Utility sets benchmark in revenue protection
EPM is 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 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. 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 joined. This programme seeks to reduce and control the loss indicator from 9.25% to 8.00% by recovering 183 GWh in a period not exceeding five years in the national energy companies through four fundamental pillars: Culture and Legality, Access and Purchase Service, technical excellence and the most advanced computing solution, with state-of-the-art analytical technologies.
With this in mind as a short-term goal, EPM started an evaluation process, which led them 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 the 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 136,7 GWh and an estimated worth of $53 million. The total 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 EPM business group worked with the accompaniment of CHOICE in the implementation of the solution, focusing on the work front of 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: 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 will continue 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. By 2020, efforts will be 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. On the other hand, the benefit of a greater rapport of energy companies within the EPM Group was obtained and to open teamwork scenarios to share strategies, experiences and thus achieve permanent benchmarking within the Group in the energy segment.
Over and above these financial benefits, EPM was not only able to reduce NTL, 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, gas, and to other companies of the EPM business group.