By unbundling usage from access, utilities can maximize contribution to margin and yet still retain load.
With deregulation and industry restructuring, energy utilities face price...
Everybody's talking about electric utilities dabbling in telecommunications. That's fine. But how about vice versa? Maybe what we've really got is telephone companies (and cable television, too) getting into energy. That's different. A whole lot different.
Swing Your Partner
The last few months have seen a flurry of deals and strategic alliances between telephone or cable companies and electric utilities, all aimed in some way at marrying energy services with information technology and software. I can think of at least five:
s Entergy + First Pacific Networks
s PSE&G + AT&T (also includes Honeywell, GE, Intellon, American Meter, and Andersen Consulting)
s Tampa Electric + IBM
s SoCal Edison + Cox Cable
s PG&E + Microsoft + TCI
These alliances promise a cornucopia of energy services: automatic meter reading, remote on/off switching, residential demand-side management, temper (energy theft) detection, outage detection, customer surveys, real-time pricing, power-quality monitoring, and distribution system automation (SCADA services via broadband could save telephone charges over the public switched network).
But those features all serve the electric side. What's in it for telcos and cable companies? (Better yet, what's in it for Microsoft, which seems to own a piece of everything except a telephone network.)
Paul E. Spaduzzi, energy consultant for Cox Cable Communications, suggests ulterior motives: "Telcos want to get into energy because energy plus information equals real-time pricing. That makes for greater efficiency, giving electric consumers the cash they'll need to buy other services on the information highway" (that telephone companies are itching to sell). And then there's cable television.
"Enthusiasm among cable companies for telephone service is unbelievable," says Spaduzzi. But market penetration holds the key. "Cable serves only about 65 percent of households," Spaduzzi notes, while electrics reach just about everybody (em which is what you need for a switched service like telecommunications. Thus, cable companies see energy management services as an entry into telephony. Are cable companies really interested in energy? Spaduzzi notes that electric utility transformer failure represents the biggest single cause of cable TV outages. So yes, there's a possible synergy. Maybe.
Cree Edwards, vice president of business development for CellNet Data Systems Inc., a company that designs and builds wireless meter reading systems for electric utilities, tends to agree: "It's not so much that electrics are getting into telecommunications as it is the other way around."
At Itron, which also markets wireless meter-reading technologies, you'll also hear a word of caution. Robert Neilson, vice president of marketing, points out that meter reading, load control, and data acquisition break down into two markets. First, you've got to collect the data from your meters. Second, you want to transport the data to the utility. What works for one job might not work for the other.
Neilson sees wireless radio frequencies as ideal for gathering utility customer data from meter to interim collection point, even if that collection point resides in a smart box located within the customer's home. It's that last 25 feet (em from collection box to the meter (em that forces costs up. Fiber or coaxial is too expensive for