Protecting Your Natural Gas Billing Revenue
Natural Gas Billing is prone to many challenges, not the least of which is completely capturing revenue due to the business. Allow me to share the story of a natural gas marketer who once thought its natural gas billing was under control with all data accounted for, until it discovered it was actually $2M dollars and counting behind on billings.
The business was comprised of a mix of ~2,500 small and medium commercial customers. Its well-executed marketing plan resulted in fast-paced growth, and, like most, the business had been built on top of spreadsheets. A few years into the venture, the marketer came to the realization that spreadsheets wouldn’t enable achievement of longer-term goals. To set itself up for continued success, the marketer decided to invest in utility billing software.
Its choice was a broadly advertised product that was hyped as being “web-based”, offering “streamlined billing”, and “executive dashboards.” The marketer embraced the idea that it could focus on sales with the back-office details managed by the software. Upon implementation, billing via the new system commenced and the operational workload was indeed reduced. The implementation enabled the business to focus on building its book, which included a unique sales product, selling virtual storage to small commercial accounts by buying extra gas during low price months and withdrawing from storage during peak months. Unfortunately, the new billing system was ill-equipped to manage a confusing mix of current volumes plus storage volume injections. Both volumes and pricing were incorrectly billed, while some meters were never billed at all. Over the course of 12 months, the total underbilled amount swelled to a whopping $2M.
As many of you know, Utilities provide billing arrangements where marketers receive a large remittance from the Utility once or twice a month. The new billing system wasn’t designed for natural gas and didn’t have a mechanism to reconcile remittances against what was supposed to be received. So, the cash on hand was a combination of revenue and virtual storage sales. As the winter season approached, the prepaid storage volumes would need to be credited back, which translated into a $2M shortfall.
After realizing something wasn’t adding up, the marketer sought assistance from nGenue, recommended by a business partner. nGenue was able to consume and cross-reference the existing system’s billing data against the Utility remittance statements, revealing there had been no consistent correlation between actual volumes metered, pricing contracts and what had been billed, hence the $2M shortfall.
In order to correct the issue, all the Utility meter read files from the marketer’s inception were gathered within nGenue to launch the process of re-generating every bill that had been produced to date. The cash receipt remittance statements from the Utility were then applied, enabling tie back to the checking account. The result was the accounts receivable balance on the books jumped by almost $2M, indicating a great many customers had been underbilled.
The question then became, how to go back to its customers and recover that money? Fortunately, nGenue enables more than just accurate billing. It also supports custom adjustments and a mechanism to follow up with incorrectly billed customers and provide them with a reconciliation statement, as well as the ability to set up repayment plans for those requiring such. This enabled recovery of more than 90% of the $2M underbilled – a happier ending than what could have been.
End Users, Producers, LDCs, Marketers, Pipelines, and Utilities face increasing competitive and compliance pressures, requiring increased operational efficiency, data integrity and process improvement. Their operational systems must support this, but most don’t. Engage us and we’ll show you how to make a breakthrough. It’s what we do for natural gas companies, and we are experts in our field.
~Ken
