METERING, MONITORING AND ENERGY MANAGEMENT

Commerical and Industrial AMR: The Time is Now; Are the Options Ready?

A number of recent industry events - such as energy shortages, deregulation and competition, and customer demands for more choice and control of energy bills - has caused utilities to think again about where their Automatic Meter Reading (AMR) dollars should be invested. Utilities now focus on an entirely different customer segment than what historically has been viewed as the prime target for AMR: residential full-scale deployments.

Because of increasingly urgent energy supply issues and dropping profit margins, utility managers are turning their efforts and actions toward the acquisition and implementation of AMR systems that address the C&I (Commercial and Industrial) sector. The data acquisition may be expensive, but capital investment provides more bang for the buck by delivering instantly recognized, valuable information in the form of interval data for individual customer load profiling.

Today's leading utilities deal with load forecasting issues, potential energy shortages, customers' rage at high energy prices and the imminent threat that valuable large customers (base load) ultimately may leave their system. Utilities are also faced with the grim realization that they know little or nothing about:
- Customers' individual load profiles
- Specific customer pattern of use
- Associating information with their current 'one size fits all' rate schedules
- Resulting impact of each customer's use on the overall
load factor and peak demand
- Utility's bottom line

Recently utilities have readily invested in acquiring the above type of customer information - and major meter manufacturers see exponential growth and profits in solid-state meter sales. Most new meter purchases include a modem under glass or some type of transmitter connected to the digital output from the solid-state meter.

Many American PUCs are making laws that require 15-minute reads with daily downloads for billing settlements in deregulating states. Information acquisition for the purpose of managing demand, pricing and billing is evident in deregulated states and has spilled over into other states beginning to deal with demands for more information from enlightened customers.

Utilities Are Learning More About Their Customers

Using customer information is credited largely to the initial forays of alternate power suppliers presenting graphical information to customers on a secure web site. From all fronts, utilities are being forced to learn more about their customers. Some immediate discoveries resulting from using customer information include:
- Rate class discrepancies: customers in the same rate class easily can vary in profitability to the utility - from more than 50 percent to below 38 percent.
- Need for new pricing structures: customers at the high end of a rate class understand that they are subsidizing the high-cost customers and the bulk of the utility infrastructure. Multi-service territories provide multi-site customers better service and pricing options. These customers now know they can secure better rates by aggregating their load and outsourcing their power requirements, resulting in competitive long-term energy procurement contracts.
- New generation lead time: Planning new energy generation construction to alleviate anticipated energy shortages makes for lengthy and costly deliberation processes with environmentalists and politically volatile consumer advocacy groups. Shifting of load and managing demand augments existing power supply and delivery resulting in postponing or eliminating the need for intensive long-term capital investment. AMR information offers nearly immediate load and capacity relief for minimal investment when considering cost and time spent to incorporate new generation facilities.

As the need for customer information grows stronger in the C&I sector, residential AMR systems appear to have no need to initiate the purchase of this high-tech metering equipment, software and telecommunications lines. But the groundswell of steady commitment in utility budgets for the capital investment necessary to purchase C&I AMR technology continues to increase. Why? Because utilities can no longer ignore the value of the timely interval data provided by AMR.

For the first time utilities can:
- Determine individual customer profitability.
- Provide information to build more comprehensive pricing for customer retention, maintaining valuable base load.
- Provide information that lets customers consolidate their energy purchases and modify patterns of use.

Survey Results

A survey conducted by Automated Communication Links Inc. in 2001 showed that more than 24 Southern electric utilities implemented an Automatic Meter Reading system solution mainly to address the acquisition of increased interval data.

Though many respondents differed in the frequency in which the data must be delivered to the utility head-end for presentation and/or billing, the majority stated that they needed the information available in the format and granularity specified by the Public Utilities Commission.

Survey results also showed that large, important C&I customers wanted information provided at the level of detail meaningful to their procurement, budgeting and management requirements.

In all cases, utilities expressed concern for acquiring accurate data that could be validated, estimated and edited to a standard that could be converted into a bill settlement, and accurate for passing on to the Alternate Energy Providers.

C&I AMR Requires More Than Turnkey Solutions

The value proposition and cost analysis is less strenuous for the purchase of C&I AMR. However, few utilities truly appreciate the technical requirements, system solutions and service delivery options for C&I AMR when compared with the simplistic, turnkey solution options generally reviewed in residential AMR.

System solutions used in C&I AMR for small utilities (under 20 three-phase meters) historically has consisted of selecting the meter vendor, using that vendor's software and connecting the meters using dedicated telephone lines. For utilities automating more than 20 three-phase meters, the choice generally includes the purchase of MV-90 software (a somewhat defacto utility software standard), providing the utility with several meter types and access to various meter protocols.

This software maintains a level of flexibility and competitiveness in purchasing multivendor meters. Through the years, MV-90 software has offered a certain amount of flexibility in using shared phone and cellular lines for connecting the meter to the utility head-end.

With growth of deregulation, competition and customer demands for more data, utilities that appreciate the value of the data in these early installations now want to automate more C&I meters. Here lies the rub. The cost per meter with the communications link now becomes a factor as utilities drill below the 750 kW range. The cost of the software and its ability to manage the interrogation process as is, or with customer or enhanced modifications, also becomes a major factor moving forward.

Complex Choices

What is the utility to do? Choices are complex to say the least:

1. Should the utility just expand the existing system?
- Is it possible to expand it?
- When does the cost of dedicated lines and line-sharing devices make this option no longer viable?

2. Should the utility search for a new vendor system solution?
- Who are these new vendors?
- What do they do about the required protocols they need to read the various meters in their service territory?
- What is the risk of making a break from the defacto standard?
- Is it worth it?
- Can standards such as ANSI 12.19 make a difference and will they be beneficial in the long term?

3. Looking at choice no. 1 or 2, can the telecommunication aspect of the puzzle be more effective with a choice other than emulating a telephone link?
- What about public RF networks?
- Can packet data serve the purpose, cut costs and add stability to the data transfer process?
- Will meter manufacturers incorporate the transceiver or modems into their solid state meters?

4. Should the utility relinquish control of the meters to an outsource service bureau?
- If significant expertise in data and telecommunications is required, outsourcing might be the answer.
- Are there companies that do this?
- Can utilities still retain control over the data and the customer?
- Does this start a process that will cause utilities concern later as deregulation and competition unfold?

Tip of the Iceberg

This is the tip of the C&I iceberg. Politics play a heavy role in C&I metering today. Unlike residential AMR, big money and big players already are established and making money in this industry segment. Newcomers also are investing heavily. And why not? They see C&I as the segue to ultimately gain utilities' residential AMR business as well.

Carolyn Kinsman is president of Automated Communication Links Inc., based in Oakville, Ontario, Canada. Contact Kinsman at aclinc@aol.com.

This article originally appeared the July/August 2002 issue of AMRA News, the official publication of AMRA. AMRA is an international nonprofit membership organization founded to address standardization, justification and deployment practices in the application and advancement of enhanced customer-service and resource-management technologies.

The association's mission is to provide AMR information and educational resources worldwide by advocating standards and the use of advanced metering technologies. Members receive numerous benefits including publications, market reports and discounted registration fees to AMRA's annual symposium.

For more information, visit www.amra-intl.org. ET