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Advanced Metering Infrastructure Special Report: A Planning Guide for AMI

How to manage the metering selection process.

Fortnightly Magazine - September 2007

internal and external costs of AMI.

Develop a preliminary total cost of ownership (TCO) estimate that addresses the business and technology gaps, and that is tied to specific benefits “capture.” Compare benefits and costs using common project valuation financial evaluation criteria; compare the results to published information; and fine tune the analysis as additional information is gained through subsequent stages of the AMI selection process.

Understanding costs and benefits, and the key levers that can swing the business case, is essential to guiding the solicitation and selection process to success—even if only estimates or placeholders are used initially. Equally important is the identification of risks, and assessing the potential impacts and mitigation strategies/contingencies that must be employed.

The ideal AMI solution should be one that optimizes benefits, TCO, and risk, according an acceptable profile for the utility (see Figure 1) .

Collect and Consolidate AMI Requirements

The AMI solution requirements become a mechanism not only to solicit the vendor community for solutions and pricing. They also provide a disciplined way to memorialize the functional, performance, technical, commercial, and system requirements that the company requires to deliver the AMI benefits.

Enspiria recommends a highly disciplined, top-down functional decomposition approach to requirements gathering and development. To achieve each identified and quantified AMI benefit, the utility must understand:

In which business process(es) does the benefit accrue;
What data is required from the AMI system, and at what levels of availability, accuracy, and reliability;
Into which operational systems must the AMI data be incident; and
What transformations—or aggregations with other operational data, if any—are required for operational use and benefit accrual.

This level of decomposition is key to defining functional and performance requirements for AMI meters, the AMI communications network, AMI data collection, and AMI data management (such as via a Meter Data Management System or MDMS), and integration with operational systems. Enspiria recommends the technology be solicited for along the following lines: AMI technology (potentially including home area and smart grid elements), field installation, and MDMS. Often we recommend various business and contracting options as an “overlay” to these underlying solicitations.

Evaluate Business Structure Options

A complete AMI solution is composed of a significant number of assets including meters, communications infrastructure, a data collection system, and a meter data-management system. As such, there are numerous business and contracting options to consider.

To explore business structure options, it is important to look at variations that can be created by dividing asset ownership and asset operations and maintenance. Today there is building national and state regulatory support for rate-based AMI systems. Therefore, there is a strong desire for utilities to own, and rate-recover, all AMI assets. However, the operations and maintenance of these assets may not necessarily follow. While most utilities today operate and maintain their meter plants, a lower number operate and maintain large-scale communications systems. Thus it may be an option to outsource the O&M of the AMI communications infrastructure. Another option and potential risk mitigation strategy may be to outsource the operations and maintenance of the AMI system during deployment.