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The Politics of AMR

The industry continues to debate the costs and technology of automated meter reading, even as some regulators insist on immediate implementation.
Fortnightly Magazine - September 1 2003

makes choosing an AMR technology doubly difficult.

Metering Inaccuracies and California

The California crisis has shaped regulators' new AMR politics. Regulators such as the Idaho PUC believe the technology will allow utilities to save money in areas beyond meter reading, including real-time service outage reporting; tamper- and theft-proof reporting; and a reduction in the wholesale cost of power during peak demand periods. Moreover, AMR could significantly reduce operational costs and the potential for error.

The Florida Public Service Commission (PSC) is investigating that potential. Florida Power & Light Co. in July said some large commercial customers may have been improperly charged for electricity because of faulty meters. But the utility was unsure of the extent of the underbilling. Problems arose from the use of thermal-demand meters, which the utility has been replacing with more accurate meters. The PSC has opened an investigation into the matter. The state's consumer advocate is worried that the underbillings may have been treated as line losses paid for by commercial as well as residential customers. Refunds could be warranted, the PSC said.

The issue of underbilling takes on a sinister tone in California. On Dec. 24, 2002, an article in the noted that Enron Corp. agreed it had underpaid the California Independent System Operator (ISO) by as much as $50 million because of meter reading errors attributed to its contractor, Computer Sciences Corp. The Times reported that Enron disclosed the problem in a letter to the ISO stating that Computer Science Corp. erred by not reading some meters at all, and reading other meters on a monthly basis instead of daily or more often.

But critics say the paper grabbed onto only a small portion of the story. They say there is a great discrepancy between wholesale reporting and retail revenue reporting in California, which perhaps could be more evidence of market manipulation through Unaccounted For Energy (UFE). That brings into question the accuracy by which the ISO calculates UFE and spreads those costs across all the market participants. Ultimately it is the ratepayers of the "other" market participants who are paying for the meter data errors. Some say that since the energy crisis in April 2000 and the rise of energy prices, under-reported usage has become the norm, and some energy service providers may be responsible for as much as 50 percent of the error.

Critics say the market structure is not set up to allow oversight into the potential irregularities of reporting meter data by market players because FERC and CPUC jurisdiction overlap in the metering arena. The ISO, under FERC jurisdiction, is responsible for oversight of UFE calculations. Meanwhile, retail end users, through their local utility or energy service provider, fall under CPUC jurisdiction. Customers' historical usage patterns that could be used as a reasonableness check against the accuracy of the meter data submitted by the utility or ESP are not available to the ISO.

Critics believe that the situation occurs due to the market structure and the information available to the key players in the market. The root problem is that no entity