By Roxane Richter, Customer Systems Editor
Value, value-who can really harness the value in automated meter reading (AMR)-deregulated utilities, large or small consumers, energy service companies, energy suppliers or retailers? As the banner of AMR painstakingly unfurls, it seems as though the true value of AMR is less of what we had previously thought-a purely cost-shaving mechanism-and more of what we didn’t know-a data-ripe, real-time information-gathering tool for larger consumers, retailers and energy suppliers. Without question, accurate and timely real-time and historical load profile information is critical to generation, transmission, distribution and consumption management.
Currently, utilities pay anywhere from 60-85 cents on a per-meter/per-month read, according to a recent CERA study. Yet manual meter reading costs can quickly add up when meter reads run $1.50, $2.50, $4.50, even hundreds of dollars per read in thinly populated and inaccessible geographical regions. And with estimates of about 125 million electric meters and half that for gas meters, the costs paid for non-automated meter reads can multiply-fast.
Considering the relatively nascent AMR market, the rate of penetration is healthy. New Jersey-based Cognyst Consulting (www.cognyst.com), a metering, customer service and utility technology research firm, estimates that current AMR penetration rates run about 14.7 percent for gas meters, 8.1 percent for electric meters, and almost one-quarter (24.5 percent) of all U.S. electric utilities utilize AMR technology. As for future growth in the AMR market, Cognyst Consulting Managing Partner Howard Scott projects AMR sales in 2004 to reach 5.4 million units, for a nationwide total of 46.6 million.
In the Cambridge Energy Research Associates (CERA) “Capturing Value: The Future of Advanced Metering and Energy Information,” report, the project team writes: “A shift is underway from considering metering as a cost to seeing energy information as a strategic technology initiative-a way to obtain and keep customers, understand the market, offer new products and services, and expand business. Players in telecommunications, data processing, electronic commerce, financial services, energy services and other sectors all seek to create value in the competitive energy business.”
Steven Taub, CERA Associate Director, North American Electric Power, explained that the shift in energy from vertically integrated monopolies to a horizontal marketplace is creating new interfaces and breaks in the structure of the industry across which data must flow. “In our report, we focused on metering because it’s the ‘cash register’ of the industry. Meters generate a lot of information on how a consumer uses the product. What was interesting and what we’re seeing is that the consumers, especially the larger consumers, ESCOs, energy suppliers and retailers seem to be finding the value in the information from an AMR.”
But when companies look at the value and cost/benefit analyses of AMR, it’s almost impossible to do an accurate valuation, as there are no sets of standard/standardized expenses used to determine the “full” costs of meter reading. Every company deems a variety of expenses to include, or exclude, in the costs to the company for reading its meters. So the question posed is: Considering the value and competitive advantages of the new services-can the expenditure of deploying these technologies justify the investment?
Cost savings as the by-product
When push comes to shove, companies still want to justify the capital expense of AMR. But what factors companies deign to include in its “full” meter reading costs often set the pace for the possible outlay of revenue for AMR.
“There are general practices in the industry on how you calculate meter reading costs that have been around for years. With a more modern analysis, you can get a more full meter reading cost,” explained Cognyst Consulting’s Scott, who produces an annual metering report entitled The Scott Report, “In my opinion, what’s being excluded from the costs are expenses like the office, or overhead, costs of meter data entry and meter reading staffs, vehicle costs and maintenance, legal costs and human resources for meter reading personnel and others. Most places don’t allocate these costs and many others to meter reading.”
Tom Summerlin of Raleigh, North Carolina-based Invensys Measurement Services (IMServ), an end-to-end metering service company, concurred with Scott that all too often, the headache and costs factored into retaining “feet on the street” for meter reading are fast-becoming too pricey in the deregulated environment.
“The driving factors of AMR are first performance to the customer, then cost savings and finally, the additional possibilities that AMR brings like curtailment,” Summerlin said. “Things like curtailment options weren’t important three years ago, but it’s a big issue now. I think it’s going to be more relevant as more markets open up. You’re going to see a lot of creative options in AMR in the future.”
Smarter, faster, cheaper, better
Meter reading launched the electric power business in the late 1890s, CERA reports. Since then, meter reading has evolved with communications and computer advances. Readings began with manual readings, then handheld technologies, followed by mobile, power line carrier and fixed network (over any network, including wireless radio frequencies and public telephone lines), and finally, has progressed to state-of-the-art Internet-based readings (most currently in pilot programs). In a nutshell, data is driven to meters through various means, including cellular and land telephone lines, public or private (walk/drive-by readings) radio frequencies, power line carrier technologies, Internet or intranet and satellites. Industry experts concur that drive-by readings using mobile-based AMR technology continue to hold the lion’s share of business today.
“Utilities are under increasing pressure for more and more frequent meter reads,” Scott said, “So far, deregulation hasn’t really helped AMR sales, especially when you consider how deregulation in California was presented around who owned the meter. The utility is not going to invest a significant sum of money into a piece of equipment they don’t own. What the regulators thought were ‘unforeseen consequences’ were, in fact, pretty obvious consequences. What I found is that deregulation has had a noticeable, distinctive dampening affect on AMR sales. Everyone’s playing wait-and-see on if the rules change.”
Scott added that while “not a lot of people” are busy making money selling AMR solutions currently, and even though this industry segment may not be considered a high-profit margin arena, “the numbers are just so big, there’s been no problem in attracting companies to AMR.” Some of the companies vying for AMR industry dollars include: Quebec-based Nertec Inc., Schlumberger Resource Management Services (who recently acquired CellNet Data Systems), metering heavy-hitter Itron, Nexus, Smart Think and others.
In California, where metering has spun off from distribution, meter data management agents process the raw meter data and transfer it to the utility distribution company (or UDC). Some of the meter data management agents include the likes of C3 Communications, IMServe North America, Schlumberger, First Point Services, Enron Energy Services, LG&E Retail Access Services and others.
Some of the latest and greatest technological advances promised through AMR include fuel cell-driven net metering, customer interfaces, real-time metering and prepayment options for customers and demand-side management functionality. Yet it is fast becoming clear that no single-type AMR provider can offer solutions for all categories of consumers-from the very remote rural resident to the high-quality data and interval needs of a large industrial client.
But as the industry moves forward, it is beginning to standardize its meters, and ANSI is the industry consortium leading the way to meter protocol standardization.
A look at standardized communication: ANSI Protocol Meters
As the industry settles into the new ANSI metering standards and major metering manufacturers develop and introduce ANSI Protocol Meters (APMs), it is important to know how to select the optimum ANSI-compliant metering solution, explained Ted York, THY Consulting, Inc., for ABB Electricity Metering. APMs use ANSI metering standards C12.18, C12.19 and C12.21. ANSI standards C12.18 and C12.19 define communications protocols that provide an open standard for optical port and telephone communications. ANSI C12.19 forms the basis for common industry data structures and provides a common industry “vocabulary” for meter data communications.
York said “the open meter designs and common support software promise increased efficiency in meter operations. But all APMs are not created equal. While current APM designs are based on the same ANSI standards, inclusion of some protocol services in ANSI C12.18 and most data structures, or tables, in ANSI C12.19 are optional.” He also added that meter manufacturers will each select what portions of these standards to support, which portions to replace and where to extend the standards-so before purchasing, each meter’s application of the standards should be reviewed.
According to York, some important features to consider before your meter purchase include: billing data (collection of billing data is always important, so presenting that data in a standard format adds to the value of any meter); present value (while the standard supports a “present value” table, the need for this information should be evaluated on a user-by-user basis; the value of this could improve if the manufacturer includes instrumentation measurements for quick retrieval); interval data recording (adds consistency and substantial value in the area of interval data recording); security considerations (deregulation increases the number of agencies that require access to data within the meter); user-defined tables (allow the user to shorten the amount of time required to read a meter); logging (a good design should include history and event logs); and power quality monitoring (the recommended activity should at least include the ability to check the service wiring and to provide notification of user selected out-of-range conditions). (See Table 1.)
Metering places an all-encompassing emphasis on the quality, accuracy and timeliness of metered consumer information. And in the end, the meter and the data it collects holds court in the royal hierarchy of deregulation. So it only makes sense to crown state-of-the-art metering technology with both the tangible (and most often intangible) benefits, cost-savings and values it brings to the table.