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Meter Markets: A New Value Proposition

Fortnightly Magazine - September 1 1997

An interview with Ralph Masiello

and Sue Scott of ABB

The big, traditional projects in automated meter reading have really stalled, because utilities are no longer assured of a return on investment."

That warning comes from Ralph D. Masiello, vice president and general manager, ABB Power T&D Co. Inc., the leading manufacturer of electric meters in North America.

"We used to understand the economics of AMR. Just compare the cost of AMR against the cost of metering. But now the economics have changed. The new model is, 'What can I sell the data for?' The metering company has got to create a whole new value proposition."

So what turned the economics upside-down?

The Revolution

On May 6, the California Public Utilities Commission ruled%n1%n that revenue cycle services - i.e., metering, billing and related information - should be wide open. Thus, after Jan. 1, 1998, electric customers who take power at levels of 20 kilowatts and above will be able to choose their own company to do the metering but must install hourly meters. Smaller customers, including residentials, will follow in 1999, but with no apparent obligation to go with hourly meters.

And it doesn't stop there.

Back in April the Pennsylvania Public Utility Commission predicted: "If the Commission decides to unbundle metering services, changes may occur in the historical methods of metering, and [in] who owns and maintains the meter."%n2%n At that time, it solicited comments on a set of 61 questions on residential and commercial metering in the electric industry, asking whether the state should allow competitive firms to provide their own consolidated billing, metering and other related services.%n3%n

Pennsylvania was set to issue a proposed rule on metering sometime in August.

Two-Way Data Flow

Back at ABB, I asked about the transition from monopoly to competitive metering. Will we see meter vendors installing new meters, or just leasing the old ones already in place?

"No one envisions ripping out all of the meters and putting in new ones - at least for residential customers," notes Sue Scott, account manager at ABB Power T&D.

"But at the industrial level the accounts are big enough," notes Masiello.

"You see," he adds, "the California decision shifts the importance from meter reading to ownership of the customer data. What is the role of the metering company? Does it just read the meters and pass data on to the energy service provider? Who then does the billing? Or does the meter company bill and collect, too, like the local utility?"

"We think that as a metering services company, you'll need a computer and software and a favorable deal with a communications network. And begs another question: Which networks will predominate? Public or proprietary?"

Masiello, an electrical engineer, explained the differences.

"Physical proprietary networks (like copper phone lines) carry very high up-front costs, but offer low per-point costs in the long term. By contrast, public networks (radio pagers, for instance) offer low up-front costs, but higher per-point costs down the road.

"In California, where the meter market will open up first only to the larger 20-kilowatt-hour

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