AMR/AMI and the Energy Policy Act

While many electric cooperatives are still evaluating automatic meter reading (AMR) systems, the Energy Policy Act of 2005 (EPAct) requires cooperatives with annual sales greater than 500,000 MWhs to consider time-based rates and smart metering options.  At the same time, AMR systems have become more “intelligent” and the new industry buzzword for AMR is Advanced Metering Infrastructure (AMI).  Many vendors are now offering systems that provide advanced features including full two-way communications, remote disconnect, load management, outage management integration, and even in-home displays where customers can monitor their energy usage.  As a result, many electric cooperatives are now taking a “second look” at AMR/AMI systems both as a direct result of EPAct and as a means for improving operations and providing better customer service.

The EPAct 2005 amended PURPA and basically requires affected utilities to consider implementing five (5) new standards: net metering, time-based metering and communications (smart metering), fuel source diversity, fossil fuel generation efficiency, and interconnection.  While some of these standards are more applicable to G&Ts, electric distribution cooperatives are taking a new look at metering options which could help facilitate compliance with EPAct 2005.  However, it is important to note that EPAct 2005 only requires utilities to consider adopting the standards but does not require utilities to actually implement the standards.  Many electric cooperatives that are impacted by the standards have scheduled hearings and will address the issue through a public forum with members.

Electric cooperatives who have already installed an AMI system, which is typically defined as a two-way fixed-network communication system for conveying meter data including 15- or 60-minute interval data, may have the existing infrastructure in place to offer smart metering as defined by EPAct.  For those cooperatives, the primary consideration will be the development of time-based rates for each of its customer classes for EPAct compliance.  According to EPAct, the development of time-based rates should also reflect the cooperatives costs of generation and purchasing electricity at the wholesale level.  What this basically implies is that electric cooperatives will need to have a time-based rate from their G&T which varies by time periods and the retail time-based rate to customers should reflect this variance.

While EPAct 2005 has provided an additional incentive for some cooperatives to consider smart metering, other drivers and market forces are also at work and making AMI a more attractive business case for many cooperatives.  In addition, there has been a trend towards merger and acquisition in the AMI industry.  Players such as Cannon Technologies, Hunt Technologies, and CellNet were all acquired in 2006 by larger companies which are well capitalized and see a growing market for AMI.

For those cooperatives still considering AMR/AMI, one of the first steps is to develop the business case which should include reviewing existing meter reading related costs, identifying business goals and objectives, defining functional requirements, and developing a detailed financial model to capture all of the costs and savings from implementing an AMR/AMI system.  Other considerations should include:

ü      Will meters be replaced or retrofitted?

ü      How will stranded assets and depreciation be addressed?

ü      What type of fixed network will be used (PLC, wireless, etc.)

ü      How will the system integrate with existing systems?

ü      What type of meter data management system will be used?

ü      Are meter modules compatible with existing meters?

ü      How will departments and personnel be impacted?

Implementing an AMR/AMI system will be a major undertaking for electric cooperatives.  Careful planning and project management skills will be important for a successful project.  EnerVision has worked with several electric cooperatives on AMR/AMI projects and can provide a wide variety of support services.  For more information on how EnerVision can help with AMR/AMI or EPAct 2005, please contact Robert Duval at robert.duval@enervision-inc.com or at 888-999-8840.