AMI & the smart grid – Utilities at a Crossroads: Invest Now or Pay Later

By Don Cortez, CenterPoint Energy

Recent challenges to energy supply, highlighted by events such as the 2003 Northeast blackout, the California energy crisis, Hurricane Katrina and other natural disasters, have exposed the vulnerabilities of the nation’s aging utility infrastructure. The Department of Energy estimates that losses to the economy due to power outages and power quality disturbances add up to $188 billion annually.

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In addition to an aging infrastructure, other trends are helping to drive utility upgrades. Some key trends include increased energy costs, regulatory policies emphasizing energy efficiency, heightened environmental awareness and homeland security concerns. CenterPoint Energy is hoping to meet these challenges for its 2 million electric customers by proposing the deployment of an “intelligent grid” initiative.

The idea of upgrading the electric grid to make it more efficient would seem easy enough until you consider that utility companies, in the past, have not been on the cutting edge of technology. The 100-year-old technology has been stuck in a rut and, in many cases, operated manually. As one utility executive recently said, “If Thomas Edison arrived in today’s world, he would recognize our electricity system immediately, since it is that old.”

But a “perfect storm” is gathering to create a change that will ultimately transform the utility industry. With this change, utilities will be able to respond more quickly to the evolving needs of customers, whose tolerance has grown thin for power outages, voltage fluctuations and lag time in receiving information about their energy usage and cost.


The advanced metering infrastructure rollout at CenterPoint Energy will ultimately empower customers to particpate in demand response and energy conservation programs.
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CenterPoint Energy (CNP), the nation’s third-largest combined electricity and gas delivery company, is ready to propose one of the first deployments of the intelligent grid, which connects electricity and gas with communications and computer controls to create a highly automated, responsive and resilient energy delivery system. In a strategic relationship with Itron and IBM, CenterPoint Energy is working on three core smart grid stages. The first is an advanced metering system, which includes remote meter reading, remote connections and disconnections, premise outage detection and voltage threshold monitoring. The second is an automated distribution grid management system, which includes load management, grid self-healing, field crew management, fault location and fault diagnostics. The third is predictive fault analysis. CNP hopes to leverage these new technologies to enhance the efficiency and reliability of its operations.

The move toward creating an intelligent grid was facilitated by the Texas legislative and regulatory environment. In Texas, customers are allowed to choose their own electricity provider. Retail electric providers purchase power from generators and, in turn, sell it to business and residential consumers. CenterPoint Energy is the energy delivery company in the greater Houston area that owns the wires, poles and substations–the electricity infrastructure.

An intelligent grid would allow CNP to:

  • Automate key operations and reduce the need for manual intervention;
  • Improve system reliability by decreasing the frequency and duration of outages;
  • Facilitate Texas’ electric market restructuring by enabling the power delivery system to respond to market demands;
  • Provide customers with near real-time information on their electric usage so they can make smart energy decisions; and
  • Prolong the life of electric infrastructure with automated monitoring and proactive maintenance.

Changing metering technology is something utilities can do relatively easily, but moving to a true smart grid involves an investment in new technologies and a different, more automated way of conducting operations. It will also involve a culture change, having people step aside to allow devices to talk with other devices without getting in the way. To fully leverage this intelligent grid, utility employees have to think differently and allow the system to work on its own, to self-heal, if necessary, and to automate.

Advanced Metering System

Advanced metering is a key component of CNP’s intelligent grid plan, with drivers that include a competitive retail market in Texas, changing and growing consumer needs, and a strong emphasis on conservation and energy efficiency. A number of other utility companies in Texas and elsewhere are also beginning to take a proactive approach with advanced metering to ensure they are properly positioned for the future.

In 2007, CenterPoint Energy successfully completed field testing of Itron’s OpenWay advanced metering technology, deploying approximately 10,000 new OpenWay CENTRON solid-state meters. The advanced metering infrastructure (AMI), with two-way communication technology, enables the collection of vast amounts of useful data while empowering customers to participate in demand response and energy conservation programs offered by the state’s retail electric providers. CenterPoint Energy successfully tested the system’s performance and reliability against a variety of benchmarks and functionality requirements in an operational environment.

The OpenWay system was selected because it is a highly adaptable, open-architecture solution that features full-two way communication to every meter and is designed to meet a broad set of advanced metering, communication and control technology requirements. CenterPoint Energy’s evaluation of these AMI meters focused on several capabilities and requirements, including:

  • The ability to deliver 15-minute interval data and on-demand reads from every meter;
  • The ability to maintain very high overall system read reliability;
  • Remote disconnect and reconnect functionality for each meter;
  • The ability to remotely download new firmware to each meter;
  • ZigBee home area network communication with other meters, smart thermostats and load control devices to support energy efficiency and demand response applications; and
  • Smart-grid functionality such as remote outage detection and remote, automated service restoration.

The initial deployment of OpenWay showed scalability; so in the coming months, CenterPoint Energy plans to ask the Texas Public Utility Commission to approve its full deployment plan, and the necessary cost recovery, for 2 million advanced electric meters in its Houston area territory during the next five years. CNP is also the natural gas utility serving the Houston-area and has 1.1 million gas customers that will be linked to the electric system’s communications infrastructure. If this plan is approved, it will be an aggressive transformation. Under the Houston area’s normal growth conditions, CNP typically installs 45,000 new electric meters annually in its service territory. However, when the company begins its advanced metering deployment, it will be installing approximately 35,000 new AMI meters per month.

How it Works and the Subsequent Benefits

As noted earlier, the advanced metering system provides energy usage information and interval data that is uploaded every day to nearby cell relays connected to the meter via broadband over powerline technology. The OpenWay system, using the wireless ZigBee standard, will be able to communicate with home area networks, including in-home appliances and thermostats.

It is vital for the utility industry to make this easy for consumers. Without consumer buy-in and regulatory support, deployment of the next-generation utility grid could be delayed significantly.

What should consumers expect from the advanced metering system? They will have smart thermostats in their homes, such as those made by several companies in the ZigBee Alliance (www.zigbee.org). These thermostats receive a signal from the advanced meter which triggers a programmed message to lower the heat, increase the air conditioning temperature or shut off the pool pump during peak load periods.

CenterPoint Energy is working with IBM to develop the grid management system. At the heart of the intelligent grid is the analytic engine which will continuously monitor grid sensors and respond with information or control of grid field devices. The analytics are based on engineering algorithms, derived from sophisticated outage analysis research as well as institutional knowledge and experience. Initially, the work will involve reactive diagnostics of field conditions, but the work will quickly transition to focus on predictive analysis of field equipment.

If approved by the Texas PUC and implemented by CenterPoint Energy, the utility, retail electric providers and consumers will all reap benefits from the implementation of advanced metering and an intelligent grid. Consumers should ultimately save money by having near real-time energy consumption information that will give them the ability to monitor and alter their energy use. The company and customers will also enjoy the benefits of remote detection of power outages and remote, automated restoration of a high percentage of outages, resulting in fewer and shorter interruptions of electric service.

CenterPoint Energy will have powerful grid diagnostics and more control, automated meter reading, improved asset management and increased customer satisfaction. Electricity retailers will receive smart home support, demand response support, and will have the ability to adopt virtual pre-payment programs and dynamic pricing to reduce peak power demand. Ultimately, the environment also wins as customers make smart energy choices to reduce consumption.


Installation of an OpenWay CENTRON solid-state meter at CenterPoint Energy.
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These are exciting and challenging times for the energy industry. Changes in technology and the way we deliver and use energy may not be easy or quick, but the potential benefits of this technological transformation make this one time when the “perfect storm” is a storm we welcome.

Don Cortez is the division vice president of regulated operations technology at CenterPoint Energy in Houston, Texas. He is also one of three Keynote Speakers scheduled to kick off DistribuTECH and TransTECH 2008 on Jan. 22, 2008. See pages 30-47 for more details.

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