Smart Metering - Supplier Benefits

Friday night, sipping a chilled beer! What better time to talk about how our suppliers or going to get benefited by smart metering. Many consumer interest protection lobby have criticized suppliers over the implementation of the smart metering program who seem to be transferring the entire cost to the consumers. Though its too early for me to comment, but as a consumer I would definitely do my mathematics before letting the utility talk me into looking at smart metering as their biggest gift to me. Enough of supplier bashing....

Now then, Smart metering provides a perfect opportunity for the energy suppliers to mine the customer usage data and transform themselves as service providers rather than a mere utility company. It would enable them to segment their customers and service them better. Let us take a brief overview of the benefits to suppliers by implementing the smart metering program:

(1) Utilities have always struggled matching supplies with consumption in the absence of energy usage metrics and patterns. With real time energy usage data available, utilities are better positioned to match consumption levels with adequate and balanced supplies

(2) Customer self service is when customers log onto the utilities portal and perform activities which typically is done by the service representatives on their behalf. By leveraging the information made available by smart meters and the resultant simplicity in business processes, suppliers can promote self service amongst customers thereby reducing CSR related costs.

(3) As discussed before, Smart meters support a lot of remote operations like readings taken automatically, tariff changed remotely, payment modes updated without a physical visit etc. With such remote operations supported field operation costs are reduced substantially.

(4) Suppliers invest a lot in trying to align them to a customer friendly image in the market to boost sales. Smart meters provide utilities a lot of information about the customer’s usage pattern i.e. their lifestyle. This enables suppliers to service their customers better.

(5) Utilities can reduce operation costs further by using Smart meter features like energy theft alarms, enable/ disable meter remotely on theft detection, faulty meter remote detection etc

(6) With Smart meters in place, Utilities can encourage customers to use different tariffs like Time-Of-Use (TOU). They can agree with customers to remotely shed load in-order to reduce peak time loads thereby meeting peak time energy demand.

(7) Smart meters allows suppliers to remotely upgrade the firmware on the meter to fix bugs, roll-out functionality supporting newer market advances etc which is not supported in conventional meters.

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Customer Service - Essence

Today I got a first-hand experience of why, still, there is a vast scope for customer services improvement in the product industry. Having been working on a customer service application for a while, you really get to appreciate the business requirements when you actually talk to one of the CSRs using a similar application. I had to place 6 calls to a product company just to book an installation to my site.

Based on the conversations that I had with the CSRs they seemed to be not having a single view of the complete business process and hence very feeding me the information in bits and pieces. What really hit me then was a business requirement for our application which was “one view/ global view” to the clients entire business end-to-end. This prevents an important customer service performance parameter of “customer call-backs”.

The other thing that struck me was the long time they took in order to book a field visit from a third party vendor to my site which required them to log onto the vendors system with my details. This got me appreciate the business requirement of enterprise interfacing with single sign on. It makes life so much easier, quicker and improves another important customer service performance parameter of “reducing call durations”.

Finally when I got off the phone I looked at my watch in horror to see the amount of time I spent just in-order to get an innocent field visit to my site and swore never to deal with these fellas ever. In my misery I could appreciate one more business drivers in CS applications of being “customer friendly” treating them as family and not leave a bad after taste.

So after all the business is not totally nuts to go crazy with their requirements and do have a vision to keep the customers first. I suddenly am appreciating my daily work profile J.

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Smart Metering - Consumer Benefits

Smart metering is been sold as a customer boon. Lets look at exactly how smart metering is going to change the way we use our appliances.

With de-regulation of the energy market, utilities have introduced many customer friendly programs over the years for e.g. Airmiles, loyalty, customer is family etc. They have tried to position themselves as a customer-friendly energy provider to increase their market share. Hence one of the primary factors dictating the success of the smart metering program is how the roll out is perceived by the customers and how quickly can the benefits be transferred to them. Let us outline the customer benefits by implementing the smart metering program:

(1) Customers can monitor their usage values on a real time basis which would allow them to keep a check on their energy consumption and budget for it well
(2) With the actual usage value remotely communicated to the utility, customers would now pay for their exact usage rather than some estimated usage values
(3) Since smart meters record consumption on time intervals enough information will be available for a customer to identify their usage patterns and hence opt for a tariff which best suits their usage pattern e.g. Time-of-use. This means reduced energy bills and at the same time saves energy.
(4) Utilities have struggled understanding their customer based on the nature of their consumption. With real time usage data available, utilities can segment their customers appropriately and provide better customer service.
(5) Moving home? Changing supplier? The suppliers and market participants take around a month for the data exchange and processing to be completed. With around 2 million people moving their home annually that is a lot of time spent. With Smart metering customers can experience a speedy transition as data sharing between suppliers and market participants will be streamlined and quicker
(6) Micro-generation is the production of power and heat by individuals typically to meet their own energy requirements. Micro-generation is usually through renewable resources like Solar energy, Ground heat etc and represents a low carbon footprint. Consumers capable of micro-generation are called prosumers. With a vision of increasing the % of renewable resource energy utilities are increasingly looking at promoting and supporting prosumers. Smart metering provides for measuring the outflow of micro-generated power for which the prosumer will be compensated appropriately. Smart meters provide for inflow-outflow netting and reward the prosumer for the surplus which promotes micro-generation.
(7) Changing tariff to suit your schedule? Want to switch payment method i.e. credit to/ from prepayment? The Meter at the customers premise has to be replaced for a tariff or a payment mode switch. Smart metering allows remote switching of tariff and payment mode without having to schedule a field representative visit to the customers address.

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Smart Metering - The Confusion

Continuing the quest on Smart metering, in this post we look at how sometimes smart metering gets confused with some of the existing terminologies in the energy industry. Though there is no clear definition for the smart metering concept, following is a generic interpretation of the energy industry terms:

i. Automated Meter Reading (AMR)

AMR technology allows electric meters to be read remotely and at configurable time intervals. However real time reading with accurate billing is the only remote function supported by AMR meters in comparison to smart meters. AMR technology has been around is the energy industry for quite some time and has measureable proven benefits. Smart meters are sometimes also viewed as an extension of the AMR technology.

ii. Meter Clip on Sensors

Clip on sensors are small devices that clip on to the cables running from the conventional electric meters and then wirelessly transmit the usage information to an in-house display unit. This gives the customer real time consumption information giving them full control of their spending. However there are NO remote functions supported by such sensors and hence Suppliers and Distributors do not have access to the usage information. However the clip on sensor technology is considered to be forward compatible with the smart metering initiative as smart metering infrastructure uses a display unit to present real time usage values.

iii. Advanced Metering Infrastructure (AMI)

Advanced Metering Infrastructure is interchangeably used with Smart metering. It is viewed as an extension of AMR which can remotely read gas, water meters as well apart from electric meters. However smart meters are much more than an extension of the AMR technology which will be apparent later in the document. A new term loosely coupled to AMI/ Smart metering is Automated Meter Management (AMM). AMM is viewed as a system with analytical and technical measurement ability sitting on top of the AMI or smart meter infrastructure managing the data generated by smart meters.

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Smart Metering – The Rationale

A month has gone by and it seems that I have lost the smart initiative. Wrong my friend! Travel kept me from updating my blog. In the next few posts I would like to present a sneak peek into the smart metering initiative going around. Would like to start with the rationale behind the entire program and try to answer "Why Now?"

Smart metering is the current buzz word in the energy retail industry. Some of the energy markets have already started a transition to the smart world whilst some are gearing up their existing infrastructure to accept the new changes. Before we try to dwell into more details around smart metering let us first try to understand the rationale behind the smart metering program. UK Energy industry de-regulation which happened a decade back changed the customer- utility relationship altogether, empowering customers to select a supplier of their choice. However customers never had the ability to precisely identify their usage patterns and take advantage of a suitable tariff thereby saving energy and money.

From a customer perspective, the only way a utility consumer can know their energy consumption is via a Bill. Energy bills are issued by a utility every month often estimating the usage based on a customer’s energy consumption history. Bills present a cumulative usage value and there is no way a customer can check their usage at real time to budget for it better.

From an energy retail industry perspective, their processes are not subject to frequent changes and remain by and large as they were standardised a few decades back. These processes were designed then, taking into consideration the market structure and the technology maturity in those times. With the business process remaining unchanged, energy suppliers and market participants could not leverage the technology advancements to their advantage to simplify the complicated industry architecture.

So the question is “Why the industry processes were never overhauled if there were known benefits?” The answer is simple, there was a never a comprehensive cost benefit analysis done to implement such a high impact change and the existing model was always scalable enough to accommodate newer market regulations and compliances. The next question then is “Why now if the model is scalable enough?” Well Smart metering is considered as the next generation of the energy industry. Not migrating to smart metering is not an option as newer market functions categorically align to smart meters and implementing them in the existing systems implies significant bolt on to an old set-up. Smart metering allows real time data exchange and processing which quintessentially has been an overnight batch job with data exchange between stakeholders taking months. This inherently implies that the existing underlying business processes in the energy industry can be simplified.

Smart metering program is thus a prospect to fundamentally review the market structure, existing business process and the technology development to create a blueprint for the new age market with an appropriate cost benefit analysis. It is been viewed as a perfect opportunity to rationalise the energy industry by addressing some of the current issues making it easier for customers to do business with their energy supplier in a de-regulated market. The implementation of the smart metering program is also proposed to have provisions for future market changes like smart grids, micro-generation, efficient use of energy program like Renewable Heat Incentive (RHI), Feed in Tariff (FIT) etc.

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