Snam Rete Gas: Forecasting the future to act on the present

Snam Rete Gas of Italy improves the precision and details of its demand forecasts by using SAS to generate them automatically. As a result, the company complies with industry regulations and meets its customers’ service expectations.

In the energy sector’s revamped operating and regulatory environment, an accurate forecast of natural gas demand is of utmost importance for Snam Rete Gas. A major player for natural gas transportation and dispatching in the Italian market, Snam’s mission has undergone major strategic changes due to market deregulation.

Today, its core business concentrates on transporting natural gas. Snam must ensure the proper allocation of nominated quantities at more than 7,000 delivery points, including local grids and major industrial and thermoelectric customers. All must comply with the established Italian Regulatory Authority for Electricity and Gas service criteria and ensure that all operations occur in conditions of maximum system safety and reliability.

A more granular segmentation of demand
Due to regulatory changes and customer service requirements, Snam Rete Gas needed to improve their operating processes and replace their current dispatching application base. The improved processes are vital for accurately routing gas toward its delivery points, monitoring the routing system and implementing necessary corrective actions. A key component of these operations is accurate and detailed demand forecasting.

As Snam Rete Gas CIO Natale Maiocchi points out, “One of our priority requirements is not only the improvement of forecasting precision, but also of forecasting details. In fact, we operate in a market regulated by the authority, and we must comply with very strict criteria in terms of service quality. We need to segment forecasts in a more granular fashion – by geographic areas and consumer type. We need to anticipate a future scenario involving an increase of nomination frequency. Furthermore, we need to overcome the technological obsolescence of applications implemented at different times and based on models that no longer meet current business needs.”

Forecasting consumption requirement in detail 
After considering their software options, Snam chose SAS® Forecast Server to help optimize its forecasting process. “Selecting SAS,” states Application Systems Manager Marzio Bonelli, “is part of a policy that is directed toward system integration. In order to respond in a timely manner to business requirements, it is not only necessary to acquire performing solutions, but also to have the data rapidly available that allows us to base our decisions on facts.”

With this solution, operators will be able to drastically accelerate the speed of the forecasting process, starting with large-scale historical series, while improving accuracy and degree of detail. Based on the number of drivers and transportation activities, weekly forecasts are produced to optimize stock management. And daily national gas forecasts – along with detailed consumption forecasts by geographic area and type of customer – are also generated.

“It’s important to know in detail the requirements at each delivery point,” Bonelli says. “The type of customer is also a relevant parameter because it strongly affects consumption, as in the case of thermoelectric and industrial companies.”

Forecast automation and speed 
Since the solution promises significant results, Snam hopes to extend it to other business areas, such as risk management in financial areas or long-term forecasting of consumption trends. But what benefits are expected?

“First of all,” Maiocchi answers, “the ability to automatically generate accurate and reliable forecasting models translates into time savings and is a determining factor in the event of a nomination frequency increase. Secondly, ease of use through an intuitive graphic interface and simplicity in generating reporting translate into a simpler distribution of forecasting within the company. And finally, a reduction in services costs.”

Accenture adds value
Snam Rete Gas chose Accenture for system integration. The company picked Accenture and SAS because of their joint experience in the utilities field, both nationally and internationally, according to Carmine Artone, Senior Executive, Accenture. “The ability to provide accurate and transparent information is vital in order to obtain excellent performance and provide better customer service, particularly in complex regulated markets,” he says. “The choice of a system integration partner is fundamental for the successful outcome of similar projects so as to achieve the expected benefits while also complying with planned schedules and budgets.”

Find this testimonial in the March 2008 issue of ITA.SAS.COM

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