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Automated Meter Reading with Manual Intervention Creates Value

May 2003 Energy & Utilities

The electric meter is the cash register of a power utility company. For the consumer of electricity, it is also the source of data to manage consumption and the bill. But getting accurate data to the electric supplier for billing in a timely fashion to the consumer for demand control and reliably managing operations remains a daunting challenge for many.

Leon Henderson of the Lower Colorado River Authority (LCRA) in Texas shared a working business model for managing information flow from the point of consumption to both the consumer and the supplying utility at the Spintelligent Metering, Billing, CRM/CIS Americas conference held in Chicago, IL during May 2003.

Mr. Henderson works for a public agency, so he can’t apply his business model out of the state, however others may. His agency works with municipal power authorities in central Texas along the I-35 corridor between Waco and Houston in mostly rural areas. Part of his responsibilities include the management of 285 commercial and industrial (C&I) meters, the routing of the meter data to the municipalities for billing, and the sharing of meter data to the C&I customers for demand management.

C&I Metering Backgrounder

C&I metering and billing is very different from residential metering and billing. While C&I overall rates for electricity are usually lower than residential rates (reflecting their lower cost for service), their rates will also vary by time of day and by the load on the transmission and distribution grid. During times of peak demand, when the transmission grid may be congested and the power plants may be generating at peak capacity, the rates for C&I customers may be four times that during off-peak times. (Actual rates and rate variances are determined by a combination of local regulations and competitive contracts.)

The variance of rates by time of day affects both the power supplier and the C&I customer. For the power utility, they need to know the amount of power demanded and the time at which it is demanded in order to properly bill. For the C&I customer, they need to know how they are utilizing power and when in order to curtail demand during expensive times and consume electricity during lower priced times as we will see with Blue Bell Creameries.

Interval metering, where the meter is read at regular intervals perhaps as short as 15-minute intervals, is utilized to capture this data. However, capturing the meter data accurately, transmitting the meter data reliably, and sharing the meter data in a timely fashion is a strain on most operations, especially in rural areas. To solve this problem, and in doing so create value for both the utility and the C&I customer, Mr. Henderson took an outsourced and packaged product approach.

Business Operation

The LCRA took responsibility for the actual meter and meter operations for the 285 C&I customers within its region. In the past, the C&I customer installed their own meter leading to errors and resulting in bad bills. Buy taking over the operation, the LCRA has been able to both reduce the incidence of bad bills and improve customer service.

At the meter, LCRA purchased the Hunt MeterSmart system to collect interval data reads and transmit them back to the utility in real time over the telephone lines. LCRA manages the telecommunications contract to ensure service. The MeterSmart system, an automated meter reading system (AMR), usually collects and transmits the data, but at times it can fail. To manage this contingency, the LCRA contracted TMD to test and trouble shoot the meter system. When a meter read fails to arrive properly, individuals from TMD will drive their van to the C&I site to manually read the meter, inspect the site, and make necessary corrections.

Timely

The MeterSmart system also allows the LCRA to post consumption data to secure websites. C&I customers can log into this site and observe their consumption. By doing so, they are also able to determine how their plant operations can be adjusted to shift demand towards off-peak times and lower their electric bill. One company in particular, Blue Bell Creamery, makers of the best ice cream in the country but available only in Texas, has shifted the time at which their freezers are in full load to lower their overall bill.

Accurate

Accuracy is the key determinant in C&I metering. To ensure accuracy, the four guys and a van at TMD have contracted the responsibility for testing all meters and the entire system. These individuals have specialized skills and training for meter management. For the LCRA, contracting this effort to TMD lowers the cost of service for meter testing, maintenance, and troubleshooting below that of a single full time equivalent but ensures service at a level equal to that of a small department.

Reliable

The relationship has created numerous success stories. For instance, fire ants, regional to Texas and warm climates, shorted the power supply to a sand plant in the LCRA region. The power shortage was quickly noticed, TMD was dispatched to resolve the problem, and service was resumed. In another case, a high school suffered from an improperly grounded transformer. As a result, the meter reads were erratic, the MeterSmart system alerted the LCRA, and the LCRA dispatched TMD to investigate. The TMD discovered the problem and it was resolved in a timely fashion. In a third example, a billing dispute arose between the customer meter and a meter read at the substation level. Because of the known reliability of the service, the LCRA was able to firmly press its case that the customer meter reads were accurate. Shortly thereafter, the wholesaler discovered a problem with their substation meter read.

Value

Combined, the automatic meter reading, meter management, trouble shooting, and posting of data, has increased the level of customer satisfaction. C&I customers demonstrate their satisfaction by selecting to continue their power service with the local municipality. And, by outsourcing to TMD and purchasing software and systems from Hunt, the LCRA was able to provide high quality service at a low price.

It should be noted that the LCRA charges the wholesale power suppliers for this service. If a government agency can create value for both power suppliers and their customers, can a competitive business do the same?



About the author

Tim J. Smith, PhD is the Managing Principal of Wiglaf Pricing, and an Adjunct Professor at DePaul University of Marketing and Economics. His most recent book is Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures.

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