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The Oracle of AMR: Interview With Howard Scott

The Oracle of AMR
Fortnightly Magazine - March 2005

Fortnightly: Many supporters of broadband over power line (BPL) implementation at utilities trumpet the efficiency benefits it will bring to a utility as it relates to bringing fixed AMR? Is power line a cost-effective alternative to other fixed or mobile technologies?

Howard Scott: BPL is still quite new and is much more expensive than anything else in the AMR market right now. From a business plan perspective, AMR is not going to be a driver for BPL for the next few years. If BPL is there, AMR could easily piggyback on it. BPL would definitely make it a lot easier for a utility to deploy time-of-use capabilities or expand demand-side programs or things like that. But AMR is not a big money driver for BPL. Utilities will have to rely on other business drivers to make most of their business cases for BPL, and AMR will be an added benefit.

Fortnightly: What do you think has materially changed in terms of AMR implementation in the last year?

Howard Scott: Mind you, we don't have the final numbers for 2004. It looks like overall the industry slowed up and possibly took a slight downturn. That was counterintuitive to what we were seeing in the marketplace. There was an astounding amount of activity, huge numbers of utilities coming to the table and applying AMR [technology], and then suddenly the numbers started going south. How can that be? It looks like activity is growing and the numbers are decreasing. So, prompted by three different AMR developers, we started looking more closely at what was happening.

Fortnightly: What did you find?

Howard Scott: These three vendors were saying that deployments were being skewed by the ending of some large projects that produced significant shipments over the past few years. We had done some preliminary slicing of the electric gas and water data and had looked at utilities with meter counts below 100,000, below 500,000, and below 700,000. I decided to look more closely at utilities with fewer than 500,000 customers and those that had more than 500,000 customers. We found that only 98 electric gas and water utilities were larger than 500,000 customers. Below 500,000 customers there were over 58,000 utilities, most of them water. So there are very few large utilities, and they tend to dominate our view. But if you look at how many AMR units can eventually be sold into the marketplaces, you find a fascinating lesson-both markets are probably the same size, 120 million AMR units could potentially be sold into each market. I am taking some license with the numbers when I say that. The potential number of AMR units in the over 500,000 market is almost exactly 120 million. The number of potential AMR units in the below 500,000 market is actually more like 160 million. But it includes many small utilities that are least likely to buy AMR.

Fortnightly: What is the eventual saturation level for AMR?

Howard Scott: Saturation is not going to be 100 percent. All the large utilities will probably buy this technology. Where you start