What's beneath the surface of a total utility solution
December 1st 2008

It's nearly one year since Encore launched its 24 hour operations service which has had a major impact on energy procurement and risk management seeing consumers of energy through one of the most volatile periods witnessed on the world energy markets.

As the dawn of 2009 approaches Encore is set to launch its latest innovation – Encore Water. Tim McManan-Smith discusses with Mark Dickinson,Managing Director of Encore International the launch of Encore's UK water service.

Does the launch of a water business represent a departure from your current focus on energy risk management ? Since foundation in 2001, Encore's business has grown to represent over 140 customers in over 19 countries, operating in local language and serving some of the biggest brand names in the world.

Our results and processes have consistently reduced the amount of risk taken by our clients and more importantly increased the amount of visibility, control and corporate governance they exercise over their energy spend resulting in some amazing results for over the last five years and already for the next three.

The launch of a water business is simply a natural progression, a reflection of the demand from our customers, who having transformed the paradigms associated with energy procurement and risk management but are now demanding a similar level of professionalism, sophistication and performance to be applied to their water utilities portfolio.

It's the same driver that led us to expand our risk management offering to Carbon, DERV, Plastics, Paper Pulp,Metals, Coffee and Cocoa.

Why are you focusing on water now? Water is often neglected, or at best is pushed to the bottom of the pile when faced with todays utility purchasing decisions.Whilst the UK Water Industry maintains its monopolistic processes and therefore there is little scope to influence the price, it is our experience that financial costs associated with water use is far outweighed by the administrative burden involved in managing the process.

With 27 different suppliers in the UK, each billing in their own unique style, it can be a nightmare trying to validate invoices associated with your water costs and accrue for your companies water spend.

The foundation stone of Encore's business is its operations centre in Budapest Hungary, where its high quality, cost effective operational processes are perfectly suited to raising the bar for this all too often forgotten business cost.

Encore currently manages electricity and gas bill validation for over 3,000 sites in ten countries across Europe including Water in Central Europe; it is this experience that we are now translating into the UK water market.

We find that our 24 hour operation means that all of the operational processes associated with bill validation are completed overnight so that we can focus on query management during the day.

This separation of processing and query resolution means that our invoice validation and accrual processing services are faster, higher quality, more cost effective and with better corporate governance than many of our potential competitors in this market.

How will you structure the services of this new business? Our Water Division works to deliver benefits in 3 key areas: Invoice Validation and Accrual Calculation, Historical Audit and Competition Benefits.

How will you approach your invoice validation process? Our Invoice Validation service allows either electronic or paper invoices to be processed more effectively than most internal finance teams as ultimately they end up having other tasks to focus on. Correct Invoices are collated into batches and sent to our clients accounts payable department for processing, whilst any queries we have are investigated directly with the supplier. A report is raised each month showing all anomalies and opportunities detailing the progress of the query resolution.

If you are forced to receive paper invoices from your water supplier, Encore is the only company that operates a dual data entry process so that you can be sure your data has been entered by two seperate people and checked for consistency before they enter the bill validation process at all. Any anomalies in the data entry process are eliminated before we check the bills for data consistency,mathematical accuracy, historical consistency and missing data.

What is the benefit of historical water audits? Once bills are being validated in a robust and effective way, inconsistencies and anomalies in your consumption and spend will be identified at source. However for new clients joining our process who are concerned about their water consumption, checking their historical data is of course the first place to start. We aim to carry out a full evaluation of their estate, which will not only identify savings opportunities where they exist, but may also provide adequate funding for further water cost reduction initiatives.

To carry out an historical audit, we require at least 12 months of historical billing data where we would expect to identify: duplicated bills (complete, or overlaps), over estimations and over charges, application of available allowances, missing bills, shared supplies and potential leaks.

We also carry out thorough investigations into the following areas: trade effluent consents, reevaluation of trade effluent both the level and quantities, correct meter sizing, tariff optimization and surface water drainage.

It is not unusual to discover errors of up to 33% of all sites investigated, with refunds and rebates amounting to almost 50% of annual expenditure in some cases.

Are there really going to be any competition benefits? The UK water industry can be a slow moving beast at the best of times, but changes are afoot. If you currently use over 50 megalitres on a single site, you are eligible under the new competition regime to press your supplier for improvements, and if you so choose, even change supplier.

If you are not one of the eligible few, you can take advantage of changes which affect you today.

Our management regularly meet with OFWAT and the Consumer Council for Water to push for improvements for our customers as well as being a voice in what can be otherwise a near silent room.

Benefits are already starting to be accrued in Scotland and through the Encore service you will be well placed to strategically optimize your position in the broader UK market In the same way that Encore pioneered flexibility in energy contracts and pushed development of the liberalized markets in each of the 19 countries in which it operates,we see a number of those principles being equally relevant to the pending liberalization of the water markets.

The aim of Encore's service in the water space is to ensure that our clients are well informed on regularity debate, able to exert influence in that debate and commercially optimise their own position as opportunities present themselves along the way.

It's not important that consumers use Encore to manage their water portfolio, but it is essential that the status of water is raised within their organisation before deciding which organisation is best structured to give you a quality and timely service in a cost effective way.

More articles from Encore Internation: