Ten years ago, unleaded gas cost an average of $1.11 per gallon, the median family income was about $45,000, natural gas cost about $6.16 per thousand cubic feet, and electricity was about $0.0838 per kilowatt hour. Investor-owned utilities were considered very safe investments, suitable for widows and children looking for dividends.
Automated meter reading (AMR) was still a developing industry. In fact, federal legislation was introduced to investigate the possibilities of remote metering. While the federal government was considering a study, 10 utilities reported installing more than 230,000 AMR units. That’s a small percentage of the installed base of meters, but certainly a building block.
For utilities, the primary driver for installing AMR systems was reduction of meter-reading costs. Collecting the critical monthly billing read without errors, without human intervention, and as quickly as possible were the main business case drivers.
Utilities were dealing with specific issues in 1993, including two-income families that resulted in lack of access to meters, meter-reader safety issues, and the increasing automation of processes. The focus was on the reading to provide input to the billing system. More frequent billing, customized billing dates, and improved customer service were all concepts for the future.
The primary technology used for AMR systems was telephone. This could be in-bound or out-bound but was firmly built on the assumption that residences and businesses had phone lines that could be used by the AMR system. While business cases for AMR implementations still include the reduction of meter-reading costs, the decade progressively has brought substantial changes to the overall utility marketplace and to the AMR industry specifically.
These changes have occurred in four main areas: technology, the utility business, social/economic arena, and regulatory issues. Let’s take a look at some of them and how they affect the AMR business case.
In 1993, few people could have predicted that the percentage of homes with landline telephones in the US would actually decrease. There are several drivers for this, including the decreased cost of mobile services as well as other technologies available to homeowners such as Internet phones and cable modems. In addition, the implementation rate of the Internet has been greater than any previous technology introduction.
These technology changes have affected the AMR industry through the development of new technologies that can be used for meter reading as well as changing the benefits of a telephone-based AMR system. Most systems installed today are radio frequency (RF)- or power-line carrier (PLC)-based.
Changes in the utility business have come from several different areas. The prospect of deregulation and now re-regulation of the electric industry has forced utilities to be more focused on their core business. For municipal utilities, the recent municipal budget challenges also have put more focus on better business practices.
For both investor-owned and municipal utilities, this has created the need to adopt technology that meets more than one need. AMR systems no longer can be justified based only on reducing meter-reading costs. More focus is placed on the entire meter-reading process. For example, collecting accurate reads results in fewer customer calls and less expense because the customer-service department receives far fewer calls complaining about high bills.
The past 10 years have seen a continued growth in the number of dual-income families. Access to these homes has become more of a challenge. In addition, these families often are technically savvy and want more control over their financial lives. This can result in an interest in energy programs that can lead to savings or simply to the customers’ desire to control the date that they receive their utility bills.
Finally, increased regulatory pressures have had an impact on the entire utility business. New focus on better customer service through the elimination of estimated reads or percentage of accurate bills has changed how utilities view AMR. While the deregulation/re-regulation of the electric industry is the most obvious example, water utilities are being hit by increased legislative pressure from the Clean Water Act and the Safe Drinking Water Act.
AMR in 2003
Today there are more than 25 million AMR units installed on gas, water, and electric utility meters. The gas industry leads with about 21 percent of the meters changed to AMR, electric has about 16 percent, and water has 11 percent installed. More than 9 million units shipped in 2002, and indicators show that 2003 numbers will exceed that substantially.
The early technology choice, telephone, has seen a decrease in sales. On the other hand, radio frequency products have captured more than 75 percent of the market. Within the RF market, there are both mobile and fixed network systems. To date, mobile technology has been installed at about 70 percent of the RF systems.
While there are more than 20 AMR vendors listed in the most recent edition of The Scott Report, seven vendors have shipped almost 97 percent of the installed AMR. These include Itron Inc., SchlumbergerSEMA, Badger Meter Inc., Hunt Technologies Inc., TWACS by DCSI, Neptune Technology Group Inc., and Invensys plc.
Many of the new systems being marketed provide more than just a monthly billing read. Network-based systems, both RF and PLC, can provide daily, every four-hour, or even every 15-minute, readings from the meter. The additional information being collected can provide benefits to both the utility and the customer.
Utilities are installing AMR systems today to improve customer service as well as to provide value throughout the enterprise. AMR systems are affecting more than the meter-reading department; they
are being integrated with resources elsewhere within the utility. More accurate and timely data has increased value to other departments.
Many customer-service benefits remain unchanged in 10 years: elimination of estimated bills, reduced off-cycle reads, and reduced billing disputes. However, regulatory pressure has been the driver for the system installation in some cases. One utility was required to answer 80 percent of its calls within 20 seconds. There were two ways to meet this mandate. The utility could substantially increase the size of its call center, or it could decrease the number of incoming calls. The choice was a new AMR system.
AMR provides actual reads for each bill. Customers are increasingly unhappy with estimated bills. If their cellular bill can tell them to the second how long they spoke and with whom, why can’t their utility bill tell them more than just the estimated usage for the past 30 days.
For some utilities, installation of an AMR system has reduced service-center calls by more than 50 percent. The day after bills are sent is no longer the worst day in the customer-service center. With daily meter readings available, utilities can let customers choose their billing date. Using software, the utility can present meter-reading data to customers on a Web site so that they can see where their greatest consumption is occurring.
Daily meter readings not only benefit the customer, they also benefit the utility. One of the first benefits is a reduction in costs related to move in/move out customers. This can be a major expense for utilities in college or university towns with a large transient population.
But more important, having accurate, finely granular data gives utilities the tool to bring more control to their process. When meter reading is collected on only a monthly time frame, analysis of usage patterns is very difficult. But with daily meter readings, load profiles can be built by customer, by neighborhood, by substation, or by supply line.
Accurate load information enables engineering departments to correctly size the infrastructure of the utility. In one case, information from the AMR system was used to right-size transformers at a utility, resulting in substantial savings. Likewise, water utilities can correctly size and select meters by knowing what the typical consumption and high consumption for a service area will be.
Marketing departments can use the data collected to run models of different rate structures. Time-of-use rates become an option for utilities, better matching costs to price. One California study indicated that peak-rate usage could be shaved by 20 percent if customers had accurate pricing information. And each megawatt of reduction can equate to $400,000 in savings per year for the utility.
With a network AMR system installed, utilities can then look at other services they can provide their customers. One utility provided energy analysis services to large customers. By looking at when energy was being used and correlating with building activity, the utility quickly identified incorrectly set HVAC systems. This resulted in 5 percent to 10 percent savings for the customer. For the utility, it provided differentiation of its service on a proactive basis.
With more than 25 million points installed at more than 6,000 utilities, the business cases are diverse. But more utilities are finding that AMR looks much more attractive.
Future of AMR
With more than 200 million meters yet to be changed out to AMR, what does the future hold? There are a number of drivers that can give some indications. These include lower-cost equipment with more features, customer demands, and continuing legislative and regulatory pressures.
The AMR industry continues to be very active. New products and new manufacturers appear frequently. Many of the new products focus on reducing the cost of the meter and AMR module. For some, this is done by integrating the two technologies, for others it occurs through reducing the cost of installing the final product.
The new products often have new features. These include leak detection abilities for water-oriented AMR products and solid-state electric meters that combine metering and AMR capabilities.
The increased choice of communication technologies – Zigbee, 802.11b, and Blue Tooth – have created a wider spectrum of AMR products. Utilities have the ability to tailor their AMR solution to their territory and customer needs. Solutions exist for urban, suburban, and rural communities and can be combined to provide a custom-fitted solution rather than one-size-fits-all. The increased levels of customer service provided by retailers have raised the bar for utilities. Many customers want to be able to choose their billing date. They want exact bills, and many want better control over their energy purchases. AMR systems can assist utilities in meeting these challenges.
Meter-reading dates typically have mandated billing dates. With meter readings available on a daily or more frequent basis, a change can be accommodated easily. Likewise, installation of any AMR dramatically increases the accuracy of the read. In some cases, AMR system providers will guarantee accuracy rates in excess of 97 percent.
Control over energy costs can come from a number of AMR systems. For some customers, a prepaid metering system that lets them pay for energy usage on a weekly basis may meet their needs. For others, remotely controlling the thermostat from their office may be their requirement. AMR systems today can provide these benefits.
Legislative and regulatory demands will not lessen in the coming years. AMR systems can provide the raw data to meet some of these. For example, monitoring of the network used in an AMR system can provide more accurate outage information than calls received from customers.
Discussions surrounding the Energy Bill recognized the value of advanced metering to the nation and included tax incentives.
The more than 6,000 utilities in North America that have made an investment in AMR are seeing the benefits. There is an immediate impact on the cost of collecting meter reads, but the benefits flow throughout the enterprise. More accurate reads reduce the burden on customer service departments and allow meter readers to focus on upgrading systems rather than collecting meter reads. Engineering departments can use the data to make better decisions in developing the infrastructure, and outage teams can respond more rapidly to the correct location.
AMR isn’t just about meter reading; it is about the information that enables a utility to make well-informed strategic decisions and to excel.