Taking AMR to New Heights

Automatic meter reading (AMR) is an efficient way for utilities to gather energy consumption and billing information. AMR has been successful in reducing inaccurate or estimated meter reads, improving billing accuracy, improving customer service and complaint resolution, and reducing costs associated with sending out crews to connect and disconnect customers or obtain special reads. All of these benefits can help a utility reduce its operating cost, but is operational cost savings enough to justify the expense of installing an AMR system?

In an environment where utilities will be competing for new customers and fending off competitors that are trying to lure away their established customers does AMR have a meaningful role? While the benefits mentioned above can produce cost reductions, they do not increase profits. In addition, the operational benefits identified do nothing to enhance customer service. In many cases, customers do not even recognize that their meters are being read differently and if they do, they do not see any value in AMR.

However, many experts believe AMR will play a major role in successful utilities’ futures. No other technology can provide a utility with more information about its greatest asset-the customer-than AMR. AMR can provide invaluable information that will allow utilities to develop services to meet their customers’ expectations. Competition, technological advancements and more demanding customers are prompting utilities and vendors that support utilities to take AMR to the next level.

Phil Cleveland, ABB Electricity Metering’s Product Manager of Systems Business, said the bar is being raised when it comes to meter functionality. Meter manufacturers are working with utilities to determine what customers need to make their life easier and what features can be put into meters to help meet those needs. Today, meters can be equipped with various instrumentation that allows them to record and transmit a lot of information. “AMR is being noticed more because it provides a point of differentiation between utilities,” Cleveland said. Utilities can now purchase and install meters that can collect valuable load and power quality information that can be fed back to the customer. Many experts believe some of this information is valuable enough to be sold to customers. Even if customers won’t pay extra for the information, having such information available could very well keep them from switching providers.

AMR provides a physical link to every customer and thus allows the utility to gather information necessary to build an evolving energy service business. This information can not only be used to develop new services, it can also be used to identify the best customers. Carolyn Kinsman, President of Automation Communications Links, a consulting firm that advises utilities on AMR strategies, presented a pre-conference seminar about AMR and value-added services at DistribuTECH 2000. Kinsman stressed that it is important for utilities to develop services that will build loyalty with the best customers first because these will be the customers that other providers will try to lure away in a competitive environment. “A utility needs to get the ‘low-hanging fruit’ connected first to build loyalty before competition has a chance to come in and take them away. The other customers will still be around later,” Kinsman said.

“Utilities must gain entry into the information collection and retail energy service business, which provides higher margins than that of the regulated wires and commodity-based business,” she said. “Ninety percent of all new revenue must come from the retail side of the business. The customer is the new utility asset.”

Now is the Time

Utilities must act quickly, Kinsman said. “At this point, no one knows exactly what the customer will want. A utility can’t start with a large package of bundled services, it must start with a small package and add a little at a time,” she said. “Very little work has been done in this area that has proven successful. It is a difficult time to try to figure out what to do with AMR, but it is definitely the time to do something with it.”

Sharon Allan, ABB Electricity Metering’s product management director, also believes this to be true. “This is a churning time of utilities,” she said. “They are looking at the future, but it is not clear, it is opaque.” Allan said that utilities must be asking “How do I retain my customers?” It is time to begin using AMR for more than gathering billing information. “They must become proactive,” she said.

According to Kinsman, the types of value-added services that can be offered are directly related to the AMR system’s capabilities. She also pointed out that many of the services that can be developed will appeal to small pockets of customers, or niche markets. “When you are talking about value-added services, you are looking at customers differently. With value-added services, you may have a customer who, under traditional profit figuring based on commodity sales, is not a very high-value customer; however, this customer may be a very valuable customer when it comes to value-added services,” Kinsman said.

Allan said that few utilities are currently involved with large-scale AMR-based value-added service offering. Most are pursuing such services with “baby steps,” she said. Allan believes, as do many others in the industry, that customer choice is not yet widespread enough to make large-scale services worthwhile or feasible. However, she did add “Most utilities know it (customer choice) is coming and they are certainly looking at AMR as a way to obtain valuable information. We believe information is of value and AMR data will eventually be important in creating new opportunities for utilities.”

C & I Value-added Services

While few utilities are involved in large-scale AMR-based value-added service offerings, a few are using AMR data to develop valuable services for their customer. Eugene Water & Electric Board (EWEB), Eugene, Ore., is a municipal utility that has developed a program called Energy Information Service (EIS) which provides commercial and industrial (C&I) customers with interval data. The AMR hardware used for the offering is commercially available, and the EIS platform is licensed from a third party. EWEB integrates the process, provides a deliverable to its local customers and builds customer retention.

Mike Logan, EWEB’s Section Manager of Programs and Services for Business, explained the program that focuses on the utility’s larger C&I customers. Many of the customers currently in the program were already involved in another EWEB program called the Load Research Project. This was a project set up to monitor about 300 large customers’ electricity usage, which allows EWEB to gain information that helps them buy electricity more efficiently.

According to Logan, customers participating in the EIS program are equipped with meters that collect interval usage data, such as kW, kWh and kvar. EWEB uses a system from Teledata Solutions to collect the data every 15 minutes. It is then sent to EWEB’s project partner, Energy Interactive Inc., a developer of energy information systems and services for electric and gas utilities, power marketers, aggregators, energy service providers and major energy customers. Energy Interactive turns the data into information that can be put on its Web site. Participating customers can then log on to Energy Interactive’s Web site and view their data. The data collected via the Teledata system is validated by EWEB before it is sent to Energy Interactive. EWEB also stores the data.

Logan said that the service was developed on a modest budget (see figure), and although participating customers pay a nominal fee, $29 per month, to subscribe to the service, it was not created to increase revenue. The EIS program was developed to create a valuable service for EWEB’s customers. “EWEB wants to be viewed by its customers as a partner helping make them successful. If our customers see us as a provider of more than a commodity-a provider of information and services that help make them successful or make their job easier-we will be more successful. This program cannot be justified as a revenue stream or new money making service. It is seen as a way to please customers,” Logan said.

The EIS program began in fall 1999 and the utility is currently providing the service to more than 30 customers. The utility did no advertising and all the current customers learned about the program through word-of-mouth. Even though the program is still small, Logan pointed out that no one has left the program. “We are not selling something the customers don’t want,” he said.

Residential Value-added Services

Another utility that is using AMR along with ancillary devices to develop value-added services is Hydro-Quebec. At DistribuTECH 2000, Marie-Andree Cournoyer, a member of Hydro-Quebec’s Products and Services Development Team, spoke about the utilities Infowatt program. The program was initially developed in an attempt to introduce pre-payment to reduce bad debts and operating costs associated with disconnects and reconnects as well as customer service. Upon implementation, the program uncovered a strong interest by customers for information on energy consumption and new payment options. According to Cournoyer, Infowatt provides instantaneous meter reading and enables customers to monitor, manage and control their energy consumption. In addition, Infowatt provides flexible payment options and the ability to pay electricity bills via a table top display provided to the customer.

The utility has identified several other services that can be provided including, outage detection and billing services. Other communication services, not yet developed, could complete the line, Cournoyer said.

Customers are given access to their real-time consumption, payment history, consumption history, current rate and current statement. They are also given a direct link with Hydro-Quebec (using telephone link) and a pay-from-home option. In addition, they have a choice of payment date and payment type that includes pre-payment, leveled bill and monthly real consumption.

The devices used in the pilot are low-cost electronic power meters, water meters, integrated service gateways, user interfaces in the form of a table top displays, and communications software. Hydro-Quebec has performed a one-year market study among 182 customers, testing their behavior, interest and willingness to pay for the services. They have also used the study to obtain ideas of new services that might be added to Infowatt.

According to Cournoyer, the pilot’s results indicate that customers’ general satisfaction with the pilot is high. Most customers are interested in understanding their consumption, and they appreciate the payment choices. It was also discovered that one-third of the participants significantly changed their energy use behavior when provided with their consumption and billing information. Cournoyer said the utility discovered that more than one-third of the customers seem willing to pay a monthly fee for Infowatt.

Through the pilot, Hydro-Quebec discovered that a low-cost-per month innovative service, mainly dedicated to understanding and managing energy consumption can become a value-added service that can generate additional revenue. But more importantly, a pay-from-home program primarily aimed at the lower to intermediate market segments, those not likely to use the Internet for bill payment, transformed difficult to service customers into easy to serve and satisfied customers. It also transformed customers who, in the traditional utility environment, would be considered lower-value customers into high-value customers. Freedom of payment mode is the key to success, said Cournoyer. The service presents interesting revenue possibilities and avoided costs for the utility and a strong business case for residential market value-added services.

These are just two examples of some of the small, niche market, value-added service programs that are currently under way. It is obvious that utilities are not going to notice a rise in profits from these types of offerings. However, it is precisely these types of AMR related value-added services that are going to differentiate one utility from the next. As customer choice becomes a reality, customers will become more demanding. The utilities that can provide customers with information that will help save them money or make their lives a little easier, will be the utilities customers choose. AMR is a valuable tool in collecting data and turning it into valuable information.

Author

  • The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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