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Chattanooga company in forefront of global energy switch
Chattanooga is full of surprises. A small tech company you've probably never heard of is turning streetlights on and off in Jamaica and unintentionally creating an informal currency backed by kilowatts in the West African nation of Benin.
Mike Harrison is co-owner of Utiliflex, a Chattanooga company that is a global provider of software and smart meters, allowing utilities around the world—including Jamaica—to sell prepaid electricity.
So one day, after its Utiliflex system was in place, the Jamaican power company asked for help in tracking down suspected power theft from people tapping into streetlights. By overlaying usage data on maps, from his office in Chattanooga Harrison was able to isolate areas where certain streetlights were using 20 times more power than their neighbors... during the day, no less.
"Maurice the project manager in Jamaica goes, 'Hey, can you turn these off?' I said, 'Well, not today, but give me until tomorrow.' So we built a little interface," says Harrison. "I like making stuff work."
Harrison started Chattanooga's first local Internet service provider, Chattanooga Online, in 1994.
"The Internet technologies I have a long history with work well in developing countries with limited infrastructure," he says. "The education I got building Chattanooga Online is now being used building networks for utility companies."
(Full disclosure: Mike and I were tag team Internet evangelists together in 1995, after we collaborated on a project that created Chattanooga's first civic web presence that year: Sustainable Development Online.)
The electric utility in Benin is another Utiliflex client that, like most, began small and is expanding rapidly.
"The system is so successful they are going from 30,000 to several hundred thousand customers as fast as they can put the meters in," he says. "In developing countries, they can't afford what we do upfront, so they pay over time as they add customers. We don't make any money up front, but long-term we should make pretty good money, and we're starting to."
The Utiliflex business model is similar to software-as-a-service, in which companies pay a monthly fee for the use of a software package rather than purchasing it outright. Utiliflex works with a partner company that sells smart meters.
"We do run it as a service for some customers, but most utilities want it installed at the utility inside the country," says Harrison. "So we will license the software and provide our services in a software-as-service pricing model, but we're actually installing it onsite. It allows them to afford it."
According to Harrison, prepaid electricity in developing countries can function like an alternative currency. Kilowatts can be purchased and transferred via text message or through scratch cards with 20-digit access codes that are entered directly into the smart meter or communicated to the power company. The Benin utility recently bought scratch cards worth 11.4 billion West African Francs, or more than 20 million U.S. dollars.
"They were printed in Ohio using our encryptions and private closed-loop system," says Harrison. "It becomes an informal currency backed by kilowatts. We see this in several places. One of the things our system allows you to do is transfer wallet balances in the utility system from person to person."
Aside from a project in North Dakota, all of Utiliflex's clients are in developing countries. In addition to Benin and Jamaica, the company works with utilities in St. Martin's, Guyana, Dominica, Philippines and Honduras, and has multiple projects in South Africa, Nigeria and the Dominican Republic.
Harrison's co-owner and senior partner is Joe Gordon, who started the company by purchasing a prepaid electric technology distributorship from his former employer, Tennessee Valley Infrastructure Group, seven or eight years ago. Gordon and other employees provide expertise in business consulting, marketing and finance, while Harrison is "the make-it-work person."
Utiliflex's system is a Linux-based platform written completely in-house that can manage every aspect of a modern utility, including prepaid and postpaid electrical service, although the company works almost exclusively with prepaid. Their system provides detail or summary data to large accounting systems, performs complex tariff calculations for large customers, generates government tax I.D numbers, and manages multiple payment gateway channels.
The company's first installation was in Guyana, where the World Bank was footing the bill for a prepaid system that was capable of running the entire country's electric utilities. Now, four years later, Harrison is returning to Guyana at the end of the month to upgrade system hardware and software.
"It the U.S. mentality, prepaid is only for the poor," says Harrison. "In reality, I think prepaid is for the smart."
One advantage is environmental. He says statistics show prepaid customers use 15-20 percent less power than others because they are not using more electricity than they can afford. Prepaid electricity is also cheaper for people living paycheck to paycheck, who may pay high fees to reconnect power that has been shut off for nonpayment. For someone on a prepaid system, he says, "Your lights go out, you just go buy juice, no penalty."
"I think it's coming in the U.S. as utilities slowly upgrade archaic legacy systems," he says. "EPB is at the bleeding edge, but a lot are farther behind and still trying to figure some of it out. Overseas, people are building their second and third systems and looking for upgrades and new feature sets."