Main Menu9/28/2005
Is the AMR market going to explode since the Energy Policy Act of 2005 (EPACT) passed? This question was on everyone's mind at the recent AMRA conference in Long Beach, California. The answer is, "Maybe" but the impact of the thunder will depend on making the business case work. A full meter data management system (MDM), which enables utilities to pull in meter data from multiple AMR systems, perform validation, editing and estimation (VEE) functions, safely interface with major IT systems such as billing, outage management, work management and GIS, and calculate complex billing determinants to support time-based pricing, as well as reduce network maintenance costs, paves the way for utilities to capture benefits beyond what have come to be known as "hard" benefits. These basic benefits are those that almost every utility achieves from savings in meter reader costs, fewer estimated bills, and other benefits that stem directly from the utility being able to read the meter with a very high rate of success. (See Table 1 Primary Basic Stage "Hard" Utility AMR Benefits below.) "Neither wind nor rain nor sleet nor snow" is a phrase utilities could borrow from the postal service after the installation of AMR.
Basic Stage "Hard" Utility AMR Benefits
| Avoided Costs of locking rings | Meter Replacement & Testing Avoided |
| Call center reduced calls | Move-in / move-out |
| Corporate overhead savings | Read meters at will |
| Estimated bills eliminated | Reduce load research costs |
| Fewer billing mistakes | Reduction in write-offs |
| Improved cash flow | Single no-lights trips avoided |
| Meter inaccuracy - electric | Support customer service in bill inquiries |
| Meter reading |
AMR allows utilities to provide the kind of service customers expect, quickly and efficiently, and the ability to answer customer concerns about their bills with surety. With daily reads, for example, customer service reps know when someone was using a vacation property. Usually, the customer will remember that cousin Joe did say something about going fishing one weekend last month. Most importantly, at the end of the call, instead of being angry and calling the regulator to complain, the customer understands the basis for his or her bill.
Meter Data Management Turns "Soft" Benefits into Real Benefits
MDM has proven to be one of the most important investments utilities need to make to successfully manage data provided by AMR systems. With MDM, AMR benefits that previously have been considered "soft" benefits, such as outage notification and distribution asset sizing, can now be captured and quantified. Chart 1 MDM Allows Utilities to Greatly Increase AMR Benefits below highlights the improvement provided by MDM compared to AMR with no MDM. Utilities can increase the dollars per meter per month from $2.03 for the basic benefits to $3.25 with MDM, an increase of 60 percent.
MDM Allows Utilities to Greatly Increase AMR Benefits
Table 2 MDM Stage Additional Utility Benefits below lists the additional benefits more easily attained by investing in MDM. As an example of why MDM is so important, consider outage mapping. Utilities without MDM typically turn off the "last-gasp" outage messages coming in from the field during a large outage. The thousands or millions of additional outage indicators simply flood the outage management system (OMS). MDM systems preprocess the raw outage data and provide to OMS only what it needs to map the outage using business rules defined by the utility. The utility may ask for only one or two indicators or "bellwether meters," per transformer during the mapping process. If one of the AMR systems used by the utility doesn't provide "last-gasp" messages, the MDM can poll selected endpoints and identify potential outages to OMS, relieving the OMS of keeping track of how each AMR system can assist in outage mapping.
MDM Stage Additional Utility Benefits
| Data mining | Outage mapping |
| Faster restoration | Power quality |
| Identification of dead meters | Provide information to customers |
| Identify potential DR customers | Sizing of distribution equipment |
| Improved load forecasting | Theft / line losses |
| Management dashboard | Vegetation management |
| Measuring contribution to peak | Verify power restored after repairs |
| Outage detection |
Identification of theft and line losses, the management dashboard, and the verification of power restored after repairs are the top three additional benefits in terms of utility dollars per meter per month. The management dashboard is an interesting new benefit which has caught the attention of utilities after Xcel Energy showcased this feature in the Xcel Innovations Center in May 2005. Several very large utilities visited Xcel Energy and expressed keen interest, and this is spurring AMR and MDM vendors to develop similar applications. As explained by Xcel Energy, the management dashboard keeps everyone in the utility focused on the same goals, and allows utility management to quickly identify conflicting directives. For example, if a business unit manager needs additional resources to replace problem transformers but also faces tight limits on capital spending and overtime, top management may continue to see the same transformers flagged as undersized day-after-day, or worse, note outages caused by failing transformers. This alerts top management to a potential problem with the goal of reducing outages. If line losses (or water leakage for water utilities) are increasing, the COO can drill down to find the area with the largest differential between sales and supply entering the system, and direct the managers in those areas to seek out the problem. The dashboard provides to utilities the ability to monitor almost every aspect of utility financials, and the investment in AMR and MDM plays a key role in providing information to complete the picture.
Quantifying Customer Benefits
Since EPACT requires state regulatory authorities and unregulated utilities to consider benefits for both customers and utilities, UtiliPoint offers this list of customer benefits as a starting point for the state investigations into providing advanced metering with communications to all customers. (See Table 3 Basic Stage "Hard" Customer AMR Benefits below.)
Basic Stage "Hard" Customer AMR Benefits
| Estimated bills eliminated | no customer meter reads |
| Fewer billing mistakes | On demand re-reads |
| Meter readers not on property | Prepay metering |
| Move-in / move-out | Remote outage detection |
The estimates are based on experience of utilities that sold AMR services to 10 percent of their customers for $3 to $5 per month. The 27 cents per meter per month seen in Chart 1 MDM Allows Utilities to Greatly Increase AMR Benefits above can then be seen as a very conservative estimate of the value to customers of basic or "hard" benefits of AMR.
Customers also benefit from utilities investing in MDM. (See Table 4 MDM Stage Additional Customer Benefits below.) An additional 20 cents per meter per month can be attributed to the following benefits:
MDM Stage Additional Customer Benefits
| Energy use profile posted |
| Fewer outages due to transformer failure |
| More accurate estimate of outage duration |
| Reduce outage duration |
It may seem to be double counting to include benefits for shorter outages for both the utility and the customers, but customers benefit independently from shorter outages. The benefit amount included is reasonable, and reflects only what the customers pay for energy during the time difference between the shorter outage period with AMR and MDM and the otherwise longer outage. If the outage would have been six hours and is estimated to be only four hours with AMR and MDM due to improved restoration verification, the customer benefit is estimated at the energy cost times the energy used in two hours. This estimate represents the lower bound of what could reasonably be included in a business case.
Several utilities (Puget Sound, Gulf Power) have proven the value of posting customers' recent hourly energy usage, allowing customers to understand the relationship between using electrical appliances and energy usage. For many electric customers, their energy bill is somewhat of a mystery. There is a rough understanding that using more results in a higher bill, but customers are often unaware of how much energy is used by any particular end-use. Posting the hourly profile as of the day before has helped interested customers target their conservation efforts and reduce their energy spending. Since not all customers take the time to review their energy profile, our estimated value of this AMR benefit is quite low at ten cents per meter per month. It is also low because this benefit is estimated for customers on more traditional rates rather than time-based rates.
Demand Response Benefits are Dramatic for Customers
Based on the work of Christensen Associates and as a result of demand response, demand response-related customer benefits from AMR are estimated to sharply increase from the MDM stage of 47 cents per meter per month to $3.79 per meter per month. Utility benefits also increase at the rate of 25 percent from the MDM stage to $4.02 per meter per month. The majority of customer benefits stem from avoiding the construction of unnecessary peaking plants ($3.00 per meter per month), but also from customer savings by actively participating in demand response programs (32 cents per meter per month).
MDM Increases Confidence in the Numbers
In the end, it always comes down to money. If the costs are less than the benefits, and the utility and regulators have confidence in the numbers, the AMR and MDM markets could experience significant growth. UtiliPoint suggests that MDM should be on the agenda when reviewing AMR business cases since it reduces the risk of investment.
