Deregulation presents opportunities which not so long ago were unavailable to utilities opportunities which many will have to take advantage of in order to survive in the new competitive market. The ability to offer new services is one area which can make the difference between a utility winning or losing customers. Doing this in a cost-effective and flexible manner has never been easy. But help could now be at hand with the development of technology specifically designed with this in mind.
Olameter of Montreal, Canada announced that it has signed a development and licensing agreement with Amino Communications, a UK-based company that specializes in technology for network appliances. In a $1.6 million deal, Amino is to supply Olameter with a custom-designed gateway that will be a key tool in redefining how electric metering and other services are managed in North America and the UK.
Through partnerships with electric utilities, Olameter intends to introduce sophisticated, telemetry-based gateways that will provide commercial and residential end-users with automated services that range from utility meter reading to security, entertainment and e-business.
More than AMR
Olameter was created less than two years ago by the former management of a Canadian long distance telephony company called Fonorola.
This was against a background which was already seeing deregulation in the electricity market and had already seen deregulation in the gas and telecommunication industries.
Vincent Gagne, managing director of Olameter commented: “Deregulation has today led to a multiplicity of new electricity service providers looking to use the incumbent lines of communications or networks. New ‘light’ players have also come in. They are light in the sense that they do not want to be vertically integrated. They are only interested in marketing a service and using other parties to execute it.”
He the cited US department store chain, Sears, as an example of a company which has just applied for a licence to sell electricity in Ontario, Canada. Such companies use their basic marketing tools to offer deals to their customers but need to rely on other parties to read the meters and so on.
Olameter’s aim is to create a platform which allows electric utility companies and other ‘light’ companies to offer a variety of services. It is trying to sell the idea primarily to electric utility companies so that they can be part of a futuristic automated collective site management unit where, through the phone, cable or radio frequency, they could read all the meters, shut off or turn on a cable service in a house or control home security.
Olameter knows it has to present a business case where it could match, as much as possible, the price of what utilities are currently paying for meter reading. According to Gagne, a basic meter read currently costs a utility $6-8 per year. However, the cost of implementing basic AMR multiplies this by two or three times. “A utility is going to ask ‘why charge customers $16 per year to automatically read a meter when I can do it for $8?'”
The key is to match the price while giving the utilities the opportunity to offer added benefits and create savings in other departments than the meter reading shop. “To do this someone elsewhere will have to pay but we feel we can do this by offering our services to other service providers through just about the same hardware and back office systems. Essentially it would obviate the need to have several trucks from several different service providers visiting a single location. “If you have just moved house for example, you can face the situation where there are four trucks, each charging, say $75, to activate a service,” said Gagne.
Olameter, from its first days, decided to work on a system that would do more than just AMR. “The best way to describe it would be as automated collective site management’,” said Gagne.
Olameter will form partnerships with various electric utilities whereby it will install gateways in residential homes, with the AMR being the anchor-tenant service.
Figure 2. Olameter’s aim is to create a platform that allows utilities to offer a variety of services through phone, cable or radio frequencies
Olameter is also working with other industry specialists to complete delivery of the product into the market. For example, IBM will handle the setting up of the back office systems which will allow Olameter or the utility to remotely manage everything which is happening at the customer premises. These might include things such as outage management, pre-payment, turning off customers remotely (simplifying moves, adds and changes) or implementing e-commerce applications.
The gateway has been developed with the help of Amino, which is providing the design, hardware and parts of the software for the gateway. Amino will also make sure the gateway functions according to the technical specifications set by Olameter.
Explaining the concept of the gateway, Martyn Gilbert, managing director of Amino said: “The gateway is all about providing a host of services and features which go way beyond just billing. It’s all about having the right communications infrastructure.”
In addition to billing and meter reading for multiple utilities, the gateway allows electric companies to perform things such as outage detection and remote load shedding. This is important in markets such as the US where a utility is able to maximize its returns by performing load shedding on a hot day. “The operational implications of having this equipment are enormous,” noted Gilbert.
The gateway can support a host of standard protocols, including TCP/IP and Internet protocols. Protocols can also be added at any time remotely. This means it is capable of providing broadband services since, in principle, it can provide connectivity to any external network. As Gilbert explained: “There is an almost unlimited variety of ways that this gateway can connect to the outside world be it via telephone, cable company lines or cable modem.”
This diverse means of external connectivity provides a high level of control security since a utility can control a premises almost regardless of what happens in the outside world. For example, if a cable is ruptured during road digging, the utility could control devices via the telephone network instead.
Inside the premises, communications can be via Ethernet, arbitrary third party wireless services, powerlines or can plug in to high speed broadband lines such as T1 lines. This range of internal and external connectivity options means that the gateway can be the platform for services such as pre-pay metering and video-on-demand.
According to Gilbert, what makes the gateway different to other devices is that in addition to being designed to perform many functions, these functions can be added remotely.
The gateway has a modular design where each function i.e. cable modem, powerline carrier, or AMR can be added as modules. A utility can therefore adapt the gateway to its needs. “It does not have to spend money on functions it does not need for a particular premises. It can start with the bare minimum and add the functions as they are needed. This is what differentiates the Olameter gateway from the fixed design switch which most people use,” said Gilbert.
This easily extendible capability is made possible by Amino’s IntAct technology (see box). IntAct uses a tightly coupled set of hardware and software protocols, which enable system components such as networking, application processing, I/O and graphics to be interconnected to create the desired product. Since each of the IntAct products is self-contained, new components can be easily added to the base product via a hot plug-in connection. This means the gateway is fully re-programmable without user intervention or any interruption of service to the consumer.
According to Amino, installation is also straightforward. “The installation process consists of mounting the gateway in the premises, putting the connectors on the cables and installing the cables onto the gateway. Installation is much quicker than one might expect since it is done in an automated fashion. There are no flashing lights or buttons on the gateway just a single light which indicates that the device is set up and is working. The functions are all configured by Olameter remotely,” said Gilbert.
Olameter is well on the way to bringing the product to market and is in post-due diligence stages with a number of utilities. Gagne said: “A good group of them are in the final stages of reviewing the game plan. They are reviewing the business model with real numbers, projecting forward 10-15 years to assess the possible levels of penetration.”
Olameter sees opportunities in three markets initially and is currently talking to utilities scattered throughout the USA, Canada and the UK. “We think the UK could be a better market. Here, we see a lot more thinking around the concept of the large third party meter reader. The UK has a model where all the meter reading and meter ownership can be done by someone other than the utilities. In the US it is the opposite where they try to create smaller meter reading and meter service providers by unbundling the function in a given territory. For example, energy service providers selling energy in California could have the choice of having metering functions to be performed by several players. The notion of a large, efficient, low cost third party player does not seem to be the way in several unregulated states. Choice seems to be the priority and prices will go down if the people have a choice. Will the unbundling model work? Answers will come up very soon.”
A crucial part of Olameter’s negotiations with the utilities is to be able to have a live demonstration. Initial testing of the product is set to take place before the end of this year. This demonstration will be with a device working in one room. “We’ll have a physical box working in a physical space…it will not be a concept anymore. We will be in a position to have utilities travel here to Montreal and show them the real capabilities,” said Gagne.
Olameter expects to announce its first contract within the next six months i.e., in the first quarter of 2001. This will probably be a large-scale trial to demonstrate and benchmark the installation process. “Installing 100 units doesn’t tell you much, but installing 10 000 tells you more about the human experience, how long it takes during a day to install each unit. This helps us include more about numbers when we finalize the business plan. This is important because deployment of a network of that nature is a killer. It’s a huge investment upfront since we are dealing with huge numbers in terms of hardware and people.” added Gagne.
Olameter will also be talking to municipalities where there will be trials involving 40 000-60 000 sites. These will probably take place in the second quarter of 2001.
When this happens utilities will be in a position to truly offer the many services that have been talked about since the beginning of deregulation or support them on behalf of other service providers.