Q&A: Meter Reading Past and Future by mThink, May 23, 2005 Q: In 1997, as Puget Sound Power and Light, you merged with Washington Natural Gas and became Puget Sound Energy. Was it then that automated meter reading made the most sense? A: We were piloting different technologies in 1997, communications technologies that would actually deliver the metering information to us. At that time, most of the automated meter-reading technology that was available was really just drive-by metering. And so you were able to make meter reading more efficient, you didnt have people running around all over the place, you could drive by in a car, and you could remotely read the meters from a van or a vehicle. Q: You would capture the radio frequency signals? A: Right, exactly. It was a more efficient way of reading meters. We were really looking at a way to get information off of the metering system in a manner in which you could do more than just read meters with it. You could actually provide that information to customers. They could manage the energy usage. We would be more familiar with usage patterns and could manage our own resources better. Customer information people would have that information available to them when talking to customers. And our planners would be able to use it in the system design. Simultaneously, we set about to develop a new customer information system. We also recognized that the customer information systems that were available at that time only had the capacity to manage the meter-reading information from a once-amonth read and produce a bill. And we wanted a system, and then ultimately installed a system, that would give us daily reads; and if we wanted to we could have even done hourly reads. But even daily reads over a million-and-a-half meters, thats a lot of information, so we had to have a new CIS system that was capable of managing that kind of information and then actually producing a bill from it. Q: What is the primary technology that is used to feed the information to the home office? A: The system that we installed was a Cellnet system. At the time it was a state-of-the-art system. We had designs on making it a two-way communications system, but it just wasnt available then. So we installed a one-way system. We could get the reads off it, but it was not designed specifically for the utility to be able to control loads off of that system as well. So it was primarily an information-gathering system, and it worked very well for that. And thats the one thats in place at Puget Sound Energy today. Q: And its still only one-way today? A: Puget Sound Energys AMR deployment was the largest in the country when it was installed, and we did some programs with it that were the first of their kind. And at the time it was state of the art and we really had some fun with it and we did differentiate ourselves. We ran some pretty important programs on the West Coast during that energy crisis that helped the utility by the fact that we had that system installed. Q: Who built the CIS to go with it? A: We developed it ourselves. We put a team of people together internally and charged them with the responsibility of developing a system. And it went relatively well. We completed the development through a subsidiary company we formed called Connext. We formed Connext because when the development was complete it was going to be one of very few systems that had this kind of capability, and we wanted to be able to sell it to others. Q: Who else had a hand in implementing the system? A: There were basically two technologies at the time that were competing then, and we piloted both of them. We put two 10,000-meter pilots in place. We tested most of the systems and the technologies that were available at the time to give us the kind of communications capability that we sought. We did not want to do drive-by. We wanted it to be able to do more than just read meters. That was a No. 1 criteria for us. So that limited us to two possible suppliers at that time. Q: What was the first big test for the system? A: We were probably about a little over halfway through our deployment in 2000 when energy markets on the West Coast really began to heat up. And in the fall of 2000 we said, look, weve got enough of these meters installed now and operating you can incrementally put them in and start using them immediately that we could actually use this system to do some pricing options to see if we could get customers to reduce demand. We had our CIS system installed, so we had the ability to take the information in and actually produce a bill based upon time of use. Customers would get price signals four different time periods a day and would be able to move their usage around to different times; and if they moved it into the off-peak hours, wed give them a rate break below what they would pay under a flat-rate scenario. So the Washington State Utilities and Transportation Commission noodled over that not for very long, only about 27 days and said OK, do it. So for 150,000 customers, they immediately got put on this time-of-use program. If they had a computer, they could bring it up on a daily basis and see what their usage was in each of those time periods. A survey later showed a very high percentage of people said they were actually utilizing the information. Q: Was there confusion going from a flat rate to time of use? A: We put people on a pricing mechanism. We sent information to them because they didnt have a choice. And all of a sudden the bills they were going to be paying were going to be based upon time of use. We had interveners in the hearings who didnt like that. They thought it was too much, too soon, and it would not be well-received by customers. That summer we put it in place April 1, 2001 we did some survey work with the customers, because the commission wanted us to come back in the fall to check our results and see if the program should be expanded. The results were in the high 80s for the percentage of customers who said they were actually doing things to shift their usage from on-peak to off-peak. The feedback we got from the customer surveys clearly showed they liked it, they didnt feel like they had been put upon, they liked the idea that they could actually save money by shifting their usage from on-peak, and they thought they were doing something for the environment and to help the West Coast energy crisis. Q: Is now the time for utilities to install AMR? A: The energy markets have stayed pretty stable. At least stable enough that utilities havent had the kind of changes in retail rates that utilities had to put in place to pass those costs through to customers in the past. This is the opportunity to get the technology in place so that when we get volatile markets or an energy crisis because of high temperatures in California or low snow packs in Washington or whatever it is, the mechanisms are in place to deal with it. The longterm real key will be to demonstrate not just time-of-use but real-time pricing. My opinion is, thats where this needs to go: where customers can see, in near-real time, changes in the market, and if markets are low they can use as much energy as they want, and if markets are high they can choose to cut back wherever they want to cut back. So Im a real advocate for real-time pricing, and the good news is there is technology available today capable of delivering it. Q: Is AMR on the verge of expanding dramatically? A: I believe it is, but few utilities are even looking at this as a strategic asset. They still look at their generation investments as strategic, because theres so much money involved. Meter-reading systems are not inexpensive, but compared to generation they are relatively small. While I love that the name has changed from AMR to advanced metering infrastructure, I think most executives arent that interested in meter reading. But I believe that just the change in nomenclature itself to AMI will be helpful in getting people to think more about it and its capability beyond just meter reading. But its going to take regulators and policy makers to make this expand dramatically. The good news is, in many parts of the country, they are playing close attention and getting involved with their utilities to make it happen. Q: What will hinder expansion? A: Several things. There are states that are regulated and deregulated with no indication of which way were going. There are still questions about who is going to be responsible for the metering long term. Are utilities going to stay in the metering business, or is some third-party provider going to come in and take over the metering business? As long as those kinds of questions are hanging around, its going to be difficult for utilities given that kind of risk potential to invest tens of millions of dollars in a new system. Ive believed that it makes no sense for utilities to get out of the metering business. The metering information can be shared, but the responsibility needs to be with the utilities. I suppose a case can be made that this is really a non-issue. After all, even if somebody else took it over, theyd have to take over the utilitys meterreading system, whatever it is. So the utility has someone to buy it. Unfortunately, its still a question mark. Q: Will technological advances help sell AMR? A: Without a doubt the answer is yes. State-of-the-art systems not only remotely gather the metering information from customers over a variety of systems, including fixed wireless networks and power line carriers; they now have two-way capability, allowing the utility to control utility system devices as well as customer end-use devices. These capabilities expand the value of the systems to the utilities. In addition, some companies are designing programs that assist utilities and their customers in using the information obtained over these systems to drive costs down and manage usage. When Puget Sound Energy was providing its customers with time-of-use pricing and daily usage information, customers were pretty much left to shift their usage on their own. Today, energy management hardware and software exist for use inside the home or business. There are companies designing systems that will respond to utility price signals and automatically change home or business usage patterns to accommodate whatever price signal is being delivered by the utility. From a consumer perspective, theres some really neat stuff coming together now that will include things other than just energy management. A customer will be able to buy systems that incorporate Internet access, TV, CD, DVD, radio and telephone in addition to energy management. When this happens, well have consumers helping to drive this market and we will no longer have to rely solely on the utility. Q: Do the cost benefits also help sell the concept? A: When state commissions take a look at a utilitys investment in this, they look at it through the window of utility only. That utility has to kind of stand on its own, either from internal efficiency or the price its paying for power, to cost-justify it. While we were implementing our system, a study was done that showed the economic benefit to U.S. customers, just from their ability to manage wholesale prices, if all homes in the country had AMI. It was like $15 billion a year in savings that would accrue across the country to customers if they had the tools in place to manage usage during times of peak pricing. Nobody incorporates that kind of economic benefit into their cost-effectiveness and analysis. And its probably one of the biggest benefits that will ultimately happen when you have a broad deployment of these systems. Filed under: White Papers Tagged under: Utilities