Using technology to challenge energy's Big Six
First Utility’s Bill Wilkins on how it is using technology to challenge energy’s Big Six
When Bill Wilkins took on the joint roles of CIO and CTO at First Utility back in 2010, he was faced with two challenges: making the IT fit for purpose and also capable of scaling up as the business grew. The pilot platform First Utility originally deployed wasn’t performing as required, Wilkins explains, and he was asked to advise on the correct route to take. “The platform wasn't scaling and the company was looking at re-engineering it, so I presented the founders with a plan and was asked to implement it. And it's been a very exciting few years watching a concept with a small number of customers growing to the very large business is today with close to a million customers and £1billion in revenue,” Wilkins adds.
First Utility was started by a group of smart investors back in 2008, looking to replicate the success they had already achieved in the telco industry, building an independent company and offering customers a different proposition. Initially, the company was all about smart meters and accurate billing – relatively new concepts at the time – and it is still, primarily, a technology company, although the product it sells is energy.
As CIO and CTO, Wilkins says, he has two distinct roles. The CTO part of his role is about designing digital solutions around First Utility’s core energy proposition, and his CIO role is all about making sure that technology was never a barrier to what the company wanted to do from a business perspective. “When you go from nothing to a million households and from 30 employees to 1,400 employees, the scalability of the platform is a very important factor in how quickly you can grow. So the CIO part of my role is all about delivering that robust, secure, scale, fit-for-purpose business. The CTO part of my role is about positively evolving the way our customers engage with their energy consumption and also with us. So that it's more convenient for them, they get a better service experience and ultimately they end up staying longer with us,” Wilkins adds.
Research and development
And a pivotal part of this technology delivery is First Utility’s preference for investing in developing its own solutions. It has a Business Technology Group – carefully named by Wilkins to highlight that technology is at the core of the company and not just an internal service provider – that works collaboratively with and as peers of the other departments. “We have 203 technologists that work in the Business Technology Group so we invest quite heavily in building our own solutions rather than buying shrink-wrapped products from the marketplace.”
This focus on developing solutions in-house is partly the result of necessity, Wilkins says, as eight years ago there wasn’t much out there already for the relatively new independent energy sector. “There aren’t many specialist software vendors that deal with how you support retail energy in the UK – because we couldn't afford to go to SAP and buy their solution when we were a young company – so we had to hire a lot of smart software engineers and do a lot of that primary platform development ourselves.”
Keeping the software engineering team engaged has been key to enabling the flow of innovation, by providing regular research days and encouraging contribution to open source communities. A good example is the successful research and development project that resulted in natural language processing techniques that works out what a customer is asking for in an intelligent way. Wilkins adds: “It handles a good proportion of our inbound customer contact traffic now via mail but also in our mobile platform, so customers can chat to what they think is an agent but it is an artificial intelligence brain and it's available 24/7 helping fix a direct debit, find out what the last bill was or even submit a meter reading.”
It was important to Wilkins that Ask First, as this product is called, wasn’t seen by customers as a barrier to good service or as a deflection technique. He adds: “We wanted Ask First to actually answer the question, not just give back some standard request. So when we build a product, there is instrumentation inside the product to make sure we know who is using it and what questions they're asking. We also track customers through our digital platform and through our voice platform so we know if they subsequently call back in. This way we know that people that use Ask First have a very high percentage of satisfaction.”
When choosing whether to invest in its own solutions or to work with what the market has to offer, the deciding factor for Wilkins is whether First Utility can differentiate in some way. It has its own modern technology platform that uses very few third party technology players and therefore has a very low cost of ownership associated with it, but there are solutions that First Utility looks to external partners for. Wilkins adds: “Typically, if it's a generic requirement and we can access it at a decent price and we think the price scales reasonably with our business model then we will buy. We don't want to build for the sake of building.”
Building something bespoke together with carefully selected partners is also an option, and is what Wilkins decided to do with the customer billing platform when its own system was no longer able to cope with the company’s growth. “We scanned the market and we found a multi-product billing platform in Israel from a company called LogNet Systems. We had fewer than 50,000 customers at the time and LogNet was willing to work with us at our relatively small scale and treat us like a very important customer. So we then embarked on a three-year project to jointly develop a UK energy billing system - the system we're on today - and one that we're very confident will get us way up into the Big Six territories.”
The Big Six he is referring to, of course, are the major players in the UK’s energy market including British Gas and EDF. So what does Wilkins think sets First Utility apart from these giants? From a business perspective, he says, it is the technology platform. “The economics of our technology platform is far superior because it's more modern and with that comes cost advantage. Also, it follows that it is much more agile, much more nimble. Agile technical platforms enable agile businesses.”
The customer-facing My Energy platform, which was introduced in 2014, is another critical differentiator. It enables customers to understand their energy use in a way that can actually lead to savings. Wilkins says: “It shows you things like how you're consuming energy versus people in your neighbourhood. Whether you're more efficient or less efficient. It shows you how you might want to save energy through energy-saving calculators. It customises hints and tips for you. It shows you how your bill will change over the next six months based on your individual tariffs and individual consumption levels.”
It provides our customers tailored information that typically leads to a five percent reduction in energy use of those who sign up for it. Great for the customer and the planet – but also great for First Utility, as it is a popular tool. “It’s very clear from our analytics that the more time people spend on our digital platforms, the longer they stay with us and the happier they are with our service. Many companies would look at investing in something like My Energy, which is completely outside of the required for what you need to operate in the energy space, as a luxury, maybe not an appropriate use of investment. Actually, it's turned out to be as we believed it would be: a very good business investment.”
In 2015, video meter reading capability was added, which means a customer can simply hold the camera to the meter to submit a reading through the mobile app. “Although we led the introduction of residential smart meters, we are pragmatic and realise that not every UK household will have one soon,” adds Wilkins.
Another important area of focus for First Utility is optimising its business model. Wilkins explains: “Technology plays a lead role here, as you would expect. A less conventional approach is to risk using emerging technologies to reduce the footprint of expensive commercial software. An example here is the use of Cassandra and DataStaxx to upgrade our meter data management store – improving our scalability, performance whilst slashing our vendor costs.”
First Utility also makes use of a cloud-based voice platform from LiveOps by Unify Communications. “Not owning a large data centre allows us to focus on our business and allow other professional organisations use their economies of scale to improve our efficiency. We have gone beyond using services like Amazon and Google for compute power and storage and use cloud-platforms for one of our most critical applications – supporting the voice channel for our customer contact centre.”
Wilkins also made the decision to put Google Apps inside First Utility, firstly because as CIO, he didn’t want to manage the email infrastructure. He explains: “In the same way I don't want to manage the data centre or air conditioning or power supplies, as those things don't differentiate us and there are experts out there already. Amazon is a great example: it knows more about how to do efficient data centre management than I ever will. And Google knows more about email and delivering a web-scale infrastructure for collaboration.”
Read the January 2017 issue of Energy Digital magazine
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.