A power consortium that distributes a mix of "green" and conventional electricity is implementing an XML-based settlements system that drives costs out of power distribution.

The Northern California Power Agency is one of several state-chartered coordinators in California that schedules the delivery of power to the California power grid then settles the payment due the supplier. NCPA sells the power generated by the cities of Palo Alto and Santa Clara, as well as hydro and geothermal sources farther north.

Power settlements are a highly regulated and complicated process. Each settlement statement, which can be 100 Mbytes of data, contains how much power a particular supplier delivered and how much was used by commercial vs. residential customers. The two have different rates of payment, set by the Public Utilities Commission.

The settlements are complicated by the fact that electricity meters are read only once every 90 days; many settlements must be based on an estimate of consumption that gets revised as meter readings come in.

On top of that, there are fees for transmission across the grid, sometimes set by the PUC to apply retroactively. On behalf of a supplier, NCPA can protest that fees for transmission usage weren't calculated correctly, and the dispute requires a review of all relevant data.

Getting one or more of these factors wrong is a commonplace. "Power settlements are never completely settled," said Bob Caracristi, manager of power settlements for NCPA, in an interview. Negotiations over details may still be going on a year or two after the power has been delivered.

Furthermore, "the enormity of the data" has in the past required a specialist vendor that creates software to analyze the massive settlement statements produced by the grid's manager, the California Independent System Operator.

NCPA sought these vendor bids three years ago and received quotes that were "several hundred thousand dollars a year in licensing fees and ongoing maintenance," said Caracristi. The need for services from these customized systems adds to the cost of power consumption for every California consumer.

Faced with such a large annual expense, NCPA sought instead to develop the in-house expertise to deal with the statements. Senior programmer analyst Carlo Tiu and his team at NCPA used Oracle's XML handling capabilities gained in the second release of 10g, a feature known as Oracle XML DB. They developed an XML schema that allowed Oracle to handle the data and an XML configuration file that contained the rules for determining supplier payment from the data. That file can be regularly updated, without needing to modify the XML data itself.

In addition, his team created a file that contained the scripts for configuring Oracle to handle the XML schema and data. In doing so, the NCPA gained a step on the rest of the industry, as the California Independent System Operator will require all of its vendors to provide power distribution and billing data as XML files next March. NCPA has already tested its ability to automatically process XML settlement statements. NCPA has scaled out its Oracle system to 10 times its needs "without seeing any bottlenecks," Tiu said.

Being able to automatically process the Independent System Operator statements will represent a huge cost savings to NCPA, according to Tom Breckon, the former information systems manager for NCPA, now retired and retained as a consultant.

NCPA is paid about $100 million a year for the power it delivers to the grid, but it needs about 40% of that amount for the staff required to schedule deliveries to the grid and process the Independent System Operator settlement negotiations. NCPA represents 2% of the power delivered on the grid.

When settlement statements come in, Breckon says NCPA has eight working days to determine where mistakes may have been made. "If we fail to get back to [the California Independent System Operator], we lose our chance to reclaim the monies from corrections." Yet, he acknowledges, "we can't inspect that volume of data on a manual basis."

Gaining the expertise to deal with settlements as XML data over the past three years has cost NCPA the equivalent of one year's expense of a manager's salary. Meanwhile, NCPA has positioned itself to become its own statement processor and analyzer, submit disputes to the California Independent System Operator for corrections, and collect more of those corrected payments for members on a timely basis.

"In my opinion," said Breckon, "everybody will be doing it this way five years from now. It would reduce costs for all rate payers."

Evidence that Breckon may be right lies in the fact that NCPA has received 28 requests in the past two months for its Oracle database configuration file since making it available as open source code.