Metering and communication in a competitive market

The meter is one of the prime interfaces with the customer and collectively meters represent the electricity supplier's cash till. But margins in electricity supply, by the commodity nature of the product, are and will continue to be narrow.

Conversely investments in new metering technology can escalate into major capital investments. The justification, therefore, for new metering and communication technology in a competitive supply market requires critical examination. And the drivers for such new technology can be grouped into three broad areas.

  1. Load management
  2. Value added services to the customer
  3. Metering data exchanges required for generator/supplier accounting (pooling and settlement, in UK parlance)

Load management has potential benefits for generators, transmission line operators and distributors. With the right trading mechanism in place, these benefits can be passed on to the suppliers, who decide whether to take them as extra margin or pass them on to the customer as lower prices.

The requirements for generation are usually inherently expressed in the bid prices. Several countries have adopted schemes for providing load management for frequency control for transmission network operators as a direct alternative to strategic reserve generation.

Distribution requirements are more localised and difficult to reconcile, but theoretically produce the best stream of income if load management schemes can be used to avoid or delay network re-enforcement, although the appropriate setting of distribution use of system charges will help to identify peak periods/areas. Yet no country in the world, as far as the authors are aware, has implemented a proactive scheme whereby suppliers are paid by distributors for shedding loads in peak times/areas.

Added Value Services can be directly related to electricity supply (such as with remote payment mechanisms) or completely divorced from it (provision of security system monitoring or even e-mail/internet services). The problem with the latter is that it has to remain technically and commercially competitive with the growing digital superhighway. We are possibly only a few years away from wideband communication into every home, which will surely put all the narrow band communication options currently being offered in a different light.

Pooling and settlement systems have in the past made firm requirements for period consumption logging for example, half-hourly metering. Very often this is coupled with a requirement to submit consumption data to such a time-table that the only practical solution is remote communication to every meter.

In the UK a half-hour recording meter plus a communication link is a fundamental requirement of the market until April 1998. This is an expensive option, with a cost estimate of £800-900 per annum. Though this may be acceptable to large industrial users, it is clearly not an option for residential consumers. The UK response for 1998 is a system of deemed profiles, where the meter and the meter reading method (quarterly/biannual/yearly manual reads) remains unchanged from the pre-competitive market. In direct comparison to half-hourly metering, such a scheme costs less than £10 per annum for a simple single rate domestic meter.

The system of deemed profile, however, is not without disadvantages. It tends to make the market commodity driven, with little chance of product differentiation between rival suppliers.

Communication networks

Implementing a communication network for metering in a competitive supply market warrants further discussion. From a distribution company perspective, using distribution network substations as data concentration points is attractive on the grounds of cost, security and accessibility, as well as on the basis of numbers of customers served, particularly for urban areas. However the distribution company may not have any direct relationship with the end customer, and will have to look to suppliers as customers of a communication service.

Basing the structure of the communication network on the distribution network readily lends itself to the inclusion of the latter's automation functions being carried out using the same communications infrastructure. However, care must be taken when linking network operational and non-operational functions, because of the differences in requirements for security, reliability and response times for the links and services.

For example, a typical UK distribution substation in an urban area supplying a mixed load of residential, small industrial and commercial customers could need the following daily data capacity.

50 residential 100k
5 industrial 600k
5 commercial 600k
Total 1300k

This results in an average data rate requirement of 15 bits/sec.

If for example an access response time for a 1 000 bit message was 10 secs, then a data rate of at least 100 bits/sec is necessary. Consequently remote meter reading functions can be carried out with low data rates, but sending and receiving messages or special meter reads in response to customer enquiries where response times of several seconds could be required dictate much greater capacity.

Channel capacity is therefore likely to be determined by function response times and protocols, rather than total data throughput. This means that network automation functions, customer alarms, dealing with customer queries on line and load reduction for network utilisation purposes must all be treated with caution when they are used to justify communication infrastructure for meter communication purposes.

Advanced metering and communications although not synonymous with a competitive supply market are not precluded by it either. However, owners and operators of meter communication systems will need to be aware that the benefits of the systems under their control may lie with many different parties. Commercial arrangements must be in place to ensure that all the benefits are translated into revenue streams that can be passed back to the party making the original investment.

All this makes the justification for advanced metering and communication systems in a competitive market more complex. A competitive market brings with it a tough commercial realism. Ultimately this is good news for purveyors of advanced metering and communication technology, as it provides a solid foundation for future investment rather than the rather nebulous justifications of the past.