Loss Prevention Services for utilities

What EY can do for you

Utility companies are losing staggering amounts of money in the meter-to-cash process for electricity, water and gas distribution. The estimated theft, fraud and other nontechnical losses total US$96 billion per year globally. This problem is damaging many utility companies, driving up prices for customers who do pay and forcing many governments to provide subsidies.

Major types of nontechnical losses for power and water utilities include:

• Illegal connections: customers bypass meters and connect directly to the grid or water supply.
• Fraud: meters are tampered with, and grids or data are manipulated to reduce registered consumption.
• Flaws in processes and IT systems, including data inconsistency, billing and collection problems, and incorrectly applied tariffs.

EY Loss Prevention Services for utilities

Capitalizing on decades of fraud detection and risk-monitoring experience, EY teams work with businesses to develop effective loss prevention programs. The consultative EY approach focuses on prevention, detection and mitigation measures from business, operations and technology perspectives. The broad range of EY services comprises: profiling fraud and loss schemes; using artificial intelligence (AI) and analytics technologies for process and control evaluation; implementing workflows and escalation procedures; and developing risk monitoring control measures, loss calculation, return on investment tracking, and reporting and remediation procedures.

Using insights generated from risk analysis, EY teams can help you develop field inspection programs that are seamlessly integrated with existing service management systems. This allows you to work in a familiar environment without the need for extensive training.

A consultative and data-drive approach

Using interactive surveys or in-person workshops, EY professionals kick off each project by working with business stakeholders to evaluate existing processes and controls, as well as loss risks during the meter-to-cash process. The resulting risk profile is used to build a business case and serves as the basis for loss diagnosis. Using data from various systems (e.g., billing), EY teams help determine the root causes of various loss categories (e.g., process errors, data manipulation) and quantify risks using AI and other advanced analytics technologies. In parallel, a data- and analytics-based infrastructure is built for ongoing risk analysis and monitoring.

Remediation efforts typically are carried out in a staged approach designed to provide early return on investment. At the end of each stage, remediation results are assessed and used to plan for the next stage. Finally, insights gained from risk analysis and remediation efforts are combined into one comprehensive report and fed into an ongoing program review and improvement process.

The use of analytics is expanded to provide estimations, by location or customer segment, for the total losses caused by fraud, defective meters and water losses. The loss quantification function also can be used to calculate losses from accounting issues, such as poor data quality, incorrectly applied tariffs, inaccurate estimations and missed invoices.

Technology that powers EY services

Powered by EY Virtual Analytics Infrastructure (EY Virtual), EY Loss Prevention Services for utilities can be deployed on premises or via the cloud, and they have the scalability to be implemented in multiple locations and the ability to integrate with a multitude of systems (e.g., billing systems, enterprise resource planning systems, service management or meter management systems).

EY teams regard broad, sufficient data as the key to safeguarding against theft and fraud. EY Virtual gives you the ability to ingest and analyze a wide range of data sources, such as master data, billing data, readings and consumption, invoices, service orders and field inspection results.

The EY Virtual case manager puts relevant information needed for investigation in one readily available, central location. Its executive dashboard enables operational leaders to monitor the performance of multiple locations in one consolidated view in real time. The reports can be programmed with easy-to-use configuration functions showing key performance indicators, such as hit rate per inspection, fraud identified and losses recovered. Besides risk insights, business owners can also gain additional operational measurements, such as revenue performance and sales projections.

Continuous risk assessments enhanced by AI

At the core of an EY offering is a library of proprietary, sector-specific, loss prevention algorithms using historical incidents. EY teams work with clients to develop custom algorithms for nontechnical losses based on their unique business models and risk profiles.

Each algorithm is translated into machine-learning scoring models that generate risks indicators to show issues, such as potential theft, meter defect, illegal connections, and overdue or missed readings. The models also estimate monetary damages and the probability of recovery.

The results are used to determine appropriate remediation efforts. Remediation activities are monitored to gain further insights that are used to retrain machine-learning algorithms, leading to continual improvement in detecting and preventing nontechnical losses.