A question often asked in the conference rooms of the energy business is: How well are we serving our customers?  Almost invariably the answer is “Very well indeed, sir.” For who among those in marketing has the courage to give an answer other than the one the VP wants to hear?

In all this new ‘stuff’, where are we actually creating value? One of my all-time favourite addresses was from S. David Freeman. Beneath the brim of his cowboy hat his message was simple: unless you focus on your customer’s needs instead of listening to high-priced consultants YOU WILL LOSE. Boy! What did he know?

Got your attention?

My view is that we have done a very poor job of rising to the customer information challenge. We claim billions of dollars in IT investments from our customers and expect them to be satisfied with a piece of paper once a month – the bill. C’mon, people, even tired old telco got the message! Yes, there are millions who still want a paper bill, but when they can install electronic bill and payment terminals in rural Brazil I think we should do a lot better. There is no good reason for customers to be satisfied with the current levels of service. We can do much better today by leveraging the power of the Internet.

So David went on in his address to point out that in just about any other (competitive) industry they would have realised that rushing headlong toward deregulation would not be a good business strategy. “Why aren’t you out there replacing gas stations with electric recharging stations?” Hmmm.

So I’d like you to think of a similar challenge, on a much lower scale. If we were able to improve the speed and quality of information in the energy markets, where would we be able to wring out inefficiencies?

In this paper I will test theories for enhancing the operation of markets from ‘well head to outlet’ based on the availability of reliably accurate usage data in real time. The easiest way to get that data is from the metering points in a distribution system. The easiest way to obtain and share that data is over the Internet. Ah hah! At last we get to the point – Internet metering.

Let us start with financial and business solutions (FABS). I will concentrate on how we might deliver more value in the form of $, €, , £, ¥, or whichever currency you choose.

MORE VALUE FOR UTILITIES

Like it or not, the utilities today rule the metering world. Unless there is compelling value, or a change in the rules, they won’t change. Unfortunately most of the value that could be unlocked by Internet metering is in reducing consumption – a disincentive. If you use less, the utility earns less.

Most utility value propositions for metering focus solely on costs to collect meter readings – pennies. Internet metering technology has not been adopted on any scale and is viewed as too expensive. The focus has been on remote reading devices added to existing meters. Very few firms have completely redesigned the technology for the Internet to build fully integrated devices that can compete on price with traditional meters.

This approach has constrained meter departments – hardly the centre of innovation in a utility. Thus we remain stuck in the meter read cycle. But what if we could help to manage budgets; help to manage distribution faults; help with power quality; and enhance customer service?

What if we actually helped out the folk managing energy budgets and billed them (hold on to your seats) monthly? In other words, January’s bill is actually for January 1 to 31.

Internet metering helps.

What if we deploy meters with access to readings at, or close to, real time? Suddenly we can build a live picture of distribution system. We can identify usage patterns and congestion points. If we apply the latest predictive algorithms, we can react quicker. Within a few seconds the dispatch centre can identify an outage and respond. What is that worth? A utility that performs well should make a great return.

Internet metering helps.

How about fully integrating measurement capabilities making consumption, demand, reactive power, current, voltage, power factor and frequency available? That will quickly change the perspective on power quality; maybe it isn’t always the customer’s equipment. Such radical thinking, however, does require a careful approach. If all this does is penalise the utility it will never get off the ground. In the right hands it is an enormously powerful management tool.

Internet metering helps.

And why, in this age of Internet messaging, do we still have to wonder if we need to call the utility when we go dark? Cell (mobile) phones and pagers continue to work. Here’s a concept. Power goes out at the meter, its battery keeps it alive for a minute, the Internet is backed by UPS. Within minutes the utility identifies and acknowledges the event and e-mails the customers. As the event is managed, customers are kept in the loop. Why not?

Internet metering helps.

Continuing the speculation, where else can we do better? The art of forecasting loads and scheduling resources can be forever transformed. I was shocked to learn how prevalent spreadsheets using ancient load data are in this business. Imagine being able to track the flow of electrons through the transmission and distribution network to meter sockets! This is the promise that broadband over powerlines delivers.

What hedge position is needed if you know the actual load you are serving in real time? If you know your position is long, maybe you could get a better buck trading now, rather than waiting for the settlement in 45 to 60 days. If short, why the heck are you short? You can track your real loads and cover your position! The really good traders will be able to run supply bandwidth tight within actual customer behaviour.

Information is competitive advantage.

Internet metering helps.

All the Internet metering improvements mentioned so far have brought quality of power and service up a few notches, but how does some benefit flow to the customer’s wallet?

Start with the ability to react in time to make a difference to the bill. It is amazing how quickly a customer can identify consumption patterns once he gets timely information. A friend of mine made the decision to give up on the utilities 20 years ago and built his own energy information system. His global corporation has long since known how close they are to budget by the 3rd of the month; identified individual budget variances by the 10th and got responses from the managers at the facilities by the 20th. Most responses were along the lines of “No big deal, we are running a business”, but there were still a few surprises – like the one when they discovered they were running a 3MW load for testing engines during afternoon peaks. The test equipment responsible for the load is now run in the wee hours.

Internet metering helps.

THE INTERNET AS A TRANSFORMATION AGENT

Following Freeman’s stretch concept, reconsider the purpose of metering – measuring consumption to generate a bill.

But why only at the meter socket? This Information Age is built around distributed intelligence – why not distribute metering? Devices that distribute electricity around a building are becoming more intelligent, transformed for the Internet. Switchgear is already measuring current and voltage; it does not take much to convert it into a watt meter. Many individual devices already measure harmonics. They are simply the wrong shape and colour to be a revenue meter, so they cannot be admitted to the club. Why not?

It is inevitable that utility metering will evolve to include other devices. Eventually all you need is a data integrator to bill the ‘account’.

Figure 1

SUB-METERING AS A NEW BUSINESS

Utilities missed the ball on this service. The opportunity to ‘meter the internal distribution of electricity’ has been missed. Data collection costs and maintenance have been the barrier, but if we can collect data for free over the customer’s network, we have found a business that most customers accept the utilities are good at.

Is the technology ripe? A common complaint is that Internet metering is too expensive, too complicated. Generally true, but it does not have to be so. Didn’t they once say that about mobile phones?

BARRIER 1 - COST OF COMMUNICATIONS

The Internet is not yet ubiquitous. Metering deployments cannot guarantee Internet access, but C&I customers have about 100% coverage – unlike many of the RF communications being deployed! Residential bandwidth solutions are being constantly improved by the last mile vendors. Hybrid wireless/fibre media will provide adequate communications when high speed access has not yet been deployed to each household.

BARRIER 2 - CONNECTION COMPLEXITY

In the rush to deploy technology, many vendors forgot about network administration. Networking nightmares are legendary. Costs of chasing network problems quickly outstripped the benefits. Too much reliance was placed on knowing the IP address of the device in order to communicate with it.

Thankfully, devices now are plug and play. Red light/green light. Install the device, and within two minutes a green light validates that communicates are working. A red light tells you to pull out the laptop diagnostics.

BARRIER 3 - COST OF THE TECHNOLOGY

Laptops resolved this issue. Remember when a network card cost over $100? Internet-enabling a device with integrated e-mail handler, file transfer and website is a few dollars today. Web-enabled C&I meters are already available for the same price as a meter with modem. $100 residential meters are in plain sight, with $35 meters only a year or so after that.

One of the highest cost barriers is the actual meter socket – a simple electro-mechanical device that adds a lot of cost. It is time to move out of the dark ages. Electronic isolation/disconnects are already practical. Get rid of the built-in display, rely on portable devices and remote reading, and save the money. It will also make the outside of our buildings look a lot better.

BARRIER 4 - THE DATA WILL OVERWHELM US

Wrong, wrong, wrong. How come I can see my credit card transactions in a few hours? How come I can track mobile phone usage through yesterday? If data creates useful information, clever people will figure out the answers.

I believe that the utility business must embrace the information age – from the perspective of a customer. Stop designing and redesigning internal solutions. Create value for your customers – and that will then drive your business.

On a personal note, I believe we have a responsibility to do better as stewards of the rich resources we have been given. We owe it to ourselves, not just our grandchildren, to make our precious energy resources go further and lessen the impact on our environment. I firmly believe that if we have better access to information as customers and participants in the energy business, we will do a lot better.