Metering

analyzing the benefits of AMR

Issue 4 and Volume 83.

Automatic meter reading (AMR) involves more than replacing meter readers and producing more accurate customer bills. AMR is a pivotal information source that can drive enterprise efficiencies within distribution operations, asset management, customer service and energy management.

What kind of benefits are utilities seeking today and what does the solution roadmap for achieving those benefits look like? This article is based on the authors’ recent experiences in crafting the AMR strategies, implementation plans and business cases for major investor-owned utilities that represent over 10 million electric end-points.

AMR benefits

The AMR benefits generally sought have been focused on distribution operations, asset management and customer service. While energy efficiencies via demand response and load management are also viable AMR benefits, there were not sufficient and definitive ratemaking and regulatory environments to enable quantification of these benefits at the utilities forming these case studies.

For distribution operations, outage and restoration notification combined with on-demand data improve the speed and accuracy of outage localization and restoration activities, resulting in improved service reliability, crew utilization, dispatch efficiency and customer communications. Most false single-light-out trips for electric utilities are avoidable with on-demand reads. Appropriate use of AMR data in distribution engineering can also reduce distribution capacity requirements as well as distribution losses and improve network reliability. Certain AMR technologies facilitate the maintenance and accuracy of the customer connectivity model, which further improves distribution engineering and operations.

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AMR can improve asset management via better load research and rate design. AMR devices and their underlying communications networks provide information that can be used to proactively monitor distribution asset performance, enabling improvements in preventative, predictive and reliability-centered maintenance. Complex billing data providing detailed information on actual load patterns can be used in transformer load management, and in load modeling and forecasting, to improve system and asset investment planning.

For customer and meter operations, AMR impacts meter reading operations by increasing the accuracy and reducing the number of physical meter reads per billing cycle and lowers the probability of field personnel injuries. On-demand AMR data eliminates ad hoc field visits for off-cycle or special reads. Integrity monitoring of site, meter and load enables more rapid detection of meter tampering, monitoring of vacant consumption, and eventual mitigation of energy diversion.

Customer service is improved initially via increased billing accuracy, which results in reductions in estimated bills and customer complaints due to meter reading errors. On-demand AMR data improves the call center’s bill inquiry and dispute resolution efficiencies. Complex billing data enables rate verification and improved load research and rate design that can yield better rate choices for customers. AMR enables flexible bill dates, improving customer convenience. AMR also improves customer convenience during move-in and move-out by enabling timelier and more accurate last reads and start of service on actual change of premise dates, while remote connect and disconnect makes possible vacancy monitoring in transient premises and provision of peace-of-mind services to customers.

Finally, AMR can be a source of increased revenue via more accurate detection and collection of meter and/or site problems leading to billing inaccuracies (stuck meters, cross-phased C&I meters, incorrect multipliers, etc.). Remote disconnect enables aggressive cuts for non-pay with reduced charge-offs and the commensurate interest costs of non-pays. AMR system deployment typically discovers meters orphaned from the billing system and improves meter accuracy through re-calibration under a retrofit scenario or replacement of aging meter population with solid-state meters. Solid-state meters are more accurate overall than electromechanical, provide greater resolution for billing, operate with a lower watts loss, and measure more load via reduced starting watts (even with the integration of AMR communications).

Case Study Results

Figure 1 shows the benefits quantified by the case study utilities, including benefit areas that most utilities are still struggling to quantify such as outage management, distribution planning and engineering. Classic AMR benefits include on-cycle meter reading, meter operations, billing and accounting, and call center. One of the AMR benefit areas that has grown substantially is that associated with revenue protection and other revenue sources. These benefits are detailed in Figure 2. As mentioned previously the case studies did not include demand response or load management benefits, which by their nature could contribute substantially to the overall AMR business cases.

planning for Enterprise AMR Benefits

To gain the benefits of AMR, utilities need a framework for developing a business and technology roadmap, including a business case and implementation plan. Enterprise AMR benefits can be derived from existing AMR systems that have not been fully integrated, or within the scope of new AMR implementations. The business case will be very different in these scenarios, with the former typically yielding returns on investment more quickly than the latter, mainly due to the time needed for AMR meters and communication network deployment.

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The framework for these activities involves the following five-step process. Steps 3 through 5 should be done in parallel.

Step 1. Define requirements and objectives. Define the strategic, business, and technical requirements for the AMR system or its integration within the utility enterprise, and prioritize these requirements.

• Align with the utility business strategies.

• Establish preferences in business options (e.g., build vs. buy, own vs. fee for service, etc.).

• Assess gaps between current and future AMR-enabled business processes.

• Develop business and technical requirements.

• Assess gaps in IT systems to enable AMR benefits.

• Analyze customer segmentations for deployment priorities and business case planning.

Step 2. Evaluate available AMR and IT technologies. Identify the most suitable AMR and IT technologies and system designs, to meet the utility requirements.

• Compare functional capabilities and technical performance of available technologies.

• Assess system integration and process alignment possibilities.

• Assess system development, deployment, and ongoing operations and maintenance costs.

• Estimate total costs of ownership.

• Adjust benefits to be commensurate with technology capabilities.

• Assess costs/benefits of the different technologies.

Step 3. Craft the system architectural plan. Develop a complete system plan with sufficient details for finalizing the business case and crafting the implementation plan.

• Develop the solution architecture footprint and enterprise integration plan for information systems and business processes.

• Identify major risks, their likelihood and potential impact.

Step 4. Develop the final business case. Conduct a sufficiently detailed cost/benefit analysis of the AMR solution to support recommendations to the utility’s executive leadership.

• Categorize the costs and benefits into capital and O&M.

• Allot the costs and benefits to the appropriate timeline.

• Identify all direct and indirect costs.

• Adjust the cost and benefits for regulatory, human resource and other constraints (e.g., labor commitments regarding FTE reductions).

• Finalize business case and associated documentations.

Step 5. Develop the implementation plan. Formulate plans for implementing the recommended AMR solutions, from development to production and benefits realization.

• Develop the system development plan, including AMR technologies and information systems such as a meter data management system (MDMS).

• Develop the system deployment, including the meters, communication network equipment and IT systems.

• Develop the system integration plan, integrating MDMS with the AMR head-end systems and the customer information and billing systems, outage management system, work management system, engineering applications, etc.

• Develop a plan for benefits realization including process reengineering, change management, training or retraining, and risk management, etc.

positive business cases

The utilities analyzed for new AMR systems all have net present value positive business cases with internal rates of return exceeding 15 percent, and paybacks of approximately 10 years. Steady-state annualized benefit per meter, per month, for a million electric meters and above greatly exceeds $3. Enterprise integration of an existing AMR system to increase the AMR benefits generally has an internal rate of return exceeding 60 percent and paybacks of less than three years.

Ivo Steklac (P.E.) is the president and founder of Enspiria Solutions Inc. and a recognized industry expert on AMR. He provides AMR strategy and business case consulting to utilities and speaks and publishes regularly on AMR topics.

Hahn Tram (P.E.) is an accomplished thought-leader in the energy utility industry. He has consulted for numerous utilities with AMR systems to enhance operational efficiency, asset management, and energy efficiency. Mr. Tram has published/presented more than 80 papers in journals and conferences.