permanent benchmarking within the Group in the energy segment.

Over and above these financial benefits, EPM was able not only to reduce non-technical losses, but also improve the associated internal processes in place to manage and process NTL. This is a scalable solution for utility companies within the services of energy, water, and gas. ESI

Acknowledgement
This article is edited from our sister publication, The Global Energy Elites
2020