Advanced metering waits in wings
By Staff -- Purchasing, 5/6/1999
While regulators, legislators, and lobbyists wrangle over complicated electric-power restructuring issues such as stranded costs and regional transmission organizations, there's an information industry waiting to be born.A 1998 report from Cambridge Energy Research Associates in Cambridge, Mass., notes that sophisticated automated meter reading (AMR) systems--combining state-of-the-art information and communication technologies--stand ready to replace the old manual systems of collecting energy usage data. But blocking the spread of AMR technologies is the energy service provider's well-justified fear of investing in still-expensive technology at a time when both power-industry restructuring remains so uncertain and the anticipated benefits of AMR remain unproven.
Why AMR is important
The beauty of AMR systems is their low-cost ability to generate massive amounts of information about when and how energy is being used. For energy sellers, advanced AMR systems are expected to (among other things):
* Generate cost savings via the automation of largely manual data collection and customer-service processes.
* Allow for market differentiation through information and other related service offerings.
* Identify profitable customers and refine pricing structures in a very low-margin business.
For buyers of energy, access to increasingly detailed load-profile information could enhance their ability to:
* React automatically to price signals.
* Segregate, benchmark, and shape internal energy loads to maximize market bargaining leverage.
* Facilitate aggregations among individual operating units by allowing for savings allocations according to consumption efficiency.
Says Steven Taub, associate director of cera's North American Electric Power service: "There's no fundamental reason why typical end users have only one meter--it's more for the utility's convenience because of the economics of manually reading meters." Submeters, he says, provide "a much better understanding of energy consumption and allow energy costs to be allocated to different processes and tenants within a facility." However, he notes, they also generate huge amounts of information that is useless without sophisticated analysis tools. "As AMR hardware and software become cheaper over time, and meter reading and data processing are automated," Taub says "there is no reason why every piece of energy-using equipment can't be metered."
The future of AMR
cera predicts that AMR deployment will accelerate in time. "As the technology matures and the industry restructures, it's likely that the metering information and services industry will take off." Deployment, according to cera, will accelerate "as high-volume production and technological development drive down prices, value becomes clearer, and regulatory issues are resolved."
The researchers note that dozens of companies already are competing to provide AMR hardware, software, system integration, and associated services. And while suppliers of AMR systems have typically focused their sales efforts on traditional utilities, Taub says this is starting to change. "AMR is more likely to sell to either unregulated energy services companies or end users because the information holds greater value for them and they won't be handicapped by regulatory issues."
From the end users' perspective, perhaps the most important question involves ownership or control of information made available by AMR technologies. "The privacy issue is thorny, and I think there are likely to be abuses," Taub says. "A collision between privacy rights and commercial considerations associated with data access is all but inevitable," he predicts.
Under the regulatory regime, Taub notes, data has typically belonged to whoever owns the meter (usually the utility) but access to the data has been restricted, by regulation, to the utility and its end customer. As to who will eventually own meters, Taub says there is little consensus. "It could be the utility, the energy service provider (ESP), the customer, or an independent meter company." Even where customers must, by law, pay for advanced meters (as in Mich. and Pa.), they may not own their data, Taub notes. "This is all being decided on a state-by-state basis."
Still, where possible, Taub says it is clearly in the interests of end users to own and control their meter data. "The more they know about their usage patterns and the more information they can give their supplier, the better deal they can get." While suppliers are starting to offer data management as a paid service, he says, "I suspect end users will not want to pay for it--or at least not much." Taub's advice to end users: pay attention to state regulatory decisions and work to influence them through lobbying; collect historical records and acquire data from the current utility; carefully scrutinize contract language regarding meter ownership and data access; include metering and data ownership requirements in RFPs when buying energy; take ownership by purchasing metering equipment.
cera is conducting a study on "Capturing Value: The Future of Advanced Metering and Energy Information" to conclude in June. Participating companies include gas and electric utilities, energy service providers, providers of advanced metering technologies, and end users--primarily large industrials. cera says it would like to increase the number of end-user "voices" in the study. To participate--and to access study results--end users must join the study at a cost of $15K. For info on this study or other consulting services from cera, contact: Peter Augustini at (617) 441-2610.
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