AMI/MDM initiatives and the role of IT in achieving their benefits

1. Introduction 

The electricity utility industry is going through a transformation throughout the world. The industry is typically divided into the generation, transmission, distribution and supply sectors. The “last mile” or the end point of this chain is the distribution and supply business, and it is from this business that all the revenue from the sale of electricity is collected in the utility chain. The distribution and supply business ensures that the energy it receives from the sellers (generator, trader or any other agency) is accounted for in an efficient manner. Today, the distribution and supply business is facing issues in meter reading, billing and collection of revenue for the energy sold. This paper highlights issues related to metering and describes how different utilities across the world are trying to solve the problems related to metering. It also looks at the present status and key enablers for implementation of a metering solution at a utility.

2. Key challenges in distribution utilities

A typical example of a billing chain in the distribution and retail supply utility is depicted below:

 Graph 1

The key challenges in the distribution and retail supply business lie in the areas which are lower down the revenue chain, i.e. metering, billing and collection of revenue.

It is here where utilities across the world are finding it difficult to prevent leakage of revenue. Most Asian utilities are facing problems in the area of power theft, while most European and American utilities are facing the problem of the costs associated with this segment of the metering-billing-collection process.

3. Advanced Meter Reading and Data Management

Advanced meter reading and data management is a process which ensures the efficient use of meter data, minimizes costs and improves the operational efficiency of the organization.

An electronic meter is fitted with a modem and associated equipment. The meter data is collected via various means such as RF devices, the GSM network and telephone lines (dial-up network). This eliminates the conventional practice of a meter reader visiting individual houses to read the meter manually.

In an automated meter management (AMM) system, the meter readings are collected remotely and transferred to the billing center for computation of bills. The bills are then sent out and revenue is collected.  

Utilities all over the world are finding it challenging to save costs and optimize efforts to do with the metering-billing-collection cycle. Some utilities have started to explore options in the area of AMI/AMM.

The following sections describe the steps taken by utilities to implement AMI/AMM in various geographical regions.

3.1 North America

The Electricity Policy Act 2005 has been the key factor in the development of metering infrastructure in North America. Section 1252 (e) (3) of the Act (EPAct 2005) mandates that each electric utility shall offer each of its customer classes, and provide individual customers upon customer request, with a time-based rate schedule under which the rate charged by the electric utility varies during different time periods and reflects the variance, if any, in the utility’s costs of generating and purchasing electricity at the wholesale level.

The time-based rate schedule shall enable the electric consumer to manage his energy use and cost through advanced metering and communications technology.

The timeline for this provision is 18 months from the date of enactment of EPAct 2005. Energy utilities in North America have started gearing up to meet this deadline.  

The U.S. Federal Energy Regulatory Commission (FERC) conducted a survey on the penetration of advanced metering in North America. The results are set out in the following figure.

Graph 1.2


The following figure shows state-wise penetration of advanced metering.

Graph 1.3


At the overall level, North America has a very low level of penetration of advanced metering infrastructure. According to the FERC survey, the penetration level is less than 6 per cent. The following figure shows the AMI penetration in North America:

Graph 4


In addition to the regular use of AMI for metering and billing purposes, it is also used for many other important tasks such as enhanced customer service, tamper detection, power quality monitoring, outage management, and load forecasting. The following figure shows the various tasks and the degree of usage, as reported by various entities that use AMI: 

Graph 5

The growth in AMI installations has been rather slow in North America. Large scale installation started in the region in 1994, and by 2006 there were about 30 million AMI installations in place. The top five utilities with the most AMI installations are PG & E (electric), PG & E (gas), Exelon (electric and gas), TXU Electric, Xcel Energy (electric and gas). These utilities constitute 49 % of the total AMI installations in North America.

3.2 Europe

In Europe there are about 14 million AMI systems installed in various nations. Lack of policy by policymakers and strict price control on metering costs have been the key factors that have resulted in AMI systems being adopted at a slower pace in European countries. Scandinavian countries have taken the initiative in AMI installation.

Some examples are given below:

3.2.1. United Kingdom

The energy and gas regulator Ofgem has taken the initiative to promote a smart metering option in the region.

In a recent landmark decision by Ofgem, it decided to lift the price controls on electricity distributors for new and replacement meters, and lift metering price controls from 31st March 2007.

This has been a major move by the regulator in promoting competition in the UK energy market.

3.2.2. Finland

Utilities such as E.ON have started using AMI systems after successful pilot programs.

E.ON is one of the largest suppliers of gas and electricity in Finland, and has been installing close to 60,000 AMI installations for gas and power retail consumers.

The completion of this installation is expected to take place early in 2007. GSM/GPRS is used as the communication medium for data transfer.

Vattenfall is another energy supply company in Finland, with about 360,000 customers. Vattenfall has installed AMI systems for 30,000 domestic customers. This installation was completed in the year 2005, and GSM was used as medium of communication.

3.2.3. Denmark

Odense Energi has 72,000 electricity consumers and it has been installing 63,000 AMI connections. PLC is used as the communication medium for data transfer.

Sydvest Energi is the third largest energy utility in Denmark and was the first to install an AMI system. It has about 156,000 end consumers, and the system covered them all.

The installation started in 2004 and is scheduled to be completed in 2007. The communication medium is PLC, LAN and GPRS.

3.2.4. Sweden

Pite Energy is installing an AMI system for all its 20,000 customers; the installation started in the year 2004 and will finish by 2007. The medium of communication is optic fiber network.

Elverket Vallentuna has installed an AMI system for all its 12,000 customers. The installation started in 2002 and was completed in 2004, using GSM/GPRS as the data communication medium.
3.2.5. Norway

Eidefoss AS in Norway is owned by municipal authorities and has close to 12,000 end consumers. Eidefoss has implemented an AMI system for all these customers.

The project started in 2001 and was completed in 2005. The medium of communication is PLC.  

Malvik Everk in Norway is another utility which has installed an AMI system for all 5000 customers. The installation began in 2000 and was completed in 2003, it uses PLC as the medium of communication.
4. Benefits and Challenges in the implementation of AMI systems

A simple AMR system installation offers benefits such as:
•    Improved meter reading procedures
•    Reduction in the cost of meter reading
•    Increase in the efficiency of the revenue cycle
•    Increase in billing accuracy
•    Increase in the collection of revenue
•    Reduction in energy theft.

With an improved AMI system, the additional benefits offered to the utility and to the end consumer are:

•    Precise load control
•    Consumer profiling and load pattern analysis
•    Time based pricing
•    Improved quality of supply
•    Load forecasting and load management
•    Reducing and managing the peak load
•    Reducing the overall cost of energy purchased
•    Better customer service
•    Outage management.

There are issues that need to be resolved before AMI systems can be adopted on a wider scale across the world. These issues include:

•    Specification of the AMI system
•    Demand responsiveness of AMI systems
•    Price information to consumers
•    Standard interfacing
•    Security of meter data.

5. Role of IT in achieving the benefits of AMI systems

Information technology plays a key role in achieving the business goals of the utility and benefiting the end customer. The data provided by the meter needs to be collated, analysed for business benefits and presented in the required format to achieve the objectives of an AMI system.

The meter data transferred by the communication medium (RF-based devices, PLC etc.) is collected by the central computing system. This raw data is extracted, cleaned, validated, structured and sent to the central computing unit, which acts as a standardized data repository. The data is shared across multiple applications and units throughout the organization. The data is used for billing applications, load pattern analysis, system operation purposes, customer application systems, load forecasting, load optimization (peak period load management), outage management and reporting etc.

The following schematic represents the role of the IT system:

Graph 6

Utilities across the world are investing in IT systems to improve performance in the areas of customer service, metering and billing, CIS, and other revenue generation activities. System integration becomes an issue and involves costs which could be prohibitive in many cases. There is therefore a need to implement integrated systems such as meter data management systems (MDM) that provide integration with other areas in the revenue chain. There is a need to recognize an MDM system as an integrated application that helps the utility not only in the area of metering-billing-collection, but is also used as a tool for load management, load forecasting, peak load management, consumer profiling, outage management, time based pricing etc.

6. Conclusion

The need is to accept that an AMI system should not just be used as a meter reading and billing tool; it should be recognized as a driver for an enterprise-wide integration tool which will communicate with/replace other IT applications in the utility.

There are issues related to costs, communication with other systems, demand responsiveness and security, but utilities are looking at AMI as a strategic tool to improve customer service and thereby retain/attract customers in the competitive energy market.