Target Metering: Customer segmentation ups AMI benefits

By Betsy Loeff, contributing writer

You’ve probably heard of segmentation, where companies characterize customers via specific traits, such as buyer age, gender, income level or address. Then, they target advertising or direct mail offers to these look-alike prospects in hopes of landing a sale. Such tactics maximize return on an advertiser’s investment.

According to Ivo Steklac, segmentation practices can maximize ROI with advanced metering deployments, too.

Steklac is founder and president of Enspiria Solutions, a systems-integration and metering consultancy. He believes that while many utilities have done rudimentary segmentation in their advanced metering strategies, they could go further with analytical efforts.

For instance, utilities sometimes choose different metering communication strategies for different geographic areas, Steklac says. They may use power-line carrier systems in rural areas and fixed-network solutions for customers in town. But, within those choices, he maintains, the utility can select specific technologies or add-ons to gain top-tier benefits without spending top dollars.

“The entire population across a service territory has a range of potential benefits,” he says. For that reason, customer segmentation leads to “a judicious deployment of technology.”

The holistic enchilada
Steklac calls his approach to metering deployments a “holistic view.” He maps out an entire utility service territory, then considers how different technology choices would work for different areas.

“We get the information of where meters are if they are geo-coded,” he says, “and then we pull in a lot of different attributes that are commensurate with the ability to derive or not derive benefit from a number of different systems.”

An example Steklac uses looks at the strategic deployment of remote-disconnect switches along with advanced metering infrastructure, or AMI. In the example, Steklac “looked for combinations of high turnover and high history of non-pay based on premises, not customers,” he says. In addition, he layered on information to find low-income areas, because “distressed areas tend to stay distressed.”

The result of this analysis was a perfect depiction of the Pareto principle, which states that for many phenomena, 80 percent of the consequences stem from 20 percent of the causes. In this case, 80 percent of non-payment problems showed up in the 20 percent of customers who fit within the geographic area defined by Steklac’s chosen characteristics. Hence, utility managers could put disconnect switches on that 20 percent of all meters, and address the bulk of their collection problems.

Parting of the ways
Segmentation needn’t focus only on technology add-ons such as meter-disconnection switches. It also might prompt partial deployment. Consider Austin Energy, the electricity provider in Austin, Texas. Currently AE has some 385,000 meters, but only 126,000 of them are read via a fixed-network RF system, reports Ed Clark, the utility’s communications director.

“Austin Energy focused the initial deployment of AMR meters on the apartment community to address the move-in/move-out issues associated with manual meter reading,” he says.

There are five universities with a total of around 90,000 students in Austin. What with summer vacation for the student population and turnover among non-student renters, the municipal utility was seeing around 100,000 off-cycle reading requests between May, when regular school sessions end, and August, when all the college kids come back again. Before advanced metering, every one of those 100,000 moves represented a costly site visit by utility personnel. There, a partial deployment paid systemwide dividends.

Segmenting your system
Stecklac notes that utility managers needn’t limit segmentation strategies to customer characteristics. For instance, he’ll consider information such as the condition of the distribution system. In an area with aging, underground infrastructure, utility managers might want to be more proactive with maintenance, he says. Such areas could warrant more robust metering-communication networks than a recently built subdivision with new infrastructure in place.

Along with looking closely at customers and their situations, it pays to consider all the add-ons available from specific metering technologies. AmerenUE, a utility operating company owned by St. Louis-based Ameren Corporation, has had AMI for 11 years, but it has now started adding a new application, “loss of potential” alarms, to C&I meters.

The technology pinpoints problems in polyphase meters, according to John Luth, the utility’s manager of system metering. He uses it on large industrial accounts, where some failure modes could escape detection from regular billing systems but still under-register usage dramatically, resulting in revenue loss.

Other technology choices to consider include prepayment devices that help customers pay-as-they-go, load-shedding devices, or communication equipment that empowers customers to participate in demand-response programs.

Do you need such add-ons deployed uniformly throughout your service territory? Maybe not. As Steklac says, “AMR and AMI technologies are not one-size-fits all.”

Betsy Loeff has been freelancing for the past 14 years from her home in Golden, Colo. She has been covering utilities for almost four years as a contributor to AMRA News, the monthly publication of the Automatic Meter Reading Association.

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