Managing and optimizing large customer supply contracts in a deregulated market Ing. Luigi Borrelli Knowledge 2006 Conference 24-25 April 2006
Uso: inserire classificazione Agenda • Enel – Company Overview • The Italian Market Overview • The Challenge for Enel • How the IT Supports the Challenge: The Large and Industrial Customer Case 2
Uso: inserire classificazione Agenda • Enel – Company Overview • The Italian Market Overview • The Challenge for Enel • How the IT Supports the Challenge: The Large and Industrial Customer Case 3
Uso: inserire classificazione Enel: one of the largest utilities in the world Market cap pf worldwide utilities Shareholders Profile (€ bn) (% of shareholders’ equity) EDF E.ON Ministry of 21,9% 38,4% Economy Enel Cassa Depositi e RWE AG Prestiti Exelon Corp Institutional Tokyo Electric Power Investitors Dominion Resources 10,2% Retail Electrabel SA 29,5% Endesa SA Duke Energy Geographical split of The Southern Company institutional investors Italy National Grid PLC France 1,5% Holland Iberdrola 24,4% 22,8% Germany Kansai Electric Power UK 5,2% Scottish Power plc RoE Chubu Electric Power NA First Energy Corp 2,4% RoW 8,3% Centrica plc 10,7% CLP Holdings Ltd 24,7% 0 10 20 30 40 50 60 4 Source: Bloomberg, Company’s data
Uso: inserire classificazione Enel in the world Europe North and Latin America SPAIN • 1.592 MW Thermal • 671 MW Hydroelectric • 600,000 customers ! RUSSIA North Western thermal power plant management • 286 MW Hydroelectric contract • 67 MW Wind 80% of EUFR: • 21 MW Biomass and Biogas • 294 MW Wind ROMANIA • 89 MW Hydroelectric 51% of Distribution companies • 62 MW Cogeneration Banat e Dobrogea • 1.4 million customers BULGARIA 67% of Maritza East III: • 732 MW Thermal • 171 MW Hydroelectric • 20 MW Wind SLOVAKIA* 66% of Slovenske Elektrarne 5% Powernext • 6.881 MW Data as of April 15 th 2004 1 – On the regulated market 5 * acquisition to be completed by early 2006
Enel’s core business Uso: inserire classificazione Production Production Transmission Transmission Distribution Distribution Market Market Electricity Electricity • 41.8 GW installed in Italy • 246 TWh distributed in Italy • 133 TWh sold to the Of which renewable : regulated market • 29.6 mn customers in Italy – 14.3 GW hydro • 21 TWh sold to the free • 0.6 mn customers in Spain • Stake reduced to 5 % – 666 MW geo market • 1.4 mn customers in – 131 MW solar & wind Romania • 126 TWh produced (~11,000 MW installed abroad*) Market Market Share Wholesale 43% Wholesale 43% Distribution 81% Retail 52% Distribution 81% Retail 52% Share in Italy in Italy Upstream Upstream Transportation Distribution Distribution Market Market Transportation Gas Gas • 5.2 bn m 3 sold • ~ 2 mn customers Distribution Distribution 10.5% 10.5% Retail Retail 11% 11% Market Market Share Share in Italy in Italy 6 2004 Data * including Slovenske Elektrarne (+6,880 MW), acquisition to be completed by early 2006
Uso: inserire classificazione Agenda • Enel – Company Overview • The Italian Market Overview • The Challenge for Enel • How the IT Supports the Challenge: The Large and Industrial Customer Case 7
Uso: inserire classificazione ESTIMATES Free Market: evolution 2000–2005 Volumes in TWh (including losses, without auto–consumption) 142 TWh 140 132,9 Market 47,8% Share Enel 117,5 120 99,6 36,8% 100 31,6% 76 80 15,7% 60 14,1% 45 40 Other 9,1% Operators 20 Enel Sales 21,5 28,0 31,5 10,7 20,9 20,0 0 2000 2001 2002 2003 2004 2005 Selective margin driven Volume driven strategy – customised offers strategy to target segments 8
Uso: inserire classificazione Agenda • Enel – Company Overview • The Italian Market Overview • The Challenge for Enel • How the IT Supports the Challenge: The Large and Industrial Customer Case 9
Uso: inserire classificazione Preparing Enel for the next challenges � Facing competition at retail and residential level � Defending our leadership in power generation in Italy � Matching the challenge of international development in the integrated Market European energy market � Growing as a primary player in the gas market � Operational excellence � Top quality Organization � Organizational flexibility and integration � Successful Integration of our international operations � Spreading market culture at all company levels � More flexibility, more communication, more encouragement People � From a “domestic” to a “international” culture 10
Uso: inserire classificazione Agenda • Enel – Company Overview • The Italian Market Overview • The Challenge for Enel • How the IT Supports the Challenge: The Large and Industrial Customer Case 11
Uso: inserire classificazione The Large and Industrial Customers Market-Segmentation Characteristics of Purchasing Process Consumptions GWh/Year Wholesales type (i.e. specialized buyer, Industrial > 100 low price, no need of commercial services) Price sensitive, not very sophisticated 1 - 100 Large such as the industrials, good sensitivity towards commercial service support 0,05 - 1 SME Low price sensitivity, sensitive towards services and conveniences (i.e. dual fuel), “faithful” 0 – 0,05 SOHO Residential Electric./Gas 12
Uso: inserire classificazione Business Requirements Straight-Through Processing Marketing & Campaign Management Product & Retail Customer Care Service Development Marketing Marketing Prospect Campaign Campaign Management Development Execution Customer Interaction Credit Transaction Marketing & Inquiries & Invoicing Management Sales Force ISO/ RTO Enrollments Data Mart & Automation/ Portals Customer Contract Mgmt. Consumption Data Mining Registration Enrollment Load Data Cost of Goods Sold Customer Customer Data Deemed Profiles Product Matrix Financial Data Financial Data Retail Load/Energy Supply Management Load Forecasts Deal Settlements Structuring/ Load Capture/ Settlements Pricing Forecasting Aggregation Forecast/Risk Components Cost Curves Finance, Product Details Planning & Aggregation Accounting Bids & Offers Energy Markets Wholesale Portfolio Management Demand & Supply Schedules Scheduling/ ISO/RTO Portals Settlements Risk Trading Settlements Settlements Forecasting Management Scheduling (ISO/RTO) Settlements 13
Uso: inserire classificazione Business Requirements To support tightly integrated business processes spanning across different functional and divisional areas 14
Uso: inserire classificazione The Infrastructure Solution Metering ERP Settlement Business Demand Forecast Risk Management Intelligence Retail Sales Management Trading EU EU GRID OPERATORS SPOT & CONTINUOUS MARKETS 15
Uso: inserire classificazione Key Benefits • Operational – Single Integrated Platform – Security Levels – Speed, Accuracy, Consistent Contracts – Flexible in adapting new Pricing Options – Workflow Design based on Enel Processes • Financial – Improve Portfolio Efficiency – Reduce Risk – Improve Cash Flows – Better Management of Penalties/Losses 16
Uso: inserire classificazione Some Performance Indicators • IT Opex = 20% reduction • Process Cycle Time (number of hours to execute the process end-to-end) = reduction of almost 83% - from 72 to 12 hours • Cost of Process = Reduction of 25% - from 60 to 45 FTEs • Processed transaction throughput (number of account receivable DIVIDED BY 365) = increase of 249% - from 5,479 to 1,369,863 • Expected ROI = 18 Months 17
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