The metering industry has changed significantly since Samuel Gardiner got the first known electric metering patent in 1872. Today, meters are used to measure the consumption of electricity, gas, water, sewage, heat, hot water and other commodities.

Many electricity meters are now all-electronic, as are some gas and water meters. Most have some form of electric circuitry (circuits in gas and water meters are kept alive by long-life batteries). In addition to revenue billing, many electricity, gas and water meters are also used for time-of-use billing as well as for planning and reporting purposes, real-time pricing and emergency response. Electricity meters have grown in sophistication to address load aggregation, energy use diagnostics and power quality, among other uses.

With the introduction of automation in many other industries, it was inevitable that more sophisticated metering would be introduced by the world’s utilities. Primarily through the introduction of control circuits and communication interfaces in meters, basic metering functions have progressed to advanced metering. The widest use of advanced metering has been for automatic meter reading (AMR), though closely related technologies also perform prepay metering, submetering, outage management, and remote disconnect (for both remote shutoff and active load control). By the beginning of 2005, over 100 million AMR units were deployed worldwide and many millions of units have also been deployed for prepayment, submetering and remote disconnect – possibly as high as half the AMR numbers.

THE METERING INDUSTRY EVOLVES

Rapid evolution of the metering industry is being driven by societal changes worldwide. The high price of fuel, growing demands on potable water and periodic shortages of water and electricity have caused public institutions to demand better information on consumption. The world’s utilities have responded to this challenge by gathering more consumption data and studying the related usage patterns.

A key change has been the need for more frequent meter reads. Though some of the world’s utilities still read their meters only once per year, and some of those utilities rely on customers to provide the reading, it is clear that more robust mechanisms are needed. Though manual meter reading will continue for many more decades, more political jurisdictions are demanding increased consumption detail. These demands exceed what can be done manually, no matter how efficient a meter reader may be.

In addition, consumers have been demanding more accurate and reliable bills. As the demand for more data emerged, many utilities found the challenge to be fraught with problems. One typical approach was to provide estimated bills to cover time periods between actual reads, or to provide bills when a meter reader was unable to get access to the meter.

Examples of energy theft in Africa (above) and South America (below)

Examples of energy theft in Africa (above) and South America (below)

Examples of energy theft in Africa (above) and South America (below)

As long as these estimates were infrequent and the cost of electricity, gas and water was low, the flaws in this technique caused minimal problems. However, in recent years large numbers of customers have complained when rising costs coupled with long periods of no actual read led to huge bills when the meter was finally read. Customers rightfully complained when an unexpectedly large bill arrived, especially when they were paying their estimated bills on time. The utilities, of course, had a right to charge for this unbilled usage, but elected public officials are not so forgiving when large numbers of customers complain about a problem that could have been avoided with the right technology. The ‘estimated bill problem’ has been a major driver for AMR for years.

Meanwhile, utilities have had to face further problems related to reading meters. As bills rose, utilities were under pressure to control costs and reduce staff. The resulting reductions led to staff realignments, thereby reducing the number of people available to read meters. Because meter reading organisations have historically been training grounds for many utilities, attrition elsewhere in a utility – coupled with staff realignments along with a growing customer base – have all led to greater pressure on meter reading departments. AMR has been the only obvious solution.

Worldwide, the most AMR has been deployed in the United States, where actual market penetration is almost 25% of all meter types. This market penetration is large enough to cause a new market factor to appear – within a few months, 50% of all American households will have AMR on at least one of its meters. Customers in the US now have the opportunity to compare the performance of different utilities serving the same homes.

More and more, the utilities without AMR are being viewed as providing poorer service because their bills are sometimes inaccurate, while the utilities with AMR almost always have accurate bills. Increasingly, utilities are reporting that they are undertaking an AMR project because other utilities in their area already provide that service. Suddenly, AMR business cases are easier to justify when the utility’s senior officers face the wrath of frustrated neighbours and public officials. The on-going growth of AMR deployments in the US is inevitable.

The rapid growth of AMR started in North America and in the past few years has also emerged in Europe. However, the AMR paradigm is not universal. The economies in many emerging nations have been challenged by another problem – a huge rise in energy theft.

The two figures shown on the previous page (the hook is from South America and the rat’s nest of wires is from Africa) were taken by this author over the past year.

They show examples of a growing problem faced by electricity utilities worldwide – access to electricity had reached people who cannot afford it, and many of them will find ways to steal it. This problem is not restricted to emerging nations; some major cities in the US report their own local versions of energy theft. The need for revenue protection has become a major worldwide effort.

In some nations, energy theft is such a big problem (often, more than 20% of all electricity consumed is never paid for) that it has forced some governments to subsidise the electricity utilities. These subsidies are adversely affecting the economies of some of those countries. International organisations like the World Bank are becoming involved in trying to resolve these problems.

ADVANCED METERING HELPS

Clearly, many problems related to theft are societal, and technology alone cannot solve them, but advanced metering technologies can help. Prepayment metering has been available since before World War II, and more advanced versions are appearing. Some prepayment sales are beginning to appear in the US, though most of the demand is outside North America. Utilities are learning how to couple prepayment with societal initiatives to cut back energy theft.

Both AMR and prepay metering have many common elements, and this is also true for the other advanced metering technologies. Submetering is almost identical to AMR, but is focused on reading meters within multi-tenant complexes (such as apartment houses and shopping malls). Outage management reports the absence of electricity, a feature that is built into many AMR systems. Prepay systems can disconnect a customer’s electricity, gas or water service when their funds are consumed, which is the same technology that is used for remote disconnect. It is inevitable that these services will gradually merge as vendors who provide more than one of them decide to use the same equipment for different metering needs.

So, with all of this growth in metering, what do the growth figures show? The answer has been somewhat surprising. In North America 2004 was essentially flat compared to 2003. How is that possible?

The answer to this conundrum lies buried in the deployment data. All types of utilities deploy advanced metering. A careful study of utility companies in the US showed that only 98 electricity, gas or water utilities served over 500,000 customers, with 58,000 serving below that number. The 98 larger utilities serve almost 120 million customers, whereas the smaller utilities serve 161 million customers. However, all of the larger utilities will probably deploy AMR eventually, whereas only 70-80% of the smaller ones will (many smaller utilities lack the motivation or the financial ability to afford AMR). Thus, the market for both these segments is probably about the same – approximately 120 million customers each.

DEPLOYMENT NUMBERS

Actual deployment numbers are also interesting – 29.7 million units had been shipped to the smaller utilities through 2003 whereas 31.5 million units were shipped to the larger utilities. Thus, not only are the markets almost the same size, the current penetrations are also similar. Finally, when we look in the smaller utility category, we find that the electricity and water deployment levels are also similar and also growing annually at about the same rates.

However, when we look at market growth a different picture appears. The market for the smaller utilities has been growing strongly for many years, whereas the deployment numbers for larger markets have been more irregular. Thus, the flat market from 2003 to 2004 was not due to a lack of interest in AMR – it was the result of the completion of a few large projects. The part of the market where there was so much activity through 2003 – utilities with fewer than 500,000 customers – was growing as strongly as before.

This analysis showed an important characteristic that will probably be true worldwide. There are far fewer large advanced metering projects because there are far fewer utilities to buy the meters. These projects will be sporadic and their growth curve will be very difficult to predict. However, a large number of smaller utilities with an interest in advanced metering yield a market with predictable growth, and that growth will probably continue for several years.

Outside the US, the next highest level of activity is in Italy at Enel – the largest AMR project in the world (eventually 27-30 million units). That project is already more than 50% completed. There are few utilities anywhere else in the world that are the size of Enel, and none of them has made an AMR purchase decision yet. Therefore, the growth rate of overall shipments into Europe will probably drop in 2007, or even in 2006. As in the US, it would be a mistake to assume that this drop reflects a reduction in interest in advanced metering – it is just the consequence of having only a few large utilities anywhere in the world.