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Austin Energy seeking $400,000 for firm to implement new rate system

Wednesday, July 25, 2012 by Charles Boisseau

Austin Energy is seeking authorization from the City Council to spend $400,000 to hire a company to rework the utility’s troublesome new billing software to implement its new rate structure.


Austin Energy Larry Weis sent a memo to City Council members and Austin Mayor Lee Leffingwell on July 11, saying the implementation, configuration and employee training for the new rates was a “critical business need.”


The city-owned electric utility wants to hire Lucidity Consulting Group, a Richardson-based consulting company, to perform the work. In the memo obtained by In Fact Daily, Weis said the utility plans to bring the request for the funds to City Council in the next couple weeks. Council next meets on Aug. 2.


“We have to fast track this to get it ready to go,” Weis said. “We have to have all this work done in a couple months. Our goal is to get the new bills out in October.”


Asked why IBM Corp. – which is still working with the city on configuring the new billing software – couldn’t incorporate the rate changes into the system, utility spokesman Ed Clark said the work “was outside the scope of the original billing system.”


IBM is under contract to perform 160 hours of contingency work on the billing system, and had Council approved increasing rates using the existing rate structure IBM could have handled the changes, Clark said. But the new rate structure is a considerably more complicated.


“This is a structural change, not just a configuration change,” Clark said.


The issue comes on the heels of City Council’s approval in June of a rate hike that will go into effect in October. The new rate structure requires substantial changes to the billing system, according to Austin Energy officials, since it increases the number of rate tiers to five from two, and streamlines the current 24 rate classes to nine (one for residential and eight for commercial customers).


Contacted Tuesday, Council Member Bill Spelman said he would have questions about “why IBM could not reasonably be expected to do this job when the matter comes before the City Council.” He added, “I would also like some reassurance that Lucidity is going to be able to get this job done in the time proposed.” 


Austin Energy last October began using a new customer information and billing system software from Oracle Corp., a sophisticated program that was tailored for Austin Energy by a team from IBM as part of a nearly $60 million contract approved by City Council in 2009.


Austin Energy is not seeking competitive bids on this latest work on its billing system since it is considered a “professional services contract” that does not require using the city’s formal competitive bidding process, Clark said.


Lucidity was chosen because “they are experts in this kind of thing. It’s a very common type of work they do,” Clark said.


Lucidity specializes in integration and information technology services for utilities and other clients, according to its website.


Weis, who joined Austin Energy two years ago as the utility’s top executive, said he was appalled by the antiquated customer information and billing system Austin Energy was using. On the bright side, he said, city employees long stretched the software system, called Mirror Pond, which saved the city money.


The new Oracle software system has many built-in features, such as linking with smart meters installed at customer locations to improve data management, Weis said.


However, it has come with headaches. Austin Energy has acknowledged that it has not yet been charging late fees for electricity customers because it lacks confidence that the new system will handle that properly. Earlier this year, the Austin American-Statesman reported that more than 100,000 customers had reported some billing error since the new billing system went online last fall.


Weis said it’s crucial that the changes in the billing system be tested, implemented correctly and presented properly on customer bills. Austin Energy, which also manages billing for Austin water and wastewater customers, sends nearly 7 million bills a year.


Weis added that Austin Energy employees would work closely with Lucidity to implement the changes in the rates. “So that in the future they won’t have to do this,” Weis said, meaning paying an outside contractor to perform such work.

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