Metering & Billing: Advanced metering – the time is now

For the past 20 years, building a business case plan for advanced metering seemed to lack the momentum to make it a reality, in addition to the expense involved. However, with climate change concerns, rising fuel costs, power blackouts and the increased cost of construction and capital expenses, has the time has finally come for advanced metering?

Arun Sehgal, Itron Inc, USA

The global utility industry has recently been building a business case for advanced metering infrastructure (AMI). AMI promises utilities the ability to collect timely and granular data from all electricity, gas or water meters customers remotely and automatically, and then apply that data to improve reliability and efficiency, expand customer choices, and create new rates and programmes.

With greenhouse gas emissions, cliamte change, rising fuel costs, power blackouts and construction costs, the case for advanced metering is strong
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This is quite an impressive promise – one solution that supports monthly customer billing, improved operational efficiency, better customer service and even compliance with future conservation initiatives or mandates. In short, AMI is offering utilities a much more complete picture of current energy and resource use, while also helping utilities and society better prepare for the future.

AMI, however, should not be confused with automatic meter reading (AMR). Some vendors have simply renamed their existing AMR offerings as AMI, with few actual changes in their product offering. In fact, two-way AMR is not AMI. Using AMR systems to address AMI needs is not a practical application of the technology, as each product offering addresses different specific drivers and requirements for the utility.


AMR refers to the ability to collect monthly billing data from electricity, gas and water meters remotely and automatically via several different communications media including wireless, power line carrier, telephone, and other ways. AMR’s primary benefit is reduced cost through automation.

AMR systems are typically comprised of meters fitted with communication modules, collection systems (including handheld computers, drive-by systems and fixed network technology), and supporting software to manage collection of the data. In addition to the collection of consumption data, fixed network AMR systems can provide utilities with some level of interval data collection, as well as outage detection and restoration notification capabilities.

On the other hand, AMI refers to systems capable of collecting detailed energy usage data more frequently and applying that data to support time-based pricing programmes for customers, as well as to achieve other benefits relating to energy delivery and customer empowerment through informed energy usage choices. Itron’s AMI solution, OpenWay, is based on open-architecture and leverages ZigBee’s ability to connect wirelessly to ZigBee home area networks.

The OpenWay meter includes full two-way communication and a load-limiting remote disconnect
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The ZigBee radio chip enables in-home communication for purposes of customer communication, data presentment, load control and demand response. OpenWay uses ANCI C12.22 protocol for networked meter communications, which helps it to maintain independence of any particular network communications technology. AMI’s ability to provide utilities with a communication pathway into the home allows for communication with customers and an enabling of demand response and load control functionality.

In many markets – the deregulated European markets in particular – smart metering is viewed as a path towards finally matching power generation with consumption. Better and more accurate meter data will allow utilities and regulators to understand when and where customers are consuming energy. This in turn supports the introduction of prices based on time-of-use.

Again, the assumption is that billing customers by how much energy is consumed, and at what time of day, will provide an incentive to change behavior, realize savings and find ways for utilities to use rate structures, energy conservation and energy efficiency to meet the skyrocketing demand for more energy.

The business end

While AMI can be more expensive initially to implement, the market drivers that justify upfront costs have developed to the point where many utilities and regulators are closely tracking how the technology changes as it matures. Major investor-owned utilities in North America have issued requests for AMI proposals covering tens of millions of smart meters and billions of dollars worth of equipment and services.

AMI will deliver the strongest return on investment for utilities striving to build a “culture of conservation” to address continued high fuel prices and volatility, energy supply constraints, capacity constraints in their energy delivery system, regulatory requirements and a desire to move toward the “Smart Grid” of the future.

While the business case and potential benefits of smart metering are clear, the industry continues to struggle with a series of hurdles and questions around AMI’s form and function. Will there be a universal standard for functionality? Will standards be “open” – that is, will there be common standards for the collection and communication of meter data, allowing any meter or technology provider to build components or software that support utilities, thereby avoiding a hodge-podge of proprietary systems? And will smart meters be designed with advanced functionality that supports the ability to support future changes?

Given the initial investment utilities and municipalities will need to make in smart metering, open standards architecture is essential. Open standards enable true inter-operability between systems, flexibility in communications choices, and competition and innovation from third-party technology providers for applications not currently envisioned.

In particular in countries where consumers have the option to switch energy providers on a regular basis, it makes sense to have a common infrastructure in order to avoid waste, lower consumer costs, create efficiencies, and ensure competition.

Having open standards ensures that utilities can choose the best-in-class vendor for all types of AMI components – from the meter itself to software, to smart appliances and in-home displays – and have all components work together. With open standards in data communication, those components can communicate through a shared network of the utility’s choosing. Should communication network pricing or technology change, the AMI components can easily switch to a new network, so long as it supports the open standards used for communications. This protects the utility’s investment in technology, and the customer’s investment in product training, against future changes in underlying technologies.

Open standards also benefit vendors developing future technologies. A common set of standards speeds development time, ensures inter-operability and provides a level playing field for all market participants. In the same way that Europe’s mobile telephone infrastructure blossomed in part because of the common GSM standard, so too will the utility industry benefit. And the cost of building utility infrastructure far exceeds that of the huge cost of mobile telephones.

So for example, with open standards it is possible for a utility to use an Itron meter, with SAP software and an in-home display if that is what fits their needs today. And, if in the future a new company develops superior software built on the same open standards, the utility should find it straightforward and affordable to upgrade.

Advanced functionality defining AMI

If implemented successfully, AMI should set a new standard – both in form and function – for the global utility industry. Fundamentally, AMI represents an infrastructure that combines smart meters and advanced two-way communications to enable utilities to meet their business needs for meter data collection. Smart metering also empowers every customer to actively and frequently participate in demand response and energy conservation. But to meet these requirements, it is critical that any AMI solution supports a number of attributes and capabilities.

While not a comprehensive list, the following are crucial components of a highly functioning and sustainable AMI system.

Meter Data Management (MDM) is an important AMI component, since it provides the robust, scalable data repository necessary to manage the huge volumes of data that AMI systems generate and collect. A MDM system also makes the data readily accessible to users for a wide variety of applications beyond customer billing. For example, regulators or system operators may also need access to meter data, and MDM systems facilitate accurate and secure information sharing. Two-way communications to every meter is essential to enable advanced control capabilities, as well as remote device configuration and firmware updates.

A smart metering system should also have integrated demand response and load control capability enabled by an open-architecture communication standard in all meters. This will make the meter ready to connect with smart thermostats, smart appliances, in-home displays, and load control switches for conservation, data presentation and energy management purposes.

There are major differences across countries and continents with regard to the state of power grids. But regulators and utilities are working towards the development of the “Smart Grid” of the future. To support these initiatives, advanced functionality like load-limiting remote disconnect/reconnect capability, positive outage notification and restoration verification, and automatic tamper/theft detection will be essential.

These attributes are required to provide utilities and their customers with the capability and flexibility necessary for conditions that justify an investment in AMI technology.

Ultimately, business needs and regulatory conditions drive appropriate technology selection. With changes in the world’s utility market increasing in both speed and complexity, it is important that significant investments such as AMI be able to meet both current and future challenges.

Deploying systems that deliver advanced functionality built on top of open standards helps ensure that investments continue to deliver for both utilities and their customers.

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