By Carolyn Kinsman, Automated Communication Links Inc.
Automatic meter reading (AMR) system selections are never made lightly. Frequent comments by utilities going through the process include:
“We’ve never bought an AMR system before.”
“Our staff is not confident the technology options can deliver the promised functionality.”
“Communications technology options vary along with the cost, making it extremely difficult to quantify or appreciate features beyond those to acquire a monthly meter read.”
Mitigating the risk of the overall AMR capital investment when selecting a system type is probably the number one concern when purchasing AMR. Keeping this perspective in mind, one can review past AMR buying behavior and see a split in how utilities have dealt with risk-mitigation.
On one hand, utilities have found that risk can be contained by purchasing a drive-by system to replace manual monthly meter reads. Costs for this type of system are generally the lowest of all AMR solutions, and in fact, seem to be decreasing at about 3 percent to 5 percent per year. At the same time, manual meter reading costs are increasing, on average, 1.5 percent to 3 percent per year. In many cases, utilities can plot the operational costs of the two methods to a not-too-distant crossover point and easily perform the necessary cost-justification.
Installing and operating an automated monthly meter reading system, however, does little to push the ingenuity envelope. For the most part, outside of the metering department, no other utility department realizes there has been a change in the data acquisition method. And while certainly more accurate, the amount of data and outcome on the customer bill is about the same.
More aggressive utilities, on the other hand, acknowledge that if an investment must be made to automate meter reading, then the incremental cost to acquire more data, more frequently, should be included in the equation. Past technology adoptions, such as when utilities transitioned to computers on every desktop, have had a positive impact on utility operations and bottom-lines. The incremental investment to acquire more frequent customer data through an AMR system is expected to accrue a similar payback. The additional data acquisition functionality resulting from the incremental increase in investment is viewed as more appropriately paralleling the “high-tech” lifespan of the AMR system investment.
Regardless of the end-device resilience, it is the ability of the communications pipe to deliver increased data throughput at increased frequency that spells true AMR operational success. The communication link to the meter must be robust enough to enable performance beyond basic meter reading tasks as the demand for data increases.
Depending on bandwidth, one-way systems may suffice for acquiring data for profiling, rate analysis, forecasting and asset optimization.
Many utilities question when, and if, a two-way link is necessary for an AMR system. Early entries in this arena are proving that the anticipated cost increase associated with additional two-way functionality was likely overestimated. Therefore the question now becomes: “What are the motivating factors for taking this next step?” Two-way is “the only way” to convey an action as a result of first acquiring usage data. To depend upon the modification of usage behavior patterns, utilities must develop and offer programs that accurately quantify and confirm the customer reaction to price signals or curtailment actions.
Time-of-use (TOU) was once considered the next big AMR feature requirement. However, more recent experiences being tested in California, Pennsylvania and New York point to peak load management and demand response as more appropriate utility- and customer-oriented applications. The tools to address these applications are critical peak pricing (CPP) and load control programs, including curtailment confirmation.
Considering these emerging trends leads most to believe that CPP will leapfrog the more traditional TOU as it facilitates initiation of energy restraint measures only when it is necessary. Customers are only asked to curtail usage if, and only if, there is a capacity issue. The translation in dollars for implementing CPP is expected to be the equivalent of deferring or eliminating investment in peak generating plants primarily constructed to serve customers for under 10 to 12 hours per year.
Savings acquired in generation and used in distribution would go a long way in justifying the capital expenditure of investing in two-way AMR systems. Realistically, the current utility structure and unbundling initiatives fight against this business theory, making investment in two-way communications difficult to acknowledge as necessary–but very attractive hypothetically.
Buying into the Dream
Building an AMR system to service the utility we think will exist five-to-eight years from now takes a well thought out, comprehensive communications strategy. Long-term, the communication option for AMR should be selected based on its ability to act as the customer link or “last leg” in the total utility communications infrastructure. Nodes connecting AMR onto jointly used high-speed transmission links are critical for cost containment and operations optimization. Joint use of infrastructure expedites the inclusion of investments in outage systems, SCADA and distribution automation.
Migrating and Mitigating:Public or Private Networks
Public networks, including spread spectrum, enable utilities to build out enhanced data collection capabilities without the associated infrastructure cost–beyond the cost of the base AMR system.
Private networks, while enabling the utility to control the entire communications architecture, require a higher level of commitment (that is to say, investment) by the utility. Utilities considering this option must be prepared to shoulder the responsibility to monitor and maintain the system, as well as perform upgrades to keep pace with technology improvements in other relevant or competitive networks.
A middle ground appears to be emerging where AMR systems are integrated to facilitate long-haul and backhaul of meter data over utility networks with infrastructure currently connected to utility substations. Still other AMR systems use a private network option to connect to the meter and the first collection node. At this point, the data is transmitted back to the utility via public network bandwidth.
Factors for considering mitigation of risk include:
- Geographical service territory;
- Customer segmentation;
- Availability of public infrastructur ability to negotiate competitive long-term contracts;
- Sunk investment in current telecommunication infrastructure for: utility communications; SCADA, distribution automation, outage systems, etc.
Moving from Concept to Real Life
Even if a utility’s risk odometer is low, incorporating a small option of action, such as building pockets of communication upgrades within a base-level AMR system deployment, may be palatable for a number of reasons. Smaller installations of “high tech” or newer equipment can be targeted to the specific customer segments that demonstrate specific needs. Data collection and warehousing systems, as well as modifications to the customer information system, can be added incrementally when the utility introduces information and energy service applications that require the increased functionality the new AMR equipment can deliver.
The acceptance of these evolutionary programs proves out the business case. Benchmarking of success is based on actual measurable customer response. Management can build the business model based on the deliverables acquired from the previous successful installation phase. While not only constructing a graduated path for increasing upper management’s level of confidence in technology-driven solutions, utilities are setting up an environment in which to increase their employees’ level of skill sets. As acquiring an automated monthly meter read is viewed as fundamental and increased usage information rises in importance when selecting an AMR system, it is not surprising that progressive metering departments are changing their names to “Energy Information Departments.”
Carolyn Kinsman, president of Automated Communication Links Inc., has a degree in telecommunications from Sheridan College. She is well-known for her 14 years of providing innovative business strategies dealing with all aspects of AMR selection, justification and integration.