Virtual utility faces crisis over backlog

Mike Simons

Computerised billing problems have caused a cashflow crisis at Independent Energy, the UK's biggest "virtual utility".


Mike Simons

Computerised billing problems have caused a cashflow crisis at Independent Energy, the UK's biggest "virtual utility".

The company had a stock market valuation of £1.5bn in March when it released £93m of shares onto the market. Last week its value slid to just £222m after it admitted that its billing backlog of £119m was getting worse.

Independent Energy first admitted to problems in February when it announced that it had only billed for £35m of the £130m worth of electricity it sold in the second half of 1999 (Computer Weekly, 24 February).

Independent Energy outsourced large amounts of its operations - including billing - to Vertex, a subsidiary of United Utilities, which built a bespoke billing system for the virtual utility.

In May, the electricity regulator Callum McCarthy ordered Independent Energy to stop taking new domestic and small business customers until the billing backlog had cleared.

This prompted John Sulley, chief executive of the company, to say, "We have been active in trying to resolve these, and to date over 60% of the backlog has been cleared. We anticipate substantially completing the backlog by the end of June."

Last week Independent Energy said, "Progress towards the resolution of this issue continues, but has been slower than anticipated", and admitted that the billing backlog had grown from £112m in May to £119m.

The company told its backers it had "significantly expanded its in-house billing infrastructure" to enable it to transfer in-house additional customer accounts from its outside billing service provider Vertex.

However, Vertex said it is continuing to provide billing services for Independent Energy's domestic and small business customers, with the utility handling large commercial and group customers.

A Vertex spokesman said the system it had created was working well but depended on high-quality data supplied by the regional electricity companies, whose clients were being poached by the virtual utility.

Independent Energy has used outside consultancy X-Team, part of the Compaq group, to build a new in-house billing platform. Independent Energy admitted it only had enough working capital to last until the end of September.

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