New Utility Metering Needs Create Opportunities for Start-ups
Driven by changing end-user needs, many new participants in the utility meter market are focusing on product innovation to capture market share. These emerging competitors have already upset the pricing equilibrium that the established metering companies have enjoyed for decades.
Communications-enabled solid-state power meters already compete with the electromechanical meters that well-established incumbents offer with added communications modules.
New analysis from Frost & Sullivan (http://www.energy.frost.com), North American Utility Meter Market, reveals that this market generated revenue totaling $959.5 billion in 2003. Total market revenue expects to reach $1,249.0 billion in 2010.
“The uncertain success of the newer metering technologies makes large volume deployments an operational and financial risk for utilities, but start-up vendors are eagerly investing large sums on finding the next killer metering/distribution application,” said Frost & Sullivan research analyst Ramesh K.
Market entrants are aware of the fact that the size and strength of meter incumbents pose significant barriers to market entry and, hence, are working on novel strategies. Low-cost production, which is a strong competitive leveraging tool, is one of them.
Emerging meter companies are using fast-moving and highly calibrated marketing efforts to aggressively target new utility service providers, such as energy services, energy management services, and aggregator markets that expect low prices and the latest technology.
In a technologically mature market, meter communication is the only dynamic factor. Therefore, the integration of communication modules is likely to continue to be the main area of innovation.
The growing awareness of the advantages of automatic meter reading (AMR) communication programs is encouraging deployment of new meters with AMR modules. This implies better average revenue per meter for vendors since AMR-compatible meters cost more.
Although meter companies are developing products adaptable to AMR technologies, AMR companies are starting to acquire meter companies and embed their AMR modules to compete in the meter market.
“AMR companies are expected to gradually dominate the meter companies in the market—a domination equivalent to that of software over hardware in the IT industry,” Ramesh said.
Meter companies need to work toward becoming full-fledged billing solutions providers to retain their demanding customers, according to Frost & Sullivan’s analysis. Among the gas, electric and water segments, the electricity meter market expects to be the bellwether of technological changes.
Consumers would Turn to Utility for Internet Access, Report Says
Internet-intensive consumers are intrigued with the prospect of high-speed broadband connections over power lines, a new national survey has confirmed.
In fact, more than a third would drop their telephone or cable company right now and switch to the local energy utility for the higher speeds and extra features of broadband over power lines (BPL) for the same or lower price of their present service, according to the survey.
Four in 10 households surveyed believe their need for faster connection speeds will increase over the next 12 months, and dial-up and cable modem customers express the greatest interest in switching.
Additional features—such as enhanced security and higher capacity for handling e-mail attachments and files—would motivate computer-intensive consumers to switch from their current provider to a utility-sponsored BPL offering, the survey pointed out.
These are highlights from a nationwide survey conducted the week of May 10, 2004, by RKS Research & Consulting, a national market research and opinion polling firm, and Barrington Wellesley Group, a nationwide energy and telecommunications management consulting firm. The survey included 250 online interviews conducted among computer-intensive U.S. households, including dial-up, DSL, and cable modem customers from rural as well as urban/suburban communities. The survey is the centerpiece of a combined RKS/BWG report titled “BPL Strategy for Utilities.”
Several U.S. utility companies, including Cinergy Corp., Southern Company, Progress Energy and Consolidated Edison Company of New York, are currently offering or testing BPL. Utility Automation & Engineering T&D plans to publish a special report on BPL technology in the spring of 2005.
IT Survey: Utility Execs Say Data is Overwhelming, Unmanageable
In a recent survey, the majority of energy and utility executives (67 percent) polled believe the amount of data in their organizations’ IT systems is overwhelming. Nine out of 10 of those executives believe that more than half of all available data is not accessible to help power system operators perform their jobs effectively.
The survey also revealed that, based on the current state of technology, a majority (52 percent) of energy and utility executives estimate another major blackout will occur within the next five years.
The survey of executives at independent system operators, integrated utility holding companies, and local distribution companies was conducted by Gestalt, an information technology firm specializing in the application of interoperation technologies, including decision support and simulation.
More than a year after the Aug. 14, 2003, blackout, industry experts continue to debate the blackout’s causes and the best way to invest resources to prevent future blackouts. While some experts argue the majority of the money should be spent upgrading physical transmission infrastructure, the survey points to a critical gap in control room operators’ ability to access and manage the enormous volumes of data facing them.
“Control room operators are being bombarded with data, and they don’t have the time, tools or technology to keep up,” said William Loftus, Gestalt’s president and CEO. “The industry can make endless investments in infrastructure, but if the information and communication issues aren’t addressed, sooner or later we’re going to have another major problem.”
In a control room, huge amounts of real-time data are rapidly presented to operators from multiple people, regions and roles—resulting in a flood of information that can become unmanageable. To put the environment in perspective, one regional transmission organization, Midwest ISO, has to handle 100,000 measurements every 30 seconds, and they anticipate that number will increase tenfold in the near term.
In times of grid instability, the problem becomes exponentially worse as the amount of data that needs to be acted upon can grow much faster than the operator’s ability to digest it. Unaddressed alarms were identified as one of the contributing causes of the 2003 blackout.
A detailed analysis of the survey can be found online at www.gestalt-llc.com.
METC Improves Service to Grand Rapids Region
Michigan Electric Transmission Co. (METC) recently installed a new power transformer near Grand Rapids to ensure that the transmission system continues to meet the area’s increasing electric demands.
Over the last two years, the Grand Rapids area has dramatically increased its energy usage. Census data estimates that growth in the area is expected to continue at a rapid pace over the next several years.
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To meet this increased electric demand, METC designed the Gaines Power Transformer Project, a $9 million development. Initially energized in March, the Gaines transformer has now completed its service testing and is fully functional. It has already started to improve system operations and overall transmission service reliability to METC’s large industrial customers and distribution companies, which provide electricity to the everyday consumer.
Last year, METC spent more than $22 million to upgrade its power system, and it plans to spend an additional $28 million this year. Last year’s upgrades included newly constructed and refurbished transmission lines, equipment upgrades at its substations and the interconnection of an independent power producer.
$8 Billion in Transmission Investment could Lower Wholesale Prices by $12 Billion, Group Says
ICF Consulting Inc. recently completed a major study of transmission adequacy in the United States which forecasts the optimal amount of new electric transmission capacity builds and the investments needed to ensure continued grid reliability.
This nationwide study, sponsored by Kohlberg Kravis Roberts & Company (KKR), found that strategic investments of just over $8 billion (net present value) over the next 26 years could lower the wholesale cost of power by approximately $12.5 billion (net present value). Further, if one assumes lower reserve margins from a more integrated system, the benefit is more than twice the cost, or approximately $18 billion. Finally, if one includes the benefit to the economy from reduced outages that could come from such investments (also called “value of lost load”), the benefit could rise dramatically to more than 8 times the cost of such investment. The average savings per current customer would be at least $30 (net present value) and could reach as high as $450.
“These are substantial savings for consumers in the U.S.”, said KKR’s Marc Lipschultz. “We were encouraged to see the high degree of leverage that the right transmission investments have on reducing the wholesale cost of power.”
“It’s very complex and challenging to do the analysis right”, said Judah Rose, ICF Consulting senior vice president. “Tradeoffs between generation and transmission need to be assessed taking into account future fuel price, plant costs, regional power demand, impending environmental regulations, inter-regional grid transfer capabilities, and other assumptions.”
“The Value of Lost Load (VoLL) analysis is one that legislators and regulators should consider when making decisions about new transmission,” says Elliot Roseman, ICF Consulting principal. “The blackout last August proved just how dependent our economy is on electricity and how important enhanced reliability is to consumers.”
More information on the study is available at www.icfconsulting.com/powercosts.
Lincoln Electric Gets New SCADA P.D.Q.
Open Systems International Inc. (OSI) recently completed a successful SCADA/energy management system project for Lincoln Electric Systems (LES) in Lincoln, Neb., in near-record time. The system was commissioned four and one half months from contract award.
Doug Bantam, vice president of LES’ power supply division, said, “It was evident during late 2003 that the replacement of LES’ SCADA system had become a critical issue. A decision was made to challenge all those involved U to execute this project in a secure and precise fashion within an unprecedented time frame.”
The contract for supply of a new Linux-based SCADA and energy management system (EMS) was executed Jan. 5, 2004. LES required a new system in operation prior to the start of the summer peak load season. The system was successfully cutover less than four and a half months later according to schedule. The project incorporated a SCADA/EMS implementation as well as a back-up control center and included extensive factory and site acceptance testing and quality assurance. The installed system is based on OSI’s distributed and open “monarch” architecture. KEMA acted as consultant on the project.
Con Edison Investing $700 Million in Power Delivery
Consolidated Edison Company of New York Inc. (Con Edison) is investing more than $700 million this year to upgrade and reinforce its electric delivery system for the 9 million people it serves in New York City and Westchester County. The investments include the construction of new substations to meet growing electric demand, the installation of miles of new transmission and distribution cables, and ongoing work for the replacement of equipment damaged or destroyed on Sept. 11, 2001.
Upgrades and system improvements include installation of 11 miles of high-voltage transmission cables, replacement of 71 miles of underground and aerial feeder cables, installation of 150 new transformers, and construction of three new substations.
Lou Rana, Con Edison’s senior vice president of electric operations, said that this was the first time in more than 30 years that Con Edison had completed three substations in the space of a year. The three new substations were brought on-line in time for summer.
Con Edison’s investments for this year include:
- $438 million on the distribution system, including $84 million for upgrades to cables and transformers;
- $29 million on transmission system upgrades;
- $183 million on substation installations and circuit breakers; and
- $51 million for electrical equipment associated with the restoration of Lower Manhattan and the World Trade Center site. àƒàƒ
Manhattan VA Center is Energy Management Pacesetter
The Manhattan Veterans Affairs Medical Center in New York City has emerged as a national pacesetter in energy management by becoming one of the largest participants in New York state’s peak load reduction program, which is managed by the New York Independent System Operator.
The 1.2-million-square-foot center helps ensure energy reliability through an innovative, remote energy monitoring system created by ConEdison Solutions (CES), an energy services company based in White Plains, N.Y.
The medical center—which uses up to 5.8 megawatts of electricity annually—receives state reimbursements that net the center approximately $100,000 annually for its participation.
Many participants’ back-up generators limit them to using one source at a time, which can potentially trigger brief service lapses during switchovers. The Manhattan VA back-up system, however, operates while remaining linked to the grid, protecting the safety of patients and hospital personnel.
“The Manhattan VA Medical Center tapped our extensive industry experience to optimize its energy efficiency capabilities,” said JoAnn Ryan, president and CEO of ConEdison Solutions. “Our automated system also helps the center promptly receive state reimbursements for its energy conservation efforts.”
CES monitors the system remotely from its Westchester County headquarters. Full-time specialists track peak load projections and maintain minute-to-minute contact with grid operators whenever peak load crises may occur.
Participants must steadily monitor consumption during peak periods. Entities typically devote considerable resources to reading meters, documenting reductions and reporting to officials. Reimbursement can take as long as two weeks after a peak load crisis.
The Manhattan VA Medical Center’s reporting system, however, is highly streamlined. Monitoring participation on a virtually real-time basis, the remote site continuously tracks electric output. This system eliminates paperwork, saves personnel expenses, accelerates reimbursements and notifies VA operators if generators run below contracted levels.
Because of the program’s success, the 1.1-million-square-foot Brooklyn VA Medical Center recently joined the CES remote energy management program.
Voluntary curtailments are especially valuable in New York City, which is designated as a load pocket because of its limited capacity to import power.
The energy management initiative received grants from the New York State Energy Research and Development Authority.
Entergy Energizes Unique Under-river Transmission Line
A high-voltage line buried 100 feet beneath the Mississippi River at New Orleans has been energized by Entergy Louisiana Inc., a subsidiary of Entergy Corp. The project incorporated a number of first-ever technologies and engineering techniques.
“Our transmission engineers have written a new chapter in power industry history as they built on the company’s record of supplying reliable power in a unique region both blessed and challenged by the constraints of natural boundaries and a rich but delicate ecosystem,” said J. Wayne Leonard, Entergy CEO.
Applying oil industry directional drilling and aerospace satellite guidance, Entergy’s transmission engineers developed a unique solution to resolve the issue of ever-larger vessels entering the port of New Orleans.
The company’s new high-voltage transmission lines are housed inside a flexible duct system of 12 pipes of varying diameters nearly 4,000 feet long, weighing more than 400 tons. The transmission cables within the ducts are among the longest, heaviest unspliced underground transmission cables ever manufactured. The cable was specially ordered and manufactured by J-Power Systems in Japan. Manufacturing and delivery took less than one year.
After months of planning and staging, work on the under-river transmission cable project began in August 2003. A horizontal directional drilling unit, guided by GPS technology, wound a path beneath the river bottom and exited on the opposite bank four inches from its target point.
Fifty-foot-long sections of color-coded pipe were fused into continuous lengths, each approximately 4,000 feet long. The 12 separate pipe strings were bound together. The lead end of the bundle was attached to a conical steel pulling unit. A four-foot-diameter tunnel was drilled beneath the river bottom and the pipe bundle pulled through.
The continuous length high-voltage transmission cables were then pulled through their designated parts of the duct system and terminated on both sides of the river. The cables were attached to Entergy’s transmission system and energized May 1, 2004, one month ahead of the original June 2004 completion deadline, which had been announced in December 2002.
Invensys Launches Demand-side Energy Management Offering
Invensys Climate Controls recently announced the commercial launch of its GoodWatts interactive demand-side management (DSM) service offering for the electric supply marketplace. Denise Rushing, whose utility industry background includes 14 years at Pacific Gas and Electric Co., was named to lead the business unit.
The commercial launch follows the success of numerous GoodWatts pilot programs in the United States and Canada.
“We’ve been very pleased with the results of our GoodWatts pilot and believe it’s a great solution,” said Bob Balzar, energy efficiency and conservation director for Nevada Power, one of the companies involved in GoodWatts trials. “We like what it does for the utility, as well as how customers respond to it.”
In addition to the Nevada Power pilot program, GoodWatts is being evaluated by PECO Energy in Philadelphia and other providers in the U.S. and Canada.
PECO Energy’s pilot program, the longest-running to date, reports offsets of at least 2 kW per home annually, with some areas slightly higher, according to Glen Pritchard, senior project manager for PECO Energy.
GoodWatts connects with homes through the same conduit used for regular cable television services. The cable is linked to a modem and then to a wireless gateway device, which communicates with a special thermostat and other equipment in the home. Using “always-on” connectivity, utilities can monitor energy usage in individual homes in real time, gaining the ability to remotely curtail energy usage in the event of high demand or emergency situations or shifting load to off-peak usage.
Contract Awards and Extensions
The Kansas City Board of Public Utilities has chosen Dynamic Ratings’ DRMCC transformer controller integrated with Luxtron’s m600 Fluoroptic thermometry module for transformer load monitoring and control.
Bangor Hydro-Electric Co. has a contract with VSI Meter Services to deploy approximately 110,000 meters equipped with DCSI’s TWACS technology. Communication with the meters will take place over existing power lines.
Holland Michigan Board of Public Works, a municipally owned Michigan utility, has signed a contract with Terasen Utility Services for field installation of approximately 35,000 new and retrofitted electric and water meters featuring the Hexagram AMR system.
JEA in Jacksonville, Fla., has awarded a contract to Elster Electricity to provide more than 20,000 ALPHA Plus electronic meters with the Cellnet multi-function meter module (MFMM). The meters will be installed at commercial and industrial accounts in Jacksonville.
Xcel Energy has a contract with Itron Inc. for the purchase of 6,000 advanced solid-state meters equipped with SmartSynch’s SmartMeter technology. The automated Elster A3 meters will be installed at hard-to-access and security-sensitive customer locations throughout Denver and the surrounding areas.
Itron also announced a contract to provide underground and overhead distribution infrastructure design tools to Northeast Utilities Service Co. to help streamline the siting, design and construction of electric and natural gas distribution lines. The multi-million dollar contract is for Itron’s LD-Pro engineering line design software, which will integrate with NU’s GE Smallworld GIS and Worksuite’s STORMS WMS (Work Management Systems).
The City of Naperville, which serves 55,000 electric customers in Illinois, has chosen to add Miner & Miner’s Designer product to its current ArcFM solution to streamline design engineering.
GE Energy has recently been awarded contracts from five utilities for XA/21 energy management system upgrades. South Mississippi Electric Power Assoc., Michigan’s Wolverine Power Cooperative, North Dakota’s Minnkota Power Cooperative, and Florida’s Lakeland Electric and Gainesville Regional Utilities will each benefit from multiple system upgrades and support from GE Energy.
Southern Maryland Electric Cooperative has selected CGI Group Inc. to deliver an integrated outage management system, geographic information system and electronic staking application. The integrated turnkey solution includes CGI’s PragmaLINE OMS, Miner & Miner’s ESRI-based ArcFM, Designer, Network Adapater and Conduit Manager, and MESA Solutions’ data migration and integration expertise.
Baltimore Gas and Electric Co. has retained the services of KEMA to support development of the utility’s reliability redesign initiative. KEMA will help identify and justify capital reliability improvement projects for 2004 and 2005.
Georgia’s Snapping Shoals Electric Membership Cooperative has purchased the Tantalus Utility Network from Tantalus Systems Corp. The network infrastructure will allow Snapping Shoals EMC to implement advanced metering, outage management, distribution automation and other core utility functions.
Alliances, Mergers and Acquisitions
In early June, Itron Inc.’s acquisition of Schlumberger’s electricity metering products business (SEM) cleared regulatory review, paving the way for the close of the acquisition in late June. The acquisition included Schlumberger’s electricity metering manufacturing and sales operations in the United States and the electricity meter operations of certain foreign affiliates in Canada, Mexico, Taiwan and France. The purchase price for SEM was $248 million.
Symantec Corp. and Areva T&D have partnered to provide a comprehensive security solution for electric power SCADA systems. Areva will resell Symantec for Electric Power to assist electric utilities in their efforts to secure interconnected SCADA networks.
To add fixed-base solutions to its AMR product portfolio, Sensus Metering Systems has purchased certain assets of NexusData Inc. The acquisition will provide Sensus with ownership of a fixed-network AMR system for water, gas and electric utility markets.
Synergen Inc., a provider of enterprise asset management and computerized maintenance management solutions, has signed an agreement to acquire the major asset’s of Axiom Corp.’s utility business, including its mobile dispatch solution suite, Mobility.
TXU Corp. has agreed to sell its Oncor Utility Solutions consulting and asset management business to UMS Group, a utility consulting company headquartered in Parsippany, N.J.
Sensus Metering Systems Inc. has purchased certain assets of NexusData Inc. in a move to expand its AMR product line to include fixed-base solutions.
Sensus has also formed an alliance with Cellnet to develop and provide fixed-network AMR solutions to utilities. Under the agreement, Cellnet technology will be incorporated into Sensus water, electric and gas meter offerings.
UAI, a provider of geospatial technology solutions, has entered into a business partnership with CYME International, a provider of engineering analysis, to enhance the functionality of UAI’s UtilityCenter 2.0 solution.
Personnel Changes and Promotions
Wayne Brunetti, chairman and CEO of Xcel Energy Inc. has been elected chairman of the Edison Electric Institute. Brunetti will be supported by EEI’s incoming chairs, Michael G. Morris, chairman president and CEO of American Electric Power, and James E. Rogers, chairman, president and CEO of Cinergy Corp.
Doug Jaeger has been named vice president of transmission at Xcel Energy. Jaeger, who joined Xcel in 2000, will oversee Xcel’s transmission systems, which serve 3.3 million customers in 11 Western and Midwestern states.
Carl English has been named president of AEP Utilities, a new position. English will be responsible for American Electric Power’s T&D operations and will oversee regulatory and policy matters relating to utility operations. He will report to Michael Morris, AEP’s president and CEO.
SPL Completes Outage Management Acquisition
In mid-July, SPL announced that it had finalized its acquisition of the major assets of CES International, a pioneer and market leader in utility outage management. The acquisition plans had been announced in May.
“For the first time,” said SPL CEO Harry Debes, “utilities can acquire two vital applications—customer care and billing as well as outage management—from a single vendor.”
Debes noted that the era of “best-of-breed” system purchasing is coming to a close as utilities have found that the cost of developing and maintaining the various point-solution interfaces has become prohibitive.
“Utilities want vendors with a more holistic view,” Debes said. “While CES is our first acquisition, it will not be our last.”
“In the current economic and industry environment, electric utilities are strongly focused on achieving operational efficiency and regulatory compliance,” said Rick Nicholson, vice president of Energy Information Strategies at META Group, a provider of information technology research, advisory services, and strategic consulting.
“In order to drive costs out of the business, these companies must integrate and optimize complex business processes such as revenue, customer, commodity and asset management. Additionally, they must achieve higher levels of system reliability. As a result, we expect to see increased investment in applications related to the utility asset lifecycle and the integration of these applications with customer information systems,” Nicholson said.
SPL will retain the CES product development facility in Minnesota, and the two companies’ product strategy and development teams will merge immediately. The development of integrations between the products is already under way.
Over the next few months, the sales forces will merge, but the products will continue to be offered both separately and together.
The financial terms of the acquisition were not released publicly.