July 2010 Vol. 237 No. 7


Smart Meters Gain Popularity Among Utilities and Consumers

Joel Hoiland, Utilimetrics Chief Executive Officer

As the United States continues to examine new ways to conserve energy, especially in light of the tragic oil spill in the Gulf of Mexico, smart meters are gaining in popularity as a technology that can help homeowners and enterprises reduce energy consumption. In addition, the technology can greatly increase efficiencies inside the utility by improving meter reading accuracy, reducing operational costs and enhancing customer service – all while reducing service calls and shaving carbon footprints.

In an industry that has changed very little since the day Edison invented the light bulb more than 100 years ago, technology is indeed revolutionizing the electric utility sector as the use of smart meters and time-of-use rates result in monumental process changes that revamp the entire industry.

Smart meter and AMI technology can benefit the gas industry in much the same way. While the gas sector is in most cases inclined to sit on the sidelines and act as a fast-follower while the technology is trialed and deployed in the electric industry, there are many examples of smart meter technology already being used by gas utilities, Pacific Gas & Electric and Southern California Gas Co. being prime examples.

PG&E has installed 2.3 million gas and electric meters on its way to deploying 9.8 million (including 4.5 million gas meters) by the end of next year. Southern California Gas won approval this year to roll out smart meters for its customers in 6 million homes.

As with all emerging technologies, challenges exist before smart meters become ubiquitous. Utilities of all kinds must thoroughly educate their customer base on the ins and outs of smart meters, how they can benefit, and what to expect from time-of-use rates that will follow. Customers are demanding transparency when it comes to smart meter rollouts, and PG&E has responded by making public 45 different reports dealing with its smart meter program dating to 2006.

AMI represents tremendous productivity improvements over traditional analog-metering practices. This article examines those benefits as well as some of the well-publicized challenges that utilities and smart- metering vendors are working to overcome.

Operational efficiencies: Utilities stand to benefit from massive labor savings by automating the meter-reading process. The meter reader position is a dying breed in the utility sector, as smart meters provide automated usage information, in many cases at 15 minutes intervals. Many utilities with smart metering programs in place are moving displaced employees into new positions such as customer service and call centers.

The trend is also expected to benefit utilities by lessening the blow when their baby boomer employees begin to retire en masse in the next several years. A host of operational benefits exist, including improved leak detection and increased visibility into gas transmission lines and load factors and improved safety. Newly available automatic shutoff features, for example, can better control lost gas and reduce the possibility of a natural gas release due to damaged or faulty equipment.

Conservation efforts: By providing customers with a better picture of their utility bills including electric, gas and water, they attain greater visibility of usage patterns and a better understanding of which appliances use the most energy. Homeowners can closely monitor how much energy their gas appliances use and how much it cost to cook dinner on their gas stoves.

Studies have revealed customers with access to this kind of information are usually able to shave up to 20% off their utility bills from conservation efforts alone. Consumers can also decrease their utility bills by taking advantage of time-of-use rates that come along with smart meters. These rates give price breaks for using appliances during off-peak hours, thereby reducing demand on the grid during peak times.

Decreasing the carbon footprint: Electric utilities have benefited greatly from being able to pinpoint outages, thereby reducing the number of service trucks deployed to search for problem spots. The gas sector is expected to grow in a similar matter. By eliminating wasteful and needless service trips, utilities are reducing their fuel bills and their carbon footprint.

Sensus, a provider of AMI equipment, estimates on its Web site that its technologies have resulted in almost 9 million fewer driving miles for service calls. And by moving to a smart grid infrastructure, all utilities will have the ability to better manage demand, protect the distribution and transportation network, control leaks and outages while increasing energy generation efficiency, especially from intermittent sources of renewable energy. As alternative energies become more common, smart meters and a smart grid will make integrating renewables much easier.

Change management. AMI technology represents a major about-face in how utilities operate and require major change management efforts led from upper management. The role of nearly every utility worker will change as rapidly developing technology gains infiltrate the enterprise and utilities begin the process of changing from stodgy, slow-to-react firms to dynamic and innovative operations.

Major changes can be expected in customer service call centers, maintenance and repair crews and IT departments, where vast amounts of new data must be harvested and analyzed. Even the role of CIO will change dramatically, as they become more involved in evaluating cutting-edge technology that in many cases has not yet reached maturity. The array of new technologies can by dizzying, with new releases being unveiled on what seems like a 24-7 basis. Utilities need to be careful to thoroughly test new equipment before deploying.

Utility executives must also be aware of things like software upgrades and new maintenance needs for new equipment. Smart meters, for example, will require frequent software upgrades, something that should be discussed thoroughly with vendors so there are no post-deployment surprises.

Customer communication and education: Without a doubt, perhaps the biggest challenge utilities face in rolling out AMI systems is the need to communicate with the customer clearly and implement an effective educational campaign. Utilities that fail to do so will likely end up with numerous customer misunderstandings that can slow or even derail their smart meter programs.

There have been numerous misconceptions about smart meters and the end result of putting meters in homes. Consumers in some markets actually claim that rates have increased once smart meters were installed, and some lawsuits have surfaced.

PG&E, for example, has stepped up communication efforts with its customers after a vocal public outcry resulted from its smart meter deployment. The utility is expanding its side-by-side meter-testing program, doubling the number from 150 homes to 300 homes.

According to the utility’s Web site, it is also increasing the number of its customer Answer Centers in order to provide one-on-one service to address questions and concerns. PG&E has added 165 additional customer service representatives to improve customer service and help customers with billing, and has revamped customer communications around the installation of smart meters, including a series of communications timed to introduce customers to their newly installed meter and its benefits.

One of the industry’s most successful education tools is Oncor Electric’s touring mobile home. The 1,000-square-foot home has a fully functioning kitchen to demonstrate how smart meters measure usage of kitchen appliances. Dallas-based Oncor plans to rollout 3.4 million meters by the end of next year, and has been showing off the touring home ahead of deployments since 2008.

Sempra, which operates San Diego Gas & Electric (SDG&E), has placed a special emphasis on educating employees for the huge changes that affect operating procedures. In order to increase employee buy-in for its smart meter rollout, SDG&E began communicating with its employees several years before its final deployment plan was in place. Out of 180 meter-reader positions affected by the smart meter rollout, 130 have already transitioned into new positions within the company.

Privacy: There are major issues to be addressed regarding who owns the new data that is now at the consumer’s fingertips, how utilities will manage it, and how they will keep that data private and secure from hackers.

The last facet is probably most intriguing for utilities, as consumers are fearful that a neighborhood hacker could actually hack a smart meter to make his bill less, while artificially inflating somebody else’s bill. Utilities are taking the privacy and security issues very seriously, especially as it relates to cyber security and national security.

Despite these challenges, the general consensus in the industry is that smart metering technology is here to stay. Millions of units are being rolled out this year alone. Smart meters will continue to evolve over time. As the technology becomes richer, its value to the utility industry and its customers will increase as well, helping our country’s overall energy conservation efforts.

Joel Hoiland is CEO of Utilimetrics, the Utility Technology Association. Hundreds of utility professionals will gather in Austin, TX Sept. 12-15 to attend Autovation, the Utilimetrics smart metering conference and exposition. For more information visit www. utilimetrics.org.

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