Developments in advanced metering in the United States

327

By David Kathan

The amount of advanced metering1 in the United States grew significantly in the last two years according to a recent survey by the Federal Energy Regulatory Commission (FERC).

The results of the 2008 FERC Demand Response and Advanced Metering Survey (2008 FERC Survey) indicate advanced metering penetration (i.e., the ratio of advanced meters to all installed meters) reached about 4.7% for the United States by the end of 2007 (Figure 1). This is a significant increase from the 2006 FERC Survey, when advanced metering penetration was less than one percent. Recently announced contracts and plans to install advanced metering should increase this penetration in future years. Increased reliance and growth in the use of advanced metering should also be supported by policies at the federal and state level. In particular, recent focus on smart grid investment as a means to stimulate the U.S. economy will increase the importance of advanced metering.

Deve1

Figure 1 – United States 2008
penetration of advanced
metering (Source: 2008 FERC Survey)

As it did in 2006, FERC conducted a nationwide survey of the advance metering deployments of electric utilities, power marketers, regional transmission organisations and demand response providers. The 2008 survey requested information on electric industry meters in all 50 states, with attention to meters that measure usage in short time intervals and with meter data retrieval more frequent than monthly. Over two thousand organisations responded to the survey or about a 60% response rate, sizable for a voluntary survey.

The 2008 FERC Survey is further evidence that advanced metering is gaining acceptance and that a move towards smarter meters and advanced metering infrastructure is underway in earnest in the United States. Deployment of advanced metering is underway at many large electric utilities such as Oncor, Southern California Edison, and the Southern Company are currently installing advanced metering throughout their service territories. When full deployment is achieved in the next several years, US advanced metering penetration should increase even more dramatically.

Nearly all regions of the United States evidenced greater advanced metering penetration since the 2006 survey. Figure 2 shows increases in advanced metering penetration broken out according to NERC regional reliability councils regions (plus the Alaska Systems Coordinating Council – ASCC, and Hawaii). Increases in advanced metering penetration since 2006 are evident for almost all regions.

The Florida Reliability Coordinating Council (FRCC) and Electric Reliability Council of Texas, Inc. (ERCOT) show the greatest percentage increases since 2006 and the highest penetrations by region in 2008, 10.4% and 9.0% respectively. In the FRCC region, adoption of advanced metering by municipal utilities accounts for the largest increase in that region. The increase in ERCOT is primarily due to activity by investor-owned utilities and cooperatives. Advanced metering deployment by Oncor, a large investor-owned utility in Texas, accounts for 77% of the increase.

Deve2

Figure 2 – AMI penetration by region
(Source: 2006 and 2008 FERC Surveys)

The FERC 2008 Survey also shows that most states now have advanced metering penetra- tion above zero. The five states with highest penetra- tion of advanced metering are Pennsylvania, Idaho, Arkansas, North Dakota, and South Dakota. Pennsylvania had the largest increase in penetration between the 2006 and 2008 surveys, moving from 0.3% to 23.9% over the two-year period.

As can be seen in Figure 3, market penetration of advanced metering grew across all utility ownership categories. Cooperatives, municipal entities, investor-owned utilities, public utility districts and federal and state utilities all show increased market penetration and increased deployment of advanced meters. Cooperatives and investor-owned utilities together account for most of the new advanced meters. The high penetration levels achieved by cooperatives in the past two years are particularly impressive. Cooperatives deployed approximately 2.4 million of the 5.8 million advanced meters in the two years; increasing from 3.8% penetration in 2006 to 16.4% in 2008. Over the same period, investor-owned utilities deployed approximately three million advanced meters, accounting for 46% of the 5.8 million total.

USES OF ADVANCED METERING
FERC asked respondents how their entities use advanced metering, beyond interval meter reading collection. Figure 4 shows the results for 2006 and 2008. Respondents identify increased use of the newer types of advanced metering functionality, especially the use of advanced metering to perform remote outage management and to remotely upgrade firmware on the advanced meters. Enhanced customer service is the most often cited use of advanced metering by respondents, as it was in 2006.

Deve3

Figure 3 – Penetration of advanced metering by entity
(Source: 2006 and 2008 FERC Surveys)

Remote connect/ dis- connect is used by entities such as electric utilities to connect or dis- connect custo- mers as they change resi- dences or to disconnect or reconnect customers using prepaid metering. This functionality is gaining in importance, surging from a relatively low 15% up to 48% usage. Prepaid metering, sometimes associated with the remote connect/ disconnect functionality, also saw modest gains.

Theft detection, a function of much interest in 2006, is used more in 2008. Other advanced metering functions used more from 2006 to 2008 are power quality management, distribution system asset management, and interfacing with water and gas meters. Use of advanced metering for load forecasting shows a decline since 2006 from over 40% usage then to below 30% usage in 2008. Another interesting decline is the reduction of the use of advanced metering to support price responsive demand response. This decline may be transitory; greater deployment of advanced metering in the future will allow utilities to offer timebased rates to a wider number of customers.

Remote connect/disconnect is used by entities such as electric utilities to connect or disconnect customers as they change residences or to disconnect or reconnect customers using prepaid metering. This functionality is gaining in importance, surging from a relatively low 15% up to 48% usage. Prepaid metering, sometimes associated with the remote connect/ disconnect functionality, also saw modest gains.

Theft detection, a function of much interest in 2006, is used more in 2008. Other advanced metering functions used more from 2006 to 2008 are power quality management, distribution system asset management, and interfacing with water and gas meters. Use of advanced metering for load forecasting shows a decline since 2006 from over 40% usage then to below 30% usage in 2008. Another interesting decline is the reduction of the use of advanced metering to support price responsive demand response. This decline may be transitory; greater deployment of advanced metering in the future will allow utilities to offer timebased rates to a wider number of customers.

Deve4

Figure 4 – Reported uses of advanced metering in 2006 and 2008.
(Source: 2006 and 2008 FERC Surveys)

Use of AMI with home area net- works (HANs) did not rank high on the list of uses in the 2008 survey, al- though AMI- HAN inte- gration is increa- singly being in- cluded as a requirement in recent requests for proposals issued by utilities in North America. A HAN “is a network contained within a user’s home that connects a person’s digital devices, from multiple computers and their peripheral devices to telephones, VCRs, televisions, video games, home security systems, ‘smart’ appliances, fax machines and other digital devices that are wired into the network.”2 Integration between HANs and advanced metering systems allows an entity to provide information to customers and remotely manage large loads (such as air conditioning and electric heat). Since this functionality is being included in the Southern California Edison and the Texas utilities rollouts, the percentage reporting this functionality will likely increase in the coming years.

LARGE UTILITY ADVANCED METERING DEPLOYMENT PLANS
The 2007 FERC Demand Response Report identified 28 utilities that since 2005 had announced plans to deploy over 45 million advanced meters.3 Recent contracts to purchase advanced metering systems by several key large utilities will bring planned advanced metering deployments to nearly 52 million. These deployments are scheduled to take place over the course of the next five to seven years. Advanced metering plans for large electric utilities include:

  • Southern California Edison’s 5.3 million advanced meter deployment will ramp up in 2009 and be completed in 2012.4
  • Pacific Gas and Electric is seeking approval from the California Public Utilities Commission for additional ratepayer funding to upgrade its SmartMeter™ program to newer advanced meters, with complete full deployment of 5.1 million advanced meters by 2011.5
  • San Diego Gas & Electric awarded a contract for 1.4 million advanced meters, with plans to begin broad deployments in February 2009 and complete full deployment in 2011.6
  • Centerpoint Energy received approval from the Public Utility Commission of Texas for an initial deployment of 125,000 residential advanced meters between September 2008 and Fall 2009. Centerpoint Energy has contracted for up to two million advanced meters for intended full deployment to its Houston customers over the next three years.7
  • DTE Energy awarded a contract for 2.6 million advanced meters at its Detroit Edison subsidiary with full deployment to begin in 2009.8
  • Oncor announced award of a contract in May 2008 to provide advanced meters by 2012 to its 3 million residential customers.9
  • Southern Company announced in January 2008 an agreement to purchase and deploy 4.3 million advanced meters for its four-state service area.10 Its Alabama Power subsidiary began a three-year deployment beginning in 2008, and its Georgia Power subsidiary began installing advanced meters in January 2008 with the intent to install 500,000 by the end of 2008 and complete its deployment by 2012.11
  • Alliant Energy, with utilities in Wisconsin, Iowa, and Minnesota, announced in August 2007 that it would deploy advanced meters to over one million of its residential electricity customers starting in the fourth quarter of 2007.12 In October 2007, American Electric Power announced an agreement with General Electric on a joint initiative to deploy over five million advanced meters to its 11-state service area by 2015, one-fifth (one million) of which would be deployed by 2010.13
  • In June 2008, Arizona Public Service announced a contract to deploy 800,000 advanced meters to its customer base.14
  • In September 2008, Delmarva, a subsidiary of Pepco Holdings, received approval from the Delaware Public Service Commission for a plan including the installation of more than 300,000 advanced meters for Delaware electricity and gas customers.15

STATE AND FEDERAL SUPPORT FOR ADVANCED METERING
Increased deployment of advanced metering will also be supported by an increased focus on advanced metering and smart grid at the federal and state level. Provisions promoting advanced metering in EPAct 2005 and in the Energy Independence and Security Act of 2007 (EISA 2007), along with state regulatory policies, are key drivers of growth in advanced metering, especially among large investor-owned utilities. In addition to enacting federal directives in support of advanced metering, Congress has also encouraged state policies in support of advanced metering. In addition, advanced metering may be considered one component of a smart grid system, and Congress has shown strong recent support for the smart grid concept.

Congress included a number of directives in Title XIII of EISA 2007 calling for both federal and state encouragement of smart grid development. Title XIII states, “Smart Grid is defined to include a variety of operational and energy measures – including smart meters, smart appliances, renewable energy resources, and energy efficiency resources.”

EISA 2007 directs that states “shall consider” requiring each utility “prior to undertaking investments in non-advanced grid technologies… [to] demonstrate to the State that the electric utility considered an investment in a qualified smart grid system based on appropriate factors, including: (i) total costs; (ii) cost effectiveness; (iii) improved reliability; (iv) security; (v) system performance; and (vi) societal benefit.”16

Sec. 1307 of EISA 2007 also encourages rate base capitalisation of smart grid investments.17

Congress took another significant step to promote advanced metering in the Emergency Economic Stabilization Act of 2008 passed in October 2008.18 This new legislation establishes permanent changes in how smart meters and other smart grid technologies are depreciated for federal tax purposes. Previously, these assets were figured at 20-year depreciation, but now the depreciation life is 10 years.

The recently announced draft American Recovery and Reinvestment Bill of 2009 in the House of Representatives includes $11 billion to improve and strengthen the electric grid.

The author’s views do not necessarily represent the views of the Federal Energy Regulatory Commission.

References

  1. FERC defines advanced metering as a metering system that records customer consumption (and possibly other parameters) hourly or more frequently and provides for daily or more frequent transmittal of measurements over a communication network to a central collection point.
  2. What is HAN? (August 28, 2008), available at http://www.webopedia.com/TERM/H/HAN.html.
  3. Appendix F, Utility AMI Implementation Projection, Table F-1, 2007 FERC Demand Response Report available at http://www.ferc.gov/legal/staff-reports/09-07-demand-response.pdf.
  4. Many Utilities Starting to Develop AMI and Utility-of-the-Future Strategies – Part 2, Energy Central (June 18, 2007), available at http://topics.energycentral.com/centers/datamanage/view/detail.cfm?aid=1495.
  5. Id.
  6. Press release, Itron, Gas & Electric Chooses Itron OpenWay® for Smart Meter Deployment (July 30, 2008), available at http://www.itron.com/pages/news_press_individual.asp?id=itr_016717.xml.
  7. CenterPoint Energy to Install Advanced Meters (September 1, 2008), available at https://www.smart-energy.com/node/13478.  See also, Itron Selected by CenterPoint Energy as AMI Technology Provider, Reuters.com (Wed. May 14, 2008), available at http://www.reuters.com/article/pressRelease/idUS117294+14-May-2008+BW20080514.
  8. Press Release, Itron, DTE Energy Selects Itron OpenWay® Technology for AMI Deployment (July 21, 2008), available at http://www.itron.com/pages/news_press_individual.asp?id=itr_016692.xml.
  9. Oncor signs advanced metering contract, (May 27, 2008), available at https://www.smart-energy.com/node/12525.
  10. Sensus Signs Contract with Southern Company for FlexNet(TM) (January 14, 2008), available at http://www.smartbrief.com/news/aaaa/industryPR-detail.jsp?id=DFB51FD5-04E1-430B-8C1D-19EA83E627CC.
  11. Personal conversation with Edward Fischler of Southern Company (March 19, 2008); Georgia Powers Smart Meter Rollout Continues (June 27, 2008), available at https://www.smart-energy.com/node/12877.
  12. Press Release, Sensus Metering Systems, Alliant Energy Selects Sensus as AMI Partner (August 27, 2007), available at http://na.sensus.com/Module/PressRelease/PressReleaseDetail/amr?id=42.
  13. AEP, GE developing in-home ‘smart meters’, Matt Burns, Business First of Columbus (October 4, 2007), available at http://columbus.bizjournals.com/columbus/stories/2007/10/01/daily26.html.
  14. Press Release, Elster, Elster Awarded APS Contract to Provide 800,000 Smart Meters (June 20, 2008), available at http://www.elster.com/en/press_releases_704.html.
  15. See Delaware Public Service Commission Order No. 7420, the Matter of the Filing by Delmarva Power & Light Company for a Blueprint for the Future plan for Demand-Side Management, Advanced Metering, and Energy Efficiency (September 16, 2008).
  16. Energy Independence and Securities Act of 2007, Pub. L. No. 110-140, §1305, 121 Stat. 1787 (2007).
  17. Id.
  18. Emergency Economic Stabilization Act of 2008, Pub.L. No. 110-343, 122 Stat 3765 (2008).