After ratepayers brought a class-action lawsuit against distribution utilities, Texas regulators commissioned a study of the state’s new smart meters. The study explains why customers reacted the...
Advanced Metering Infrastructure Special Report: A Planning Guide for AMI
How to manage the metering selection process.
Often termed “design, build, run, transfer,” this option places the onus of deployment, and operations and maintenance, of an AMI system into the hands of a third party until implementation is complete and a formal acceptance and transfer occurs.
Similarly, the utility must decide what elements of the AMI solution it wishes to procure. Obvious elements include all the dedicated products that form the AMI solution, and their installation and deployment. Options typically come in terms of systems integration and program support services such as program management, deployment, operations, or prime services. A utility’s desire, willingness, or need to procure these will depend greatly on internal capabilities, resource availability, the scope of the AMI program as well as past experiences, and existing business structures (e.g., outsourced IT department). Program scope, especially the addition of demand-response programs and smart-grid capabilities, will expand the skills and capabilities required, and the potential need for additional assistance.
Finally, as the utility considers these options, it is critical that it does so with an eye to the future, and the future demands and capabilities of the utility work force during the next 20 years.
Establish Vendor Selection Criteria
Clear, concise, and undisputable vendor evaluation and selection criteria provide for uncontested choices and lower risk during the negotiation process. Equally important, broad ownership of the selection criteria—and resultant AMI selection—is important to solution acceptance and adoption.
Also, one should prioritize requirements based on maximizing benefits and avoiding costs. Identify “must-have” requirements, and select based on these. Be prudent, be reasonable, and be selective in the identification of critical requirements. A hundred is too many; 25 likely is too few. Assemble a cross-functional team to develop and vet the selection criteria. Gather evaluation information from different venues including vendor meetings; competitive solicitation or rapid sourcing; and demos, benchmarks, and site visits. Include qualitative and quantitative risk assessments at each stage and factor appropriately.
As the evaluation proceeds, be sure to isolate functional and performance evaluation from cost evaluation to avoid premature biases to develop. Perception of low or high cost relative to other vendors can influence how technology and risk evaluation factors are weighed. Total cost of ownership is the only valid comparison, and developing the TCO requires diligent review of all elements of a vendor’s proposal.
Procurement should follow a process of iterative vendor selection. Initial information collection and vendor meetings, prior to solicitation, provide background and capabilities enabling a first order selection to take place. A detailed assessment of the benefits-driven AMI requirements, implementation costs, and identified risks should be used to further down-select potential vendors, retaining those vendors that provide the highest benefits coverage and lowest risk. Finally, a formal solicitation is sent to the remaining viable vendors. An alternative approach is a rapid sourcing process if the number of viable vendors is on the order of two or three. Solicitations and scopes are developed based on the detailed AMI solution requirements and the utility’s preferred implementation time frames. Pricing is solicited to provide all external elements of the developed TCO model, across all desired business