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CGI Wins U.K. Data Services Deal

Bob Lockhart — August 14, 2013

There’s a line in Driving Miss Daisy where Idella says to Hoke, “I wouldn’t be in your shoes if the Sweet Lord Jesus his-self came down and asked me.”   That’s about how I view the data service provider (DSP) role in Great Britain’s nationwide smart metering project.  This morning, the U.K. Department of Energy and Climate Change (DECC) announced that its preferred vendor for the DSP role is CGI, which acquired bidder Logica last year – that is, during the bidding process.  The DECC vendor selections have a strong Buy British flavor – which is logical considering the funding source.

The DSP will be massive and complex, given Britain’s unique approach to smart metering.  Unlike most countries, where the distribution network operators own and operate the smart meters, Britain has chosen to make energy retailers accountable for smart meter operations.  Given the deregulated retail environment, this has the potential to bring serious chaos.

One bidder told me that, while many customers never change their energy supplier, there is a subset of consumers that change energy suppliers up to 5 times per year.  This does not mean 5 meter swap-outs per year.  Rather, meter management specialists will install and operate meters on behalf of the energy suppliers, so the meter stays put while the customer switches retailers.  However, the use cases regarding delivery of consumption data to the appropriate energy retailers can become complex.

Mind Boggling

Perhaps more challenging will be the ability to run energy conservation programs such as demand response.  The permutations boggle the mind.  Will all energy retailers offer the same dynamic rate programs?  That’s hard to believe, given the potential of such offerings as a competitive differentiator among retailers.  And when a consumer swaps from one retailer to another, will that consumer be automatically enrolled in the new retailer’s dynamic rates program – will the opt-in carry over from one service contract to another?  The legal issues surrounding change of retailer could prove challenging.

None of those problems are newly created by this morning’s vendor announcements.  And the bidders – including CGI – will understand the use cases as well as anyone.   This does not necessarily mean that all the use cases have been identified, given the creative nature of retail customers in general.  Still, this is an 8-year deal estimated at £75million ($116 million).  $14 million a year seems pretty cheap to manage this potential chaos.

One wonders if some DECC administrators are walking around their Whitehall office this morning saying, “Bargain, innit?”

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