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Recommended Practices

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  rev. 2011-02-07        
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The number of ways to go about defining a tariff is infinite.  You want to set up tariffs that can handle expected situations over time without needing to change them and without a lot of ongoing maintenance work.

To illustrate when you might need to change a tariff definition, consider discovering a few months into using ManagingEnergy that a utility provider is repricing on a regular basis.  This is a common situation in restructured markets.  To validate your invoices properly you could create a new tariff for each date range, but that would be time-consuming.  It would also be awkward to reassign the tariff on each account at exactly the right time.  Your best bet is to set up the tariff from the outset in a way that it can smoothly handle repricing.


                                    What happens when you change a tariff after invoices have been entered?

A tariff can be changed any time, but changing a tariff does have consequences.  Invoice records retain the structure of the tariff definition in use when they were entered.  If you change the name of a tariff component, continuity is broken and ManagingEnergy loses the ability to report or display on that component across the tariff change.


It's worth taking the time to plan.  You will want to answer these questions:

Do I want to include charge adjustments in the invoice records?

Utility invoices are subject to late payment penalties and unpredictable regulatory adjustments.  If you want these irregular charges and credits to be stored with the invoice records, include a ChargeAdjustment Component as a constant with a default value of $0.00.  Use the pre-defined Notes field on the invoice record to describe the adjustment.  As an added refinement, you could choose to split this between two or more components, say RegChargeAdjustment and Penalty.

Could the account holder possibly decide to enter into a supply contract with a commodity retailer?

If so, you will want at least one component for the external charge from a third-party retailer.  Include RetailerCharge in the invoice total calculation but leave it as a constant of $0.00 to start.  Assign it to a Reading Group when a contract is signed, which will tell ManagingEnergy to prompt for a value during invoice entry.

Could such a commodity contract be structured as a hedge (i.e. procurement of only a part of the expected volume)?

In this case the tariff calculations would need to correctly allocate how much consumption is charged at the utility company rate, and how much at the retailer's rate under the hedge contract.

Where a 3rd party supply contract exists, how complex is it?  Is there a need to validate the internal workings of that contract, and can the ManagingEnergy tariff engine handle it?

You need to take a good look at 3rd party supply contracts, and decide whether the contract terms can be incorporated into the tariff.  If the ManagingEnergy tariff engine can properly represent the contracted terms you have the ability to validate the retailer's charges.  However it will result in a very complex tariff and complicated representation of the invoices.  It may add to the effort and complexity of entering invoices.  You will need to weigh the business value of validating the supply contract against the additional work necessary to do it.

The simplest choice is to include a single RetailerCharge component without doing any validation of that component.

Will any components will be repriced frequently?

Include a RepricingDate component which can be used to select between values or handle the situation where invoicing periods straddle a change-over between rate schedules.  This way, the data entry person doesn't need to choose between pricing possibilities and you maintain a controllable number of tariffs.  Utility companies publish their pricing changes well in advance, so go into the affected tariffs about a month before to change the RepricingDate and replace the appropriate unit cost values.

Which components will be repriced by a significant amount?

Some invoice components such as commodity unit costs are quite volatile and can change very significantly during a repricing.  In addition, these components are often repriced quite frequently, commonly every three months.  You will want to include the complexity to handle these components accurately during repricing.

Other invoice components change slowly over time (e.g. distribution charges and transportation charges typically change annually at the rate of inflation).  For these components, it simplifies tariff definition and maintenance to ignore the effect of the small rate changes.  Set the validation tolerance wide enough to let the impact of these changes pass testing.  Soon after these changes occur, go into the tariff and change the values in the affected components.  Invoices entered after that point will use the new values.

How are invoices straddling the repricing date calculated?

Check with the utility provider to make sure you understand how charges are calculated when a invoicing period straddles a repricing date.  ManagingEnergy includes custom functions for prorating and calculating charges before and after the repricing.


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