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Technology Corridor

Utilities are finding strategic benefits in demand-based metering technologies.
Fortnightly Magazine - February 2004

achieved an average load reduction of 1.1 percent 3 -good enough that regulators support a state subsidy for interval-meter installation and urge program expansion. 4

The Data Issue

Widespread use of sophisticated metering confronts utilities with the question of what to do with all the data these new meters generate.

Some solve the problem by pre-processing data before feeding it into the billing system. Others use complex-billing software to inform investment, scheduling, and forecasting decisions.

Of equal or greater benefit are the product opportunities that spring from careful data analysis.

"As the economy kicks in, increasing numbers of commercial and industrial customers will have money to invest in new ways to cut long-term costs," reports Jim Spiers, META Group affiliate analyst. "They're agitating for-and getting-access to the wholesale grid. They want something more than their utilities have traditionally provided-better pricing, more flexibility, and higher quality.

"The issue is not the commodity rate per se. The issue is their overall cost of service/delivered product to their ultimate consumers. Energy-intensive commercial and industrial customers must make decisions based on how their energy quality, cost, and consumption drive to their bottom line. They need price signals and consumption option analysis to stream through all business processes. If utilities can't help their consumption, data is of limited business use."

Utilities' demand-response programs will speed and intensify those demands. AMR Research's Jill Feblowitz points out that New York's Emergency Demand Response (EDR) puts in place equipment and processes that "will change the way commercial and industrial customers consume energy." She continues, "As more C&I customers use EDR in non-emergency situations, [their utilities] will see a business opportunity." 5

That opportunity for utilities might become a business necessity. Zarko Sumic, META Group vice president, sees a future in which "profit margins are too low to sustain a low-cost provider, commodity-only business strategy for large customers. Instead, large customer retailers will need to focus on delivering value-added services like energy management, performance contracting, and consolidated billing. Account managers will need an intimate knowledge of their customers' businesses in order to recommend and apply contract options that return positive results for both customer and utility."

Profiling

Some utilities already are far down the track in responding to the needs of large customers.

TXU Energy, for instance, uses complex billing to offer load profiling. Profiles identify a customer's opportunities for energy- and maintenance-saving improvements, establish benchmarks, and help customers evaluate competing supply offers.

Given the ability to process complex data, the variations on product offerings are virtually endless. One large European utility, for instance, offers customers multiple options for overriding basic contracts, many of which can be used simultaneously. Options include:

  • Special days on which customers can alter demand;
  • Occasional offers of lower-priced electricity if demand falls within specific ranges;
  • Credit options for pre-defined amounts of electricity, for use when demand is higher or lower than contract specifications; and
  • "Tickets" to increase or decrease the contracted demand level by a negotiated amount of power for a predefined period of time.

Within these options are still further refinements. Tickets, for instance, may