Taking a crack at revenue robbers: Utilities use AMR to detect theft

Garrett Johnston, Chartwell Inc.

Many automated meter reading (AMR) vendors promote their systems’ abilities to detect tampering and some utilities have, in fact, attributed thousands—or even millions—of dollars to increased revenue from improved tamper detection. But when it comes to cost justifying AMR, utilities should be careful how much revenue they estimate will be generated by systems’ abilities to detect potential theft.

With utilities losing an estimated 1 percent to 2 percent of annual revenue to theft, it is no wonder that about half of utilities use or are looking to use AMR to reduce theft. About 45 percent of utilities use or may use AMR to detect theft, according to Chartwell’s 2002 survey of 115 utilities. About 20 percent of utilities use or plan to use AMR for theft detection while another 25 percent are considering doing so.

In fact, tamper detection is currently the most popular benefit of AMR, as almost 10 percent of utilities use AMR for this purpose.

Many AMR systems have various tamper- and current-diversion detection capabilities. These features often include:

“- alarms to detect and signal meter tilts and rotations, power outages and the presence of magnets;

“- ability to track events, such as when and how they were programmed, the total number of outages they’ve experienced, and the cumulative amount of outage time; and

“- alarms to detect usage on inactive accounts or if power to the meter falls below a preset threshold, possibly indicating current diversion.

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Many large utilities, such as PPL Electric Utilities of Allentown, Penn. and JEA of Jacksonville, Fla. have installed AMR systems in part to increase theft detection. However, these systems’ tamper detection capabilities are limited. They cannot detect when customers tap in ahead of meters—a common practice among commercial customers. Some utilities also report that AMR’s theft detection capabilities are too sensitive, causing them to send numerous non-theft-related flags.

AMR systems vary in what they report. Some systems will provide three separate theft-related reports that indicate if the meter is working or if there is an outage or tamper. Others will record all potential theft, including tilts and outages, together without indicating the type of problem. The latter can cause headaches because utilities often can not efficiently filter through the numerous flags to identify true tampering.

Still, anecdotal evidence suggests AMR can be helpful in detecting theft.

Philadelphia Gas Works obtained more than $9 per meter per year savings ($3.2 million in total) by using its mobile system to detect more than 3,400 cases of tampering, according to Spokane, Wash.-based Itron.

In justifying its powerline carrier system from Hunt Technologies of Pequot Lakes, Minn., Excelsior Electric Membership Cooperative in Metter, Ga., estimated savings of $99,000 annually. That includes handling inquiries and labor expenses from theft-related issues and was based on research by the National Rural Electric Cooperative Association that concluded AMR could help save 1 percent of total revenue.

Before implementing Hunt’s Turtle system, Crow Wing Power in Brainerd, Minn., had never won a theft case, but then used the system to recover $13,000 in two theft cases, including one for $8,000.

In addition to physical tampering, wireless fixed networks, such as SchlumbergerSema’s, can help detect usage on inactive accounts. A trigger on the SchlumbergerSema network can be placed on vacant homes to make sure no more than a minimum amount of electricity is used.

However, AMR is not perfect at detecting theft. Baltimore Gas & Electric turned off its mobile system’s theft detection features after the utility found that 80 percent to 90 percent of tamper flags were not related to theft. The system’s “tilt” detection feature was so sensitive it sometimes would go off when large trucks drove by, according to BGE.

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In addition, at least one Midwestern utility says is not expecting the wireless fixed network it is installing to help identify sophisticated kinds of theft.

To take better advantage of automated tamper detection, utilities and vendors will have to better manage the vast amount of data collected by AMR systems.

For now, it is difficult to assess AMR’s true effectiveness in detecting tampering because no one knows the percentage of theft done through taps ahead of the meter. But while AMR systems are not foolproof, the use of meter readers for identifying theft is not perfect either. Thieves can, for example, disguise tampering at the time of the month when the meter reader is due to come.

That is why a combination of technology and humans may be the best way to detect tampering.

Johnston is a managing editor/research analyst with Chartwell Inc., an Atlanta-based research firm focusing on the utility industry. He is editor of Chartwell’s AMR Research Series, the industry’s only unbiased publication fully devoted to automated meter reading. Johnston has been covering the energy industry for more than five years, and has directed Chartwell’s last two AMR surveys, each of more than 115 utilities.

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