Electric AMR Market Enters its Second Curve—Autovation

By James F. Andrus, AMRA

Most people consider the concept of automatic meter reading (AMR) to be a phenomenon of the 1990s. This notion is largely accurate because that is when most installations occurred, but, in actuality, the very first AMR installations began in the 1940s using increasingly popular and available telephone technology.

However, I like to use 1979 as a starting point for the electric AMR market, and I’ll explain why.

On Dec. 31, 1979, the Department of Energy (DOE) released a report on “Design of an electronic module for electricity load research.” The product reviewed was developed by the Cain Encoder Company of Greenville, N.C. Here is the description that was provided in the DOE report:

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“A design is presented for a small solid-state module which permits load surveys and time-of-day billing from existing electric watt-hour meters without the problems of pulse-counting techniques or magnetic tape recorders. The Load Survey Module (LSM) obtains direct digital readings of the meter by interrogating a Cain Encoder at 15-min intervals and stores the successive four-digit readings in memory for later examination and computer entry via an LSM Reader also described. Each module can contain 4,096 separate meter readings–42.7 days of readings–without memory overflow. The very low combined power requirement of the LSM and the Cain Encoder allows the LSM to operate entirely from an internal long-life battery if desired. (Because of the latter feature, the LSM and Cain Encoder are also useful for profiles of gas consumption.) In addition, the LSM and Reader may be readily interfaced to telephone lines, power line carrier equipment or other communication or load management system with minimal investment. A system of LSMs will cost less and will give higher reliability, greater operating efficiency and convenience than a system of comparable size consisting of magnetic tape recorders and translators.”

I actually saw the Cain Encoder once and even interviewed Mr. Cain in 1988 for an AMR research report I was writing. It was an ingenious design, offered a lot of functionality, and provided many of the features and benefits that electric utilities are still seeking today.

While the Cain Encoder never became a widely accepted product due to commercial and technical issues, it did identify an emerging electric AMR market and started the design and development of the modern AMR module. Twenty-five years and 27.3 million meters later, here we are.

First, let’s describe what we mean by an automated electric meter. I would propose that we categorize automated electric meters as meters that can communicate some, if not all, of their register data remotely, whether by RF signal, powerline carrier, satellite or telephone (wired or cellular). These deployed technologies offer a mix of two-way, one-and-a-half-way and one-way communication options. Some use handheld computers to collect data, some use vans and some use fixed network. What they all do is provide solutions to several utility problems.

Over the past 25 years, almost on a universal basis, utilities have been interested in eliminating their hard-to-read and high-cost-to-read meters. This business decision was almost a no-brainer as utilities searched for a solution to address the most challenging and expensive part of the meter data acquisition process. There were also a handful of electric utilities that had the strategic vision to automate all of their meters during this time frame.

It is safe to say that the success the industry has realized to date in automation was achieved through harvesting the “low-hanging fruit” of hard-to-read and high-cost-to-read applications and the handful of visionaries who became early AMR technology adopters.

Borrowing a term from author and futurist Ian Morrison, I would categorize the last 25 years as the first curve of the electric utility AMR market. Morrison is an internationally known futurist who specializes in long-term forecasting and planning. He is author of “The Second Curve: Managing the Velocity of Change.” Morrison describes a market’s first curve as “traditional business carried out in a familiar corporate climate.” The second curve is the future “of new technologies, new consumers, and new markets that will combine to bring about a sweeping and irrevocable alteration in the way every business must organize and function.”

The AMR market is approaching the end of its first curve and beginning the second curve. How can you tell when you’re at the end of the first curve and entering the second? According to Morrison there will be signs: Revenue growth will flatten, even decline slightly. New players will show up with a new technology and a slightly different way of doing things, and they will make inroads into what were once thought of as secure markets.

As an industry, we need to understand the sources of the second curve. Massive forces of change typically fuel it: new technology, new customers and new markets. The second curve will fundamentally change the threats and opportunities we face. To succeed, we have to learn to understand and anticipate these changes.

If the first curve was focused on electric utility AMR. The second curve is focused on electric utility “autovation.” Autovation is the theme of the 2004 AMRA International Symposium to be held in Orlando, Fla., Sept. 26-29. AMRA defines autovation as:

  • advancing AMR and related technologies to share information and optimize operations across the utility; and
  • connecting data, CIS, billing, IT, operations, management and customers for the benefit of all stakeholders in water, electric and gas utilities.

A number of new market requirements have been created as a result of the need for utilities and their customers to manage the risks associated with electric market restructuring. Today, all 50 states and the District of Columbia are addressing reforms to retail electric service. Some states have implemented pilot programs, while 24 states and the District of Columbia–representing 62 percent of the U.S. population–have adopted retail competition. The states are pursuing electricity restructuring in a variety of ways and at varying paces. The differences in approach reflect each state’s unique circumstances. According to the Energy Information Administration, electricity consumption in the United States will increase by 51 percent from 2002 to 2025. Needless to say the electric utility industry faces some major challenges in the years ahead, and demand response and autovation projects are going to be essential if we are going to be successful.

In Canada, the recently proposed regulations in Ontario regarding “smart meters” are also expected to move that country further along with deregulation and retail competition. These “smart meters” are to be put in all of Ontario’s 4.5 million households and record the time at which power is drawn, as well as the amounts of power. Initially, by 2007, about 800,000 homes will be fitted with smart meters to help them cut their power use. This is the target year set by the government to shut down all five of the province’s coal-fired generating plants, which provide about 25 percent of Ontario’s power.

These changing electric utility requirements are fueling constant product innovation within the electric meter industry. The operational challenges presented by these changing requirements are further intensifying the need for technological advances.

A chief area of innovation is the integration of communications capability into the base electric meter products. These emerging technologies have already affected the product and pricing paradigms that have been established for years. Solid-state electric meters with integrated communications modules have become competitive with electromechanical meters that have add-on communications modules. Utilities are looking for the lowest-priced communication-enabled solid-state meters with high reliability and functionality.

The emergence of intelligent, affordable two-way network technologies is generating renewed interest from electric utilities worldwide as a means to solve the complex automation requirements that have not been addressed by previously available AMR technology. This enhanced technology not only allows electric utilities to address their advanced automation and demand response requirements–such as time-of-use, demand, load profile and/or critical peak pricing–but is also less expensive than the earlier fixed-network solutions. It provides much more than AMR. It provides “autovation.”

One of the primary benefits of two-way technology is the capability to provide interval usage data. Interval usage data allows utilities to support new rates and send price signals to customers to reduce usage during periods of relatively high-energy prices. In addition, the availability of real register data from the meter, and not just pulse data, increases the data’s reliability and accuracy and provides an auditable record of energy usage. This will help utilities alleviate the many risks created by energy market restructuring.

While the added risk of newer metering technologies makes large-volume deployments an operational and financial uncertainty for utilities in the short term, manufacturer’s are investing large sums into developing next-generation meter automation technology and the associated “killer” metering applications, in the hope that utilities are ready to commit to deployment and start the second curve of the electric “autovation” market.

AMR’s first curve was a major accomplishment for the electric utility industry, and the installation of 27.3 million automated meters provided a good foundation for growth. With the new electric utility market requirements being clearly identified and the introduction of new technologies to serve these requirements, the second curve of “autovation” should carry us a long way to automating all 130 million electric meters in the United States and Canada.

James F. Andrus has been involved in the utility automation industry for more than 15 years. He is manager of AMR systems and business development for Elster Electricity, LLC (Formerly ABB). Jim currently serves as vice president of the Automatic Meter Reading Association (AMRA) and was the recipient of the 2002 Distinguished Service Award. Prior to joining Elster in May of 2000, he was with Itron, Inc. and held several senior management positions. He is a graduate of the University of Hartford and Rennselaer Polytechnic Institute.


AMRA brings ‘Autovation’ to 2004 Symposium

AMRA, the voice of the automatic meter reading industry, provides information critical to the understanding and application of AMR technologies. Through industry analysis, symposia and relevant publications, the nonprofit membership association serves the business interests of utilities and utility technology suppliers.

AMRA’s most highly attended educational forum is its annual symposium. Autovation: The AMRA 2004 International Symposium takes place Sept. 26-29 at the Gaylord Palms Resort & Convention Center in the Orlando area.

Autovation takes a fresh look at automation strategies for utilities of all types and sizes. Sessions cover fundamentals as well as advanced issues of interest to veteran AMR managers who now want to further optimize their utilities’ AMR investment.

Topics include:

  • building a business case, then benchmarking results;
  • technology capabilities and needs matching;
  • maximizing your AMR system;
  • enterprise-wide integration and optimization;
  • customer service; and
  • reducing losses and building revenue.

Utility-only forums on Wednesday, Sept. 29, encourage the free flow of ideas among utility delegates from North America and around the world. Conversations will touch upon experiences and lessons learned, technological challenges and benefits, return on investment and overall objectives.

Meanwhile, the Autovation exhibit hall showcases billing, communications and information systems designed to help you best serve your customers. And in-depth Pre-Autovation courses will cover topics including RFP development, information systems, data-management issues, communications options, business models and market requirements.

For more information about AMRA and Autovation, visit www.amra-intl.org. Or contact AMRA headquarters:

AMRA
60 Revere Drive, Suite 500
Northbrook, IL 60062
(847) 480-9628 or 888-612-AMRA
amra@amra-intl.org

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