The good news for automated meter reading (AMR) vendors is that utilities have readily accepted that AMR technology works, and it is, indeed, something almost every utility is considering in at least some sense. Now, the questions are: How fast will utilities deploy AMR technology, and what technologies will they use?
Chartwell research indicates that the AMR industry will continue to grow steadily for the foreseeable future. Chartwell estimates that, as of the close of 2003 calendar year, about 16.5 percent of meters in North America were equipped with an AMR device, a number that was expected to grow to 20 percent in 2004, according to Chartwell annual surveys of 100-plus utilities. In fact, around 40 percent of meters could have AMR by 2008.
The levels of AMR system sophistication vary, but it is clear that more utilities continue to add AMR units to their meter population in an effort to meet their respective business cases. This is a trend that will continue to rise as well, perhaps even at greater rates than seen in the economic slump of the past three years.
There is little doubt that AMR is now mainstream. About 95 percent of utilities are at least considering deploying AMR technology (see Figure 1). In addition, the shipments of three leading AMR vendors—Distribution Control Systems Inc. (DCSI), Itron Inc. and Hunt Technologies—increased 18.2 percent in 2003. Combined, the three vendors shipped 6.3 million modules in 2003, almost 1 million more than in 2002.
The basic AMR questions most utilities now face are:
How much AMR should we deploy? Should we deploy AMR throughout the service territory or just for niche applications, such as commercial/industrial and/or high-cost-to-read residential customers?
If we install a system throughout the territory, should we go with the basic mobile (drive-by) technology that costs less or a more expensive fixed network that provides daily usage data that can potentially improve the efficiency of various utility processes, including customer service and engineering? If we go with a fixed network, should we go with a wireless network or one that uses the power lines?
For now, utilities generally continue to install AMR for small deployments, and mobile remains the choice of the majority of utilities implementing hundreds of thousands of AMR units. Utilities are showing particular interest in using AMR to decrease the cost of reading meters for high turnover customers, such as those in apartments.
Utilities Turn to AMR for High-turnover Customers
Chartwell’s 2003 survey found that about 52 percent of utilities use or are looking to use AMR to decrease the cost of reading highly transient residences, a dramatic 22 percent rise from 2002 (see Figure 2). Some, such as Austin Energy and Nashville Electric Service, are implementing wireless fixed networks just for apartment reads. It’s not just that highly transient customers, which often include apartment customers such as college students, can be costly to serve. Almost as importantly, utilities can also calculate the hard, or actual, savings AMR can provide—an important fact when trying to get executives to approve multi-million dollar expenditures.
Utilities estimate it costs $10 to $30 or more each time they have to send someone to read a meter outside of the regularly scheduled read cycle. Thus, to estimate the savings, they merely have to multiply the cost of each off-cycle read by the number of such reads they have annually. That can add up to big savings for some.
Austin Energy estimates it will save $1.3 million per year with its AMR installation on 123,000 customers, while Nashville Electric estimates annual savings of $115,000 through its various fixed network installations on almost 9,000 meters in 28 apartment complexes.
Fixed Networks Appear to be the Future
The future of AMR lies in fixed networks—what it is often referred to as “advanced metering.” In fact, some AMR experts do not consider drive-by a true automated solution because a person has to drive the vehicle to gather reads.
About 39 percent of utilities report using mobile AMR, while 28 percent report using either powerline carrier technology (PLC) or wireless fixed networks. But, it would appear if utility decision-makers had their druthers, they would choose more advanced systems. In fact, more than half of utilities say they are considering either wireless fixed or PLC systems, while about 24 percent say they are considering mobile systems (see Figure 3).
The primary drawback to advanced metering systems is cost, but there are indications utilities are evolving out of their back-to-basics approaches that led many of them to choose drive-by solutions.
One factor driving interest in advanced solutions is the increasing popularity of PLC, which, as the name implies, uses the power lines to transmit data. PLC is beginning to challenge wireless technologies as the premier advanced metering technology. PLC used to be seen as primarily for rural electric cooperatives, but that is starting to change. Indeed, shipments from PLC leaders, DCSI and Hunt, have nearly doubled over the past two years.
DCSI, a provider of two-way PLC technology, shipped out more advanced metering modules than any other vendor in 2003, even surpassing the owners of Cellnet’s fixed wireless technology. Although it cooled off slightly from its 65 percent-plus growth of the previous two years, DCSI shipped out a robust 1.5 million modules in 2003. In 2002, DCSI says it surpassed CellNet to become the largest supplier of fixed network modules to electric utilities.
DCSI’s growth has been fueled by a combination of continued success with cooperatives and an increasing presence among investor-owned utilities. DCSI, which made its biggest splash in 2002 with its contract at PPL Electric Utilities, announced in early 2004 significant deals with two investor-owned utilities—Idaho Power and Bangor (Maine) Hydro.
In February, Idaho Power, which has 426,000 customers, announced it signed a contract for phase one of a contract calling for installation of DCSI’s TWACS (Two-way Automatic Communication System) on 23,500 advanced meters. While the initial deployment is not large, the contract puts DCSI in line if Idaho Power goes with a full deployment. And, though there is no word of that yet, nearly system-wide deployment appears likely, given the relatively large size of the initial deployment as well as the Idaho Public Service Commission’s desire for advanced metering. In April 2004, Bangor Hydro announced it would install TWACS on 110,000 meters.
While Hunt’s growth has not been as fast as DCSI’s, it has been steady, and the company appears primed for continued growth. While Hunt Technologies continues to have success in the rural electric cooperative marketplace, more than 25 investor-owned utilities and 35 municipals have also selected Hunt Technologies’ solutions. More than 34 organizations, including many IOUs, have the vendor’s two-way system in place, say Hunt officials. Hunt has shipped more than 100,000 two-way modules since that product was rolled out in the summer of 2002 and has another 200,000 on order, according to company officials.
While Cellnet deployments have been on the decline, there is hope for wireless networks. Cellnet has reconfigured its offerings to reduce costs and enable utilities to own the networks, and there is a lot of interest in new mesh network technologies. Many utilities are testing mesh technology from vendors such as Elster and Tantalus. In mesh or peer-to-peer networks, each meter serves as a potential collector that can pass on data from other meters; the meters can even use various routes to pass that data to the main collection point, thus decreasing communication problems.
Orlando Utilities Commission (OUC), Salt River Project and Southern Co. subsidiary Mississippi Power are among those testing the Elster system. OUC officials say the system has worked very well.
Mobile Still Dominant
For now, however, mobile continues to dominate, which also means Itron—the No. 1 mobile vendor—continues to lead the overall AMR pack. The Spokane, Wash.-based company shipped about 4.2 million modules in 2003 for 14.7 percent growth. The company’s purchase of Schlumberger Electricity Metering was finalized recently, and the vendor hopes to take advantage by incorporating Schlumberger’s electric meters with Itron’s AMR technology.
For the vendor to maintain its AMR lead, it will need to have success selling both fixed and mobile systems. Company officials say they have received lots of interest regarding its latest fixed network technology (rolled out in 2002). Itron also rolled out a new water fixed network in 2004 that is designed to be more powerful than other similar networks. But, while it has had some success in selling its wireless network for small niche deployments, Itron has issued no announcements of utilities installing fixed network technology for large-scale deployments.
Business Cases Remain Problem
Utilities will continue to favor drive-by technologies, as long as business cases for advanced metering remain a problem for many utilities. Many large utilities, including Southern Co. and Entergy, have yet to make the move to AMR en masse, largely because of the cost of advanced metering systems.
Some utilities have to scratch and claw to prove that advanced metering is worth the price. However, others live in what one utility official calls “the faith dimension”—a place where executives have “faith” that advanced metering will be worth it, even if it is not completely clear how it will help. That is, these executives believe advanced metering will provide additional value above and beyond what is expected.
Despite the business case problems, it seems likely that utilities will increasingly turn away from mobile systems and toward more advanced, “fixed” networks that can provide the type of daily data to help improve customer service interaction, distribution operations and other areas.
But, don’t expect a rash of large advanced metering installations in the coming years. More steady growth is probably more likely. The rate of advanced network deployments will depend largely on how well the business case improves over the coming years—or the amount of faith executives place in AMR’s ability to improve their utilities’ overall operational processes.
F. Garrett Johnston is manager of Chartwell Inc.’s Metering Research Series. Garrett has analyzed the utility industry for Chartwell since 1998. Valued for his AMR expertise by both industry insiders and outside knowledge-seekers, he has overseen the research and production of Chartwell’s last three annual reports, and is currently working on The Chartwell AMR Report 2004. Altogether, he has developed more than 25 reports devoted to the AMR industry. Garrett earned his bachelor’s degree from James Madison University in Harrisonburg, Va. in 1993, and is pursuing his MBA in risk management/finance at Georgia State University.