Entering the information age with AMR

At the Metering Asia-Pacific conference held earlier this year in Bangkok, Thailand, one delegate stated that, for his company, the metering data is more important than the energy they sell. Similar sentiments have been expressed by many other industries as they have shifted from being a monopoly to facing competition. Why the sudden interest in data?

This new interest is consistent with the worldwide evolution from the Industrial Age to the Information Age. In the Information Age, much more attention is given to data being collected and to the information it yields. A renewed focus on the processes used in creating products, and whether a product actually serves customer needs, is a natural consequence.

Traditionally, metering data served one purpose – setting the amount each customer paid for service. Little attention was given to other uses of that data, or what it told a utility about its customers.

Most utilities were spared these introspective activities, as they focused on providing the basic building blocks of modern society – the energy used to power the Industrial and Information Ages, and access to clean water and sanitation. The utility industry made minimal use of information technology, except for pollution control and an improvement in production volumes (mostly hardware technology).

However, in the past few years the proliferation of PCs and the growing insistence that each industry proves itself in the marketplace have forced utilities to address these issues, in the same way as other industries have had to do.

THE FOCUS SHIFTS

The natural focus for utilities is on metering data, because it provides information on the amount of service needed by the customer as well as customer usage patterns. And, because manual meter reading cannot provide detailed customer usage data, the focus for information has gradually shifted to AMR.

The move to AMR provides interesting insight into the extent that utility companies are moving into the Information Age. When examining possible AMR products, most utilities would rather study the AMR technology than plan how to use the new data they can collect. Though the move to AMR is significant (for example, over 10% of all meters in the US are now read with AMR) most utilities initially use it to generate more detailed usage billing, not for its value-added features. Thus many utilities experience a two-stage evolution – first improving existing metering practices within the utility, and then a second stage that extracts information about customer usage. Those utilities that can implement both stages together will more quickly achieve the benefits of meter-based information. However, they will also have to address the internal stresses of change more quickly.

ADDING VALUE

To examine the ways that metering information can add value, let us consider a common scenario from the electric utility industry. A regulated utility must purchase expensive electricity when demand exceeds its generating capacity. This means that its managers would like to:

  • See a peak coming
  • Selectively help customers save energy, thereby reducing the amount of peaking energy it must buy
  • Know how much power can be shifted elsewhere

Achieving these goals usually requires answering more specific questions, such as:

  • Which businesses or homes consistently turn on energy-hungry equipment during demand peaks?
  • How efficient are customers’ cooling plants?
  • Do unavoidable demands conspire to cause excessive peaks at the worst possible time? Does ‘unavoidable’ mean that the demand can’t be shifted by even a few minutes?

These questions point out an important lesson – knowing one’s own data is only one piece of the puzzle. To understand how energy is used in a marketplace means that one has to collect data about customer activities in that marketplace.

CUSTOMER LIFESTYLES

Finding the cause of usage peaks often involves learning about customer lifestyles. How does metering data help identify such a problem? Let us say that frequent readings during the day show that residential usage has a summer-time mid-afternoon peak. Coupling the meter readings with detailed demographic information on households could show that the peak occurs in those households with children in the 6-18 years of age category. The utility would then be able to research what is causing all these households with children to consume so much electricity at this particular time. Once the cause of the peak is identified, an innovative solution might be found that could shift this usage to a less expensive time.

Note the role played by AMR – the metering data is just one tool employed to solve the problem. Over time, the role of AMR may even disappear and become an unrecognisable component of other utility activities.

As this example shows, running a utility in the Information Age may require different tools and procedures than before, especially if profits are tied to both usage and performance instead of usage alone.

Clearly, managing a utility with this type of information requires new procedures and facilities. In addition to transmission and distribution expertise, the utility must also be good at market research, information analysis and strategic planning.As the utility develops these analytical skills, it will apply them to its own activities as well as to the marketplace. It will then be able to look in more detail at its own operations.

  • What is the network’s ability to carry and direct peaking demands?
  • Do the meters accurately report consumption?
  • Are the computer systems capable of storing the data that can answer these questions?
  • Are the internal processes available to turn this information into a successful action plan?

Herein lies the crux of the problem. In an attempt to merely control peak usage, we are already asking questions about how the utility operates. It is not surprising that some managers might scream in frustration, “Don’t tell me how to run my company, just get usage under control!” Wouldn’t it be nice if the answers were so simple?

The challenge facing so many utilities today is where to apply their resources. Do they want to expand their marketing, customer service and data management staffs or do they want to expand their supply and/or delivery systems? It is easy to say ‘both’, but corporate resources are usually limited.

AMR FORCES CHANGE

Even a minimal AMR system will force a utility to operate differently. The simplest systems require at least one new computer that must be interfaced with the billing system, plus the related staffing changes. The more complex systems will require procedural changes in the finance, operations, information technology, customer service and market research departments.

Just having an AMR system will not guarantee that customer-related issues can be addressed easily. AMR host computers are usually set up to collect data for generating bills automatically. Addressing other issues could require modifying the AMR system to provide easier access to the data, reprocessing the AMR data, and expanding information in the utility’s Customer Information System (CIS).

What if you have already implemented an AMR solution? If your utility only wants the minimal AMR solution, your task may already be done. However, if you want to become an Information Age utility, then you have more planning to do, and you will want to encourage broad participation in the decision by all affected departments within your utility.

What if you do not have an AMR solution? Choosing an AMR vendor is much more complex than choosing a meter vendor. The first step is to determine the strategic direction of your company. (Note: Strategic decisions cannot be made at a lower level and sent up the chain of command. The senior managers must set the direction first.) Then, involve all departments that will be affected by the inevitable changes, including finance, operations, information technology, customer service, market research, corporate officers, etc. There are several good consultants that can help facilitate such a process.

Each utility has its own way to solve problems, and the ripple effects of an AMR project could potentially ‘rock the boat’. The wisest approach is to get broad management support in advance and to encourage every part of the organisation to help develop the plan for the AMR project. Even though the introduction of AMR is probably inevitable, the opportunity exists to create unity or crisis, depending on how the project is handled.