Michael Wiebe, MW Consulting
Utilities, employees, customers and shareholders need ‘fixed network’ AMR today. We have supported utilities in AMR projects that have gone to implementation involving over 5 million meters with every business case, reflecting positive stakeholder benefits as measured in net present value, EPS, customer satisfaction and PUC approval.
Fundamentally, our business case projects-including PPL Electric Utilities, Exelon (PECO Energy), Duke Energy and others-have demonstrated that fixed network AMR is a strategic tool creating benefits on a corporate scale by improving numerous processes to yield ‘hard’ quantifiable benefits acceptable to a CFO. When seen as a corporate tool, AMR is about improved customer satisfaction, enhanced asset management, increased operational effectiveness and much more. However, the business case for this view is complex and the historical view of AMR has focused on the issue of reducing meter-reading expenses because it is the easiest to document. But, this approach misses many valuable benefits. Meter reading automation tools like mobile (MAMR) and off-site meter reading (OMR) are tactical tools for a departmental need. This does not mean that partially automated methods like MAMR and OMR are bad ideas but as an island of technology they do not enable strategic benefits. A sound business case will quantitatively identify the best strategy.
John Menichini, VP of customer service for PPL Electric Utilities and our AMR project’s lead sponsor was prescient in January of 2000, when he told his team, “We’re on a burning bridge and there’s no way to go back. We need to prepare PPL for the future as quickly as possible, so figure out our best meter reading strategy and make it happen.”
Menichini’s charge to find ‘the best meter reading strategy’ is a critical distinguishing feature of successful AMR projects. It has been our experience that projects with this goal are successful while those that view AMR as a hammer trying to find a nail, do not.
Game stats
AMR technologies continue to emerge, evolve, mature and disappear but surprisingly little change has actually taken place in over a decade. Estimates of investments by over 100 firms in AMR R&D over the last twenty years range as high as $3 billion. However, the stability of AMR technology is amazing when comparing what has actually been widely deployed to the changing face of technology since 1980. Interestingly, amid all the turmoil of new fixed network AMR aspirants over 20+ years, three firms have thrived: DCSI, Hunt and Schlumberger. While Itron owns the OMR and MAMR markets, it is not included in the fixed network list as it has not achieved 1 percent penetration with its two fixed network deployments. Our analysis shows that no firm failing to capture a 1 percent market share within 5 years of introducing an AMR, MAMR or OMR product survives other than as a small niche market player in that market.
DCSI, once viewed as only a rural solution, has recently upgraded its technology and it now supplies AMR systems for urban, suburban and rural needs. While Schlumberger still leads the industry in units booked, it has had to fight hard with DCSI in the last year for market leadership with DCSI actually booking more new business than Schlumberger. Hunt has carved a niche with the NRECA market but it too is facing new competition from DCSI.
A new group of companies are emerging with a diverse array of new technologies including CATV/RF Internet, hybrid RF/PLC, peer-to-peer radio and public network radio offerings from Eka, eMeter (Echelon), Nexus and StatSignal among others. In addition there is rapidly growing specialty group focusing on AMR for C&I customers by using SkyTel and CDPD public radio networks. Of these Comverge, E-Mon and SmartSynch are the leaders in the use of public networks to enable surgical AMR deployments for high revenue customers.
I coulda been a contender
AMR will make a robust growth burst starting in 2003 with some surprising new movers. Notwithstanding the present market lull, AMR will erupt from late 2002 to 2003 with anticipated contracts for over 10 million new points for Fixed Network AMR deployments.
Among the large project opportunities the most anticipated decision is Exelon’s ComEd subsidiary in Chicago where, as of this writing, the short list of contenders for the 4 million-meter project are rumored to include Schlumberger, Invensys/DCSI, eMeter and newcomer EDS. Two major new contracts to deploy fixed network AMR for gas utilities are rumored in the mid-west and northeast. The California Power Authority has selected four projects whose participants include Comverge, eMeter, Invensys and Schlumberger among others. Other utilities known to be considering AMR deployments are Carolina Power & Light, Laclede, Florida Power Corp, CMS and NICOR.
A major potential technology shift for the gas AMR market occurred in 2002. The Nexus contract with Atlanta Gas (AGL) will result in replacing over 700,000 Itron ERTs with Nexus modules operating in a Fixed Network radio based system. This may signal an interesting shift in gas utility expectations for meter reading automation towards a more comprehensive fixed network AMR business case model.
So if the AMR market is beginning to look as though it’s going to shine again, will it stay the course or change technology direction? Both. DCSI, Hunt, Itron and Schlumberger have multi-year contracts with more deals anticipated this year so they aren’t going away, except for perhaps one that is rumored to be struggling in making new sales.
The real question is: Will new players emerge to become major future suppliers?
Yes. This is due to new complications in deploying traditional fixed network radio AMR systems, as well as from an emerging drive to convergence of AMR and energy management systems. The group of new AMR suppliers that need to be taken seriously includes at least Nexus and StatSignal for mass-market systems as well as SmartSynch and Comverge for surgical C&I systems. These firms have evolved technologies to eliminate the need for a pole top infrastructure of message repeaters. The need to access an extensive pole infrastructure recently caused problems for one vendor whose AMR contract is stalled due to its inability to secure pole access rights to city owned facilities. This has stimulated interest in DCSI, Nexus, StatSignal among others as they require no such infrastructure.
Wiebe is president of MW Consulting located in Winnipeg, Boston and Providence. The firm has 15 years of AMR project experience with over $700 million in AMR projects with PPL, PECO and other major clients. He can be contacted at 404-915-4991 or [email protected].
To view Wiebe’s table on North American fixed network AMR technology evolution please visit www.elp.com.
