By IAN ROSS
Thriving on confusion has proved to be a blessing for Ron Savage.
The deregulation of Ontario’s energy industry market has meant opportunity for his North Bay e-commerce company and has unknowingly made them a trendsetter in modern business transactions.
“The more uncertainty, the more kerfuffle creates momentum,” says Savage, president of Savage Data Systems.
The 10-employee company provides an electronic data management and transaction service that allows electricity retailers and local hydro companies to communicate, allowing retailers to offer competitive rates to consumers.
As with any seismic industry shift in the way commodities are marketed, sold and delivered, there’s always an overwhelming need for structure, regulation and for technology gaps to be filled.
In Ontario’s electricity sector, it’s resulted in a new kind of venture for companies like Savage Data Systems, with electronic business transaction (EBT) “hubs” being created and powered by Internet technology. Confidential customer information, such as usage and payment history, can be exchanged between local distribution companies (LDC’s) and energy retailers.
Savage describes an EBT hub as a centralized mailbox system, similar to e-mail, but more secure.
“Ontario was one of the first markets to deregulate so there wasn’t a cookie-cutter solution (for) people to go out and buy.”
Savage took part in a provincial working group set up by the Ontario Energy Board to create the standards for a centralized communications system.
“Since the LDC’s already had the infrastructure in place, like the billings and customer information systems to track the people that actually use electricity, we realized there’s the requirement for some sort of standard. We’ve been working on that for a number of years.”
The group was a great opportunity for Savage to get his foot in the door with larger competitors and establish where those standards and trends were going.
“We were the smallest company but we’ve ended up creating a (hub) product on our own. All these other guys spent millions buying stuff and getting large mega-servers and hiring teams of people, and we’ve kind of done that in our spare time here.”
Today, they are the second-largest EBT hub in Ontario.
Building on that, they’ve developed a software product geared toward the natural gas market called Hub in a Box.
Rather than have a centralized hub and charge customers monthly fees, Savage explains, they would prefer to sell software to businesses and let them do their own communications.
“Our Hub in a Box is taking our hub technology and moving it out to the individual companies.
It would allow them to reduce their monthly costs.”
Monthly fees would generate a “cash for life” scenario, but Savage didn’t see it as the best way to serve his customers.
A huge chunk of his business today revolves around the wholesale/retail settlement bureau. It involves a complex set of calculations that the Ontario Energy Board came up with that allows the market to operate with a fluctuating wholesale price and a more fixed retail price.
By reading interval meter data for big companies, they monitor fluctuating electricity prices and consumption from the various hydro utilities they do business with.
Household consumption meters measure usage, but prices change hourly.
“LCD’s have to know what to charge to the IMO (Independent Market Operator) for that energy.”
Savage says there were no products on the market to measure certain time intervals, so he wrote a program to take 15-minute segments from interval meters into hour-long segments.
They first began working on the service bureau with the Upper Canada Energy Alliance during the time the market deregulated.
“That’s probably our largest (revenue) producer.”
He’s also active in establishing provincial standards for the natural gas sector, deregulated in the mid-1980s, and is vying to participate in a standards group for smart metering.
Queen’s Park has introduced legislation requiring individual smart meters measuring consumption and time of electricity use for every home and business by 2010.
“Even though the standards (for smart metering) haven’t been written, I have kind of an idea how it’s going to turn out. We’re creating product based on that. If it turns out the way I’m thinking, it’ll be great.”
Savage will be doing product testing this year with a major southern Ontario utility.
The company has also moved from Lakeshore Drive into a renovated 1920s-era corner building at Algonquin Avenue and Front Street.
Twenty-five years earlier, Savage started the company as a custom programming house after he left his data processing position with the Ontario Trappers Association. He decided to take his sideline job writing programs and created a full-service data system company with his wife, Dawn, now the office administrator.
Through the lean years, he built up his client base by providing IT network and workstation support, and supplying training needs for local companies.
He wrote complete billing and accounting system packages for local dentists and the Ontario Tourist Outfitters, compiled geological databases for a mining exploration company and created management tracking systems for the Ministry of Correctional Services, the Ontario Provincial Police and Flowers by Sears.
“We monitor our customers’ requirements pretty closely. The people we work with, we’re constantly asking ‘What are you missing, what do you need?’ Even though we’re not a cabling company, if they need cabling done in a crunch, we can do it.”
Savage admits he’s not a big schmoozer and his company does next to no marketing. Most of the work comes from customer referrals and recommendations.
“There’s nothing we won’t do,” says Savage, whose company recently wrote a program for Ontario Northland Transportation’s bus fleet to track their maintenance and repair compliance.
“We wrote a similar program for Deluxe Coach Lines for their school buses. Ontario Northland found out about it through word of a mouth and we were able to sell it to them.”
Savage admits geography sometime works against a small Northern Ontario technology company when it comes to attracting large clients.
But he says North Bay has been fortunate with its built-up Internet infrastructure due to CFB North Bay and Nipissing University. “The T-1 (connection) here is every bit as good as Toronto, Montreal and Vancouver. We’ve got identical connectivity here and the pricing is very similar.”
