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Metering in Real Time: A New Cost Equation for Electric Utilities

Fortnightly Magazine - September 1 1997

strategy in a competitive marketplace.

In contrast, a system that provides a return on investment in the form of reduced operational costs will be less valuable in a competitive market.

The advantage of full-service gateways is that they enable a host of revenue-producing services in energy management and lifestyle enhancement, as illustrated in Chart 3. As we have seen in the deregulation of other industries, these high-margin, value-added services can grow more important to a company's bottom line than the low-margin, basic commodity-type services.

New, value-added services promise significant intangible benefits as well. Such services offer an opportunity to build customer satisfaction and brand loyalty, and provide customer choice - key factors in retaining existing customers and attracting new ones in a competitive market.

Closing the Gap

Two-way communication enabled by full-service gateways generally costs only marginally more - and in some cases is priced even less - than an average smart meter. And that cost gap closes rapidly when the revenue potential of new, value-added services is taken into account.

There will be instances when simple AMR or other basic utility functions are adequate for a utility's business goals. But most utilities will find themselves in an environment that demands more powerful solutions.

Jack King is president of Scientific-Atlanta's Control Systems Division, specializing in communications products for utilities. He has nearly 30 years of public utility experience in all phases of utility operations.

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