Low energy prices have weakened the business case for advanced metering. Regaining momentum might depend on innovation to strengthen the benefits.
Smart Metering: CIS Gets Smart
Smart metering changes the back-office paradigm.
As a member of power industry consultant KEMA’s intelligent networks & communications practice, Ron Chebra often meets with utility executives to explain the impact a smart metering or smart-grid initiative will have on the company’s customer information, billing and other back-office systems.
He usually kicks off the meeting with a brief video clip from “I Love Lucy” called “The Candy Factory.”
In it, Lucy and Ethel have been hired to hand-wrap individual pieces of candy as pieces trundle down an electric conveyor belt. At first the candy is delivered at a reasonable pace. But then the conveyor belt picks up speed, reaching the point where the two simply cannot wrap the candies fast enough. At that point all hell breaks loose and the hilarity ensues.
“I like to show that during my presentation,” Chebra says. “My point, of course, is that a utility can’t suddenly go from gathering meter data once a month to gathering it every hour without making significant changes to its back office. I usually see a lot of nodding heads and nervous smiles.”
Suffice to say most power industry executives—especially those looking to institute an advanced metering infrastructure (AMI) program— have a pretty good understanding of what’s going to be coming down that conveyor belt.
The multi-million dollar question is: Will the utility’s customer information service (CIS) be able to handle a large-scale smart-meter deployment, and if not, can it be modified? Or will a full-scale CIS replacement be necessary and if so, how much will it cost?
While AMI and smart-grid pilot programs generate the headlines, most back-office system modifications or change-outs are still on the back burner.
Jerry Melcher, a consultant with EnerNex Corp., describes the typical AMI implementation as a two-step process. “First you have the infrastructure build out, with the new meters and the communication network to the back office put in place,” he says. “Then comes the back-end systems, including a meter data management (MDM) system, which will take all the billing determinants needed to construct the charges in accordance with the tariff.”
According to a December 2008 FERC report, advanced-metering penetration in the United States is just under 5 percent. That means U.S. AMI programs still are in the pilot or early build-out stage. Utilities in the midst of a major smart-meter deployment are years away from completion. As a result, even if dynamic rates are in place, it will be years before the U.S. power industry can clearly demonstrate the impact a large-scale AMI program will have on a utility’s CIS and billing systems.
“Most utilities have ignored the downstream impact to customer information systems,” says Allan Schurr, vice president, strategy and development, with IBM’s global energy and utilities industry practice. “Many have begun their AMI programs without developing plans for the CIS, partly because in many instances the dynamic pricing models in their territories aren’t firm yet. It could be years before