By Christina Kelly
The purchase was a bold move that helped confirm Itron’s status as the industry leader in solid state electricity metering, automated meter reading and meter data management.
Earlier this year, Itron acquired Actaris Metering Systems, with offices in Brussels and divisional offices throughout the world, producing water, gas, heat and electricity meters and associated systems. The acquisition doubled Itron’s annual revenues, added 6,000 employees to the company, provided nearly 30 additional manufacturing facilities worldwide and elevated Itron to one of the world’s top meter manufacturers, along with the software applications to collect and analyse meter data.
“Itron has been extraordinarily successful in the AMR business and more recently in the electric metering business in North America,” said LeRoy Nosbaum, chairman and CEO of Itron. “While that is pleasing to us, if we think about the rest of the world – where we do about 6 to 7 percent of our annual revenue – we were not a player on the world stage. The key strategy has been to expand outside of North America while hanging on to the good reputation, position and market shares that we have in North America.”
Actaris was formed in 2001 through a leveraged buyout of another Schlumberger division, Schlumberger Resource Management Services, which, like Schlumberger Electricity Metering, was part of Schlumberger Ltd, a large global oilfield and information services company. Actaris is a world leader in the design and manufacture of meters and related systems for the electricity, gas, water and heat markets.
It is familiar ground for Actaris employees and some of the Itron electricity metering personnel, since they share common ties with Schlumberger – many of the core leadership teams have worked together in the past. That connection helps make the transition smoother and enhances operations both in North America and in other countries where Actaris is the industry leader, say industry analysts.
“This acquisition brings together two very talented management teams, including many individuals who have worked together in previous careers with Schlumberger,” said Nosbaum. “These are both well-run companies that produce the highest quality products in very efficient and productive factories around the world. Bringing these companies together unites research and development, manufacturing and business synergies that no other provider can match.”
Both companies complement each other. Actaris is a global leader in meter manufacturing, primarily outside of North America. Itron is the AMR leader and foremost electricity meter supplier in North America. The acquisition allows Actaris to offer Itron’s industry leading AMR and Advanced Metering Infrastructure (AMI) technologies, software and systems expertise to customers outside of North America, and expands Actaris gas and water meter opportunities in North America.
HUMBLE BEGINNINGS TO A WORLD LEADER
It was 30 years ago, in a rented space behind Gator McCluskie’s Bar in Hauser Lake, Idaho, that a couple of engineers from Washington Water Power (WWP), known today as Avista Utilities, talked about the idea of automated meter reading. Endowed with $250,000 initial funding from WWP, Itron was born out of a request from the utility to produce a device that could automate the utility meter reading and billing processes.
By November 1978, WWP was field testing the first Itron portable computer to automate meter reading. It was called the Datameter and allowed utility meter readers to generate a bill on the spot once a meter reading was entered. The bill was then left under the customer’s door. The Datameter stored route information and meter readings on cassette tapes. It was considered a big success and as computing technologies mushroomed throughout the 1980s, AMR field computers shrank in size and weight, while growing in power and capabilities.
In the years that followed, Itron made a series of strategic acquisitions to expand its portfolio that ultimately helped to shape and influence the AMR industry. By the time Itron purchased EnScan in 1992, it had assembled all the building blocks – end points, mobile computers and application software – to bring a cost effective and highly scalable AMR solution to market.
Up until recently, utilities collected meter data without applying the information to anything but billing. As the volume of automated meter data grew, utilities found that the data had value beyond an improved billing process. Coupled with increasing computing power, meter data became the foundation for improved demand forecasts. Meter data also drove new tools for designing distribution networks, identifying leaks and meter tampering, conserving resources and lowering periods of peak demand to bolster system reliability.
Today, more than 138 million meters worldwide are read automatically, with nearly three-quarters (100 million) of those in the United States. AMR technology is becoming a must-have capability for utilities wishing to provide better customer service, financial performance and regulatory compliance.
In addition to AMR technology, utilities are building business cases for AMI, referring to systems that are capable of collecting detailed energy data more frequently. Collection of more timely and granular data enables utilities to support time-based pricing programmes for their customers and achieve other benefits relating to energy delivery and customer empowerment via informed energy usage choices.
Once again, Itron’s vision for AMI sets a new standard – both in form and function – for the industry. Fundamentally, AMI represents an infrastructure that utilises smart meters with advanced two-way communications to enable utilities to meet their business needs for meter data collection, empowers all their customers to actively and frequently participate in demand response and energy conservation, while supporting movement toward the smart grid of the future. In the meantime, AMR and AMI technologies are complementary offerings that will co-exist in the marketplace, with each utility’s unique combination of needs and objectives driving the selection of the most appropriate technology.
Actaris already has extensive experience in the deployment of advanced metering solutions in areas such as AMR and prepayment. With the purchase of Actaris, Itron is now poised to introduce a more extensive AMR and AMI offer in markets throughout the world where advanced metering makes sense. Industry analysts have reacted positively to the acquisition, generally agreeing that combining metering and AMR/AMI technologies together, including software applications, is a very good fit.
“There can be no doubt that this acquisition represents a historical turning point in the life of our company and a significant commitment on the part of our investors,” said Nosbaum. “But as I look at the strength of our businesses and cash flow, the talent of our combined management team and employee base, the synergies in our technology offerings and the expanding opportunities in the global marketplace, I have no doubt that this is the right move – both strategically and financially – and the right time to take Itron to an entirely new level and drive strong future growth in our business on a global scale.”
In the years since engineers started working on AMR technology, electric, water and gas utilities have been looking for ways to manage and distribute the resources more efficiently and effectively. Years ago, conservation was just a hip thing to do, but hardly cost effective. In the past two years, the conservation of our natural resources has been moving up dramatically on the agendas of government leaders. The cost of conservation has also become more attractive as prices for energy continue to grow.
Itron is building a business that creates data, gathers data and helps analyse that data, so utilities and their customers can participate in their use of energy. Itron is turning data into knowledge – knowledge that is spreading throughout the world as Actaris becomes an Itron company.