IssueAlert Emerging Technologies ~ August, 2003

[News Item from BUSINESS WIRE] SANTA ANA, CA.-Aug. 27, 2003-Open-c Solutions, a premier provider of billing and customer care solutions to the utility and energy industry, today announced that Denver Water has selected the Open-cIS® customer information system to support its 217,000 water and wastewater accounts in the Denver metropolitan area.

Analysis: It is good to see the water utilities beginning to update and upgrade the infrastructure. Recently I spoke at the New Jersey Utilities Association annual conference in Absecon, NJ. According to Consumers New Jersey Water President & CEO Sharon E. Schulman, “current rate-making practices act as an impediment to water's ability to rebuild its infrastructure. Water companies offer unique growth opportunities because they are extremely capital intensive. They need capital investment to pay for water main replacement and rehabilitation, transmission and distribution and water treatment.” Schulman also made the following positive measure recommendations:

• Allow companies to charge full cost of service
• Targeted Revitalization Infrastructure Program will allow for proactive infrastructure improvements
• Offer incentives for investment
• Enhance loan programs so funds will be replenished and reused
• Educate the public about the need to rehabilitate the infrastructure to keep the water flowing and clean

Not only are the water utilities in dire need of infrastructure replacement, they also are beginning to realize that their internal systems are antiquated.

Customer Care Replacements
In a customer care survey of 304 North American utilities completed by UtiliPoint earlier this year, water utilities are beginning to replace what is known as the customer information system (CIS). In 2002, 2.2 percent of the water utilities in North America were in the market to replace their CIS. That compares to 9.5 percent this year, a dramatic increase in activity.

Source: UtiliPoint International, Inc.

Yesterday I interviewed Denver Water CIS project manager Mary Price. According to Price, the selection project took approximately 2 years to complete. Denver Water did most of the work internally, briefly bringing in an outside consultant to review the short-list of vendors, which included 3 license providers. “We wanted some industry perspective to make sure we were getting the right players on our short-list,” said Price. “The reason we decided to replace the CIS was that we could not give our customers all the services they wanted, and we wanted to roll 3 different systems into one.” Denver Water is planning to utilize Open-c Solutions to replace a legacy CIS, a miscellaneous accounts receivable system, and what the utility calls its “tap sales system,” or the system that currently manages sales of the physical tap and the right to water.

After an extensive evaluation, demonstrations, an RFI, and a three week usability lab set up on-site in Denver, the selection team chose Open-c. “I was very pleased to see such a consensus from our selection team,” said Price.

Drought Played a Role
As mentioned earlier, selection took the better part of 2 years. Denver Water had originally planned to make a CIS selection last fall but the drought in the West delayed the decision.

The entire western United States has been plagued with a severe drought recently. Denver Water was not immune from this drought. Last year the utility's water reserves dropped dangerously low, prompting an aggressive water conservation program that worked. Some may say that it worked too well. According to the Rocky Mountain News, Denver Water sales this year are likely to fall $8 million short of projections, thanks to conservation efforts by customers. Water revenues are expected to be $125 million, down from an anticipated $133 million.

The news means Denver residents are taking the drought seriously, but it could also mean the utility will sell less water over the long term and may have to find new ways to finance major projects, according to Denver Water finance director David LaFrance.

During the drought Denver Water held open meetings with customers to educate them and to solicit ideas to help alleviate the lack of water issue. “Our customers were asking for functionality that we simply could not handle with the existing system,” said Price. “We knew we had to replace it in order to fulfill some of the requirements being requested from our customers.”

This spring the water reserves had increased and Denver Water started the selection effort again, eventually selecting and beginning work with Open-c.

Open-c Solutions
Open-c Solutions, a subsidiary of NWP Services Corp. headquartered in Santa Ana, Calif., delivers systems and services to utilities and energy companies to enhance operating efficiencies and ensure long-term profitable customer relationships utilizing their state of the art Open-cIS platform.

Open-c Solutions was formed in 1998 when ex-Accenture employees who were experienced with the Customer/1 CIS product formed a “think-tank” of sorts that resulted in a new CIS product known as Open-cIS. The original intent was to create a new CIS that was more of a product solution and less of a customized solution.

Current features of the Open-cIS product include:

• Supports the changing and varying needs of the deregulating utility market
• Provides true multi-company, multi-receivable, and multi-jurisdiction functionality
• Is built upon a flexible and scalable three-tiered platform
• Includes integrated browser technology
• Has an open, well-documented Component Object Model (COM) architecture that easily integrates with other applications
• Supports e-commerce using industry-accepted standards and emerging technologies
• Reduces the introduction and support of new products and services to hours, as opposed to months
• Minimizes the cost of implementation and ongoing support
• Meets world-class software design standards

Open-cIS is deliverable in three formats: supported software; application service; and service bureau for those interested in outsourcing.

Earlier this week I spoke with Open-c Solutions CEO Doug Thompson regarding the announcement at Denver Water. “In the end it was our people that made the difference. This selection by Denver Water continues Open-c's market place momentum, having already brought three other clients representing 630,000 customers live in just the past 8 months. Right now it looks like we will be able to go live with Denver Water in the second half of next year.”

Open-c Solutions currently serves Washington Gas, Wisconsin Public Service, and National Water & Power. Denver Water will be the first full implementation of version 3.0 for Open-c, which includes the use of newly completed tool-sets that facilitates the gathering and documenting of detailed requirements and creates efficiencies for the implementation process. “The team is thrilled that these tools are working so well and we are actually a little ahead of schedule right now,” said Thompson. Price agreed by stating “so far my team is confident that we selected Open-C for all the right reasons. It is a very flexible, robust system and the more we work with them the more we know that we were right about our selection. They are a little ahead of schedule at the moment.” Thompson added, “we believe that our initial implementation is better than others in terms of time and cost.”

Investing in Water is Critical
At the New Jersey Utilities Association earlier this year, the President of the National Association Of Regulatory Commissioners (NARUC) Hon. David A. Svanda spoke on investing in the infrastructure. Specifically addressing water issues, Svanda suggested that public and private water providers of all sizes work together to keep investment incentive packages consistent throughout the industry. State and national regulators and water companies should educate the American investing public on infrastructure needs. Svanda also advised that public and private interests send two key messages:

• Water is a stable place to park investment dollars
• Water systems are critical to homeland security

Price agrees and adds yet another key element—customer service. “We are out to provide the best customer service that we can—the guiding light at Denver Water has always been to improve customer service. It has been 10 years since we put in a billing system and we simply cannot do certain things that our customers are asking for—Open-c Solutions will now enable us to do those requirements.”

UtiliPoint's Emerging Technologies IssueAlert articles are compiled based on the independent analysis of UtiliPoint consultants, researchers, and analysts. The opinions expressed in UtiliPoint's Emerging Technologies IssueAlert articles are not intended to predict financial performance of companies discussed, or to be the basis for investment decisions of any kind. UtiliPoint's sole purpose in publishing its Emerging Technologies IssueAlert articles is to offer an independent perspective regarding the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy issues.

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