It’s official, the age of advanced meter reading (AMR) and Advanced Metering Infrastructure (AMI) has arrived. At least, according to the numbers and from industry adoption to marketplace potential, these numbers can’t fail to impress. Starting with a study about to be released by the Water Research Foundation, in Denver, CO, wherein researchers conclude that almost half of all North American water meters were equipped with AMR or AMI devices.
“That’s about 44 million meter points since 1985″, says Harvey Scott, lead author of the Scott Report on AMR Deployments, 4Q2010, Cognyst Advisors, Newark, NJ. “In 2010, there were 5.3 million new AMR/AMI points. So this is a very healthy industry.”
Healthy indeed. Although Scott doesn’t specify how many of those meters are in the United States, we can refer to another group that studies water, the EPA. And by their figures, in the US those meters are finding their way to about 53,000 community water systems and 21,400 not-for-profit, non-community systems. So we have a staggering number, but whether it’s customers served (millions), leaks and losses by gallons per year (billions), or cost of infrastructure repairs (don’t ask), any discussion of drinking water distribution in the US racks up its fair share of staggering numbers.
Moreover, those numbers add up to big business for the manufacturers of AMR and AMI products and related services. According to Lux Research, in Boston, MA, the universe of water-related businesses will grow to $961 billion in total revenue by 2020. The result is something of a stampede by manufacturers looking to help the utilities that supply drinking water in North America. And judging by that tally of water meters cited in the Water Research Foundation survey, utilities may be enjoying a bit of a stampede themselves. But if AMR has been around since the mid 1980s–and AMI systems have been the talk of water industry conferences since the early 2000s–why the sudden acceleration in acceptance by utilities and water districts?
Turning the Corner on Technology
That question gets an interesting response from Craig Hannah, performance engineer, Water Technology, Johnson Controls, Milwaukee, WI. “We did our first AMR project back in 1999, and AMI systems didn’t even exist at that time,” he states. “And I would say that from 1999 until 2008, the solutions were limited to mobile AMR for water. The industry turned a corner in 2008 with the technology and pricing for AMI systems. Now we have two-way communication and reliable battery life that will match the life of the water meter itself, which is designed for about 20 years of service. And then, the costs came down.
“So we have longer life battery technology and lower prices, but, even before the costs came down, Johnson [Controls] was using its experience as an ESCO [energy service contractor] to offer utilities performance contracts that made infrastructure projects budget-friendly,” adds Hannah.
When an ESCO enters a performance contract, it guarantees savings over the contract period–10 to 15 years is typical–and the savings pay off the capital investment in the improvement. It’s not unusual for the new energy efficient equipment and systems to have an immediate cost savings impact, and at the end of the contract the utility owns the new infrastructure, while continuing to benefit from the efficiencies that have reduced their bottom line. Performance contracts that combine water and energy projects into a single package can maximize returns on an entity’s investment.
Hannah recalls that Johnson Control’s first water and energy package happened in 1999 during a performance contracting project for the city of Hamilton, TX. Efficient lighting and environmental systems offered significant savings and benefits. But there was another nagging problem: Hamilton’s water system included meters over 20 years old, most of which were losing the utility money due to decreased accuracy.
“They couldn’t raise water rates, but still needed to replace those meters,” says Hannah. “So Johnson [Controls] looked at improving available usage and increasing billable revenue, and operational efficiencies from AMR and other factors in a traditional energy project. We found that we could use a performance contract to fund this project.”
Performance Guarantees
Johnson Controls cites hundreds of performance contracts with water utilities across the nation since Hamilton took the first step. For example, in 2008, the city of Hollywood, FL, signed a $13.9-million performance contract combining an automated water meter reader system with a Wi-Fi wireless communications platform, and solar-powered, multi-space Wi-Fi parking meters. Operational and energy efficiencies were projected to save Hollywood more than $23 million during a 15-year period, with guaranteed performance and compensation to the city if shortfalls occur. Other cities with similar projects include: Cumberland, MD; Tyler, TX; Mount Vernon, IN; Harrodsburg, KY; Patriot, IN; and Lancaster, SC.
The adoption of AMR/AMI by Johnson Control’s customers would seem to provide a lot of evidence of industrywide acceptance, but a good percentage of the industry is still skeptical, according to David Hughes, Water Distribution Infrastructure Lead for American Water Innovation and Environmental Stewardship in Mount Laurel, NJ.
“The big question remains: Is it worth the investment,” says Hughes.
Nonetheless, he does see many solid benefits that will contribute to the bottom line, such as the ability to analyze the usage of specific commercial customer segments. For example, by focusing on a customer such as McDonald’s restaurants and tracking water usage, the data could likely reveal a range of high, middle, and low consumption.
“The middle is probably a good example of average usage, and maybe the low-reading locations might have a bypass or meter that’s not running quite right,” explains Hughes. “Then, with the restaurants that run high, there could be something like a broken toilet that’s wasting water. So that’s the kind of analysis that you can get into, and that’s one example of hundreds that relate to customer usage and conservation.”
The technology does have great potential, agrees Guerry Waters, vice president of Industry Strategy at Oracle Utilities, a division of Oracle Corp., in Redwood Shores, CA. “Water has become a major topic across the nation, and I think the drivers behind it [AMR/AMI] are conservation and leak detection,” says Waters.
Oracle doesn’t make meters or other hardware. Instead, it focuses on maximizing the data from smart meters. And of course, the subject of leak detection on the customer’s side of the meter gets a lot of attention as a major benefit of smart meters, but, Waters notes, there are equally impressive benefits on the utility’s side of the meter.
“Smart meters give you overall data about consumption, but they also give a fine granular description about where and when water is being used, so you can cross correlate that with your assets and understand the impact,” he says.
An example would be using the data to model a distribution system to determine the energy consumption of a particular pump and the customers that it supplies. With detailed data on usage and flow, the capabilities of a pump can be analyzed for maximum performance and efficiency.
The Water Energy Nexus
Such activities relate back to energy consumption, sometimes referred to as the water energy nexus, a critical factor for water utilities. “The water infrastructure is a major consumer of energy, so in this day and time of energy conservation and lowering costs, there is a lot of attention being paid to it, and it’s something we hear about often these days,” says Waters.
Don’t forget about lowering costs through savings in labor, adds David Stoddart, vice president of Neptune Technology Group, Ontario, Canada. “One of the key initial reasons for the move to AMR and AMI is that labor is becoming scarce, while at the same time, there is a desire to move to more frequent monthly billing,” notes Stoddart. “Here in Canada this has happened in areas where labor is not abundant, such as the oil patch area where most of the inexpensive labor has been absorbed with those jobs. That means meter reading labor has become a higher cost for utilities, and AMR is a way to reduce those costs.”
As an example, the City of Toronto, Canada, has embarked on a wide-ranging project that will benefit from reduced labor and other AMR and AMI services. In January 2010, Toronto chose Neptune as the prime contractor for the supply and installation of lead-free water meters and a fixed area network and AMR system, covering the city’s 465,000 water services accounts.
It’s a major contract, scheduled for completion by 2015, and not without its share of complications. Stoddart anticipates installing about 72,000 meters at unmetered residences that are currently paying a flat rate, then, the balance of existing meters will be replaced or upgraded.
“In a system as large as Toronto there can be a variety of meters technologies out there, so we have to deal with whatever is installed,” explains Stoddart. “As a service company, we are doing the supply and installation work and have encountered different obstacles such as plumbing problems in residences.”
Beyond the residences are industrial, commercial, and institutional (ICI) meters–about 16,000 of them, in Toronto’s case. “Those are the larger meters, and they generate most of the revenue so they’re very important,” adds Stoddart. “And that’s almost a separate project.”
The Data Integration Challenge
A typical challenge going into a project of Toronto’s stature is the integration of the data. “Now the problem is you have all that data and want to derive the benefits from it, so you need a way to organize it so it’s more intelligent,” says Stoddart. “I think that’s why you’re seeing more of an emphasis on meter data management due to the volume of data AMI systems can generate, and that requires tools to analyze the data so you can take action.”
Large volumes of data require meter data management (MDM), another hot topic connected to AMI and another example of the staggering numbers utilities are struggling with. Consider that, in the past, data systems typically operated on the premise of one monthly read per meter. But today’s meters can deliver reads as often as four times an hour. That would be 2,880 reads over 30 days. But let’s be conservative and make it an hourly read, for a total of 720 reads in 30 days. That’s still a data increase of three orders of magnitude and doesn’t take into account additional information, such as leak and tamper, time and date, peak, and average flow, which could increase overall data volumes exponentially.
In Toronto’s case, the city chose to start with reads every six hours for residential customers and hourly for their commercial industrial customers, while trusting its data to the STAR Network system from Aclara RF Systems, in Hazelwood, MO. Aclara has deployed the system in other cities such as New York City, NY; San Francisco, CA; Boston, MA; and Beverly Hills, CA.
“It is a big change,” says Dean Slejko, product marketing manager at Aclara RF Systems. “And certainly, we are seeing readers becoming more powerful, in terms of the data they can gather.”
When the data is gathered in a two-way communications network, it creates opportunities for analysis by methods such as Aclara’s time synchronized reading feature. A time-synched network does a simultaneous read of all endpoints in a network, thus providing a snapshot of the system’s usage.
By reconciling the usage snapshot with the amount of water entering the system, a utility can calculate water losses and their location. Says Slejko, “When you do that and see that you’re producing 100,000 gallons yet only 75,000 are reaching the customers, it’s the first step in looking at the efficiency of your system and figuring out where you need to take action to account for that 25,000 gallons.”
System analysis tools are definitely of interest to water utilities, says Thomas Butler, Director of Product Marketing for Water, Itron, Spokane, WA. “Leak detection is the number one concern, and most utilities that are honest with themselves acknowledge leak problems throughout their distribution systems in excess of 10% and more,” says Butler. “Actually, a utility that’s losing 5% to 10% water would be considered an excellent utility, because it’s not unusual to see estimates of 25% water loss in the distribution system.”
The good news is that starting a leak detection pilot program doesn’t require a huge commitment or complicated hardware. Itron uses a small sensor that attaches to a water source line, and Itron has utilities that have started with pilot programs as small as 25 leak sensors.
“With AMR, readings can be done simply with a handheld mobile or drive-by system,” explains Butler. “So you have a small route that can be covered and surveyed. The results can be uploaded to software that we provide and host. The utility can look at the maps of their system and it’s a simple user interface that provides various color codes to define leak problems.”
Information Gets Granular
Itron’s technology appealed to utility managers at Cleveland, OH, but data management was equally important. “They wanted a strong management system with the ability to store data and access it over time,” says Butler. “One of the things utilities don’t think about is the incredible amount of data and information when you’re getting hourly readings from meters. You need to do more than just generate bills with this data. You want the ability to archive them for future analysis.
“It’s one thing to be able to store the data from 30 to 60 days,” he continues, “but quite another to show that level of granular data over a period of years. As far as where the industry is going, it’s very easy for us to look at where electrical utilities are going, and we tend to adopt many of the technologies and products and services that electrical utilities offer.”
The electrical utilities may have earned a smarter profile with consumers, but that could change quickly, according to John Galloway Executive vice president of business development and marketing at meter data management systems provider, Ecologic Analytics, Bloomington, MN. “We’ve seen a lot of focus on the electrical distribution infrastructure, but the water infrastructure is an equal if not more actionable platform,” says Galloway. “We are concerned with meter data and the technologies to capture and interrogate this data, identify anomalies, and initiate connections into whatever the utility has existing within that system to communicate the action, either automated or manually.”
Galloway notes that meter data can also reveal patterns and trending. Ecologic’s system shows a history of consumption and gallons or kilowatt-hours against time. It’s even possible to program predefined actions to be executed should a pattern or trend appear. Predefined actions could include notifying a customer, or in a critical situation sending a work crew to a location. But what if the customer didn’t respond or the situation required a shut down of the location’s water?
Less Staff, More Pressure
That’s no problem, according to Scott Williamson, president, Capstone Metering, in Carrollton, TX. Williamson invented the IntelliH2O meter, an intelligent water meter with an integrated ball valve. “We built in features like an integrated ball valve and the ability to recalibrate and manage water so a utility can save on operating costs,” he says. “We measure pressure and other things at the meter level, so the utility can adjust its pressure and lower cost by reducing leaks and energy consumption.”
Pressure management has other advantages beyond leak reduction. For example, Williamson recalls a water district in Texas that had to maintain a minimum pressure at the meter just to keep up with compliance standards. In the past, a pressure test required sending utility staff to test multiple locations, but the IntelliH2O automates the process so it can be done from a central location without sending staff out to the field.
As with other AMI products, a dashboard style user interface monitors low-pressure or particular issues within the system and shows a snapshot of the meter network. Other features include detection and flagging options for problems. “If the meter starts flowing in full volume for an extended period of time, it can notify the utility or the homeowner of a potential leak, and from that point it can be flagged and programmed to shut itself off,” says Williamson.
In this age of environmental awareness, the issue of a carbon footprint, points to another trend boosting the rapid growth of AMR/AMI technology–sustainability. In fact, one of the most visible of corporations waving the sustainability banner, General Electric, chose Capstone for a $100,000 award in the GE Ecomagination Challenge Award for 2010.
Success With Customer Communication
It’s more than safe to say that demonstrating a sustainable philosophy to the public is important to the water industry, and that brings up another contributor in the growth of AMR/AMI–good communications with the utility’s end users. Yes, it’s a critical factor, explains Karen Mills, CPA director of finance, Town of Cary, NC.
“I wouldn’t say this is the biggest thing we’ve done, but the thing that’s different about it is that it’s such a large operations project,” says Mills. “We are touching every single customer, and for most of those customers, we are interrupting their water service to change out their meter over a course of 18 months, where normally it would be a 12- to 15-year span.”
In November 2010, the Town of Cary selected Sensus, Raleigh, NC, a supplier of utility infrastructure systems, as the technology provider for a program utilizing smart grid technologies for water management including AMI two-way communications and smart metering. The project encompasses a network of almost 60,000 meter endpoints that will communicate on the Sensus FlexNet AMI network.
“We had been looking at meter reading alternatives in the early 2000s, but didn’t think that it was cost-effective at the time, although it would be the right thing to do sometime in the future,” recalls Mills. “We looked again “˜round 2005, yet there were still some issues that prevented us. In 2009, we started again in earnest with an evaluation that took about a year. It included a cost-benefit analysis and covered all the details. The technology has come down in price, and the battery life is better. The systems were more reliable and more utilities had adopted the technology, so there was a track record, and that made it more attractive.”
Considering the fact that the new system would be, “touching every single customer,” Mills says an extensive public outreach was important and included community meetings, announcements in utility bills, signs in public buildings, advertisements in newspapers, plus announcements on the town’s website and the public access channel. A door hanger arrives a day or two before the installation and again on the day of the installation.
Mills expects the system to help keep cost down for both the Town of Cary and its customers. “Utility bills are rising because of requirements and environmental regulations, so folks are paying a lot more attention to their bills,” notes Mills. “If we can help our customers detect leaks early so they don’t get a high bill, that’s our goal.”
The Town of Cary opted for meter readings once per hour, and long-term plans include a website that customers can access to see their usage.
According to Mike Tracy, vice president of North American water for Sensus, the frequency of readings requires the support of a strong and reliable communication network. “The FlexNet system uses a dedicated, primary-use FCC [Federal Communications Commission]-licensed spectrum,” says Tracy. “It communicates with two watts of power, and that means that we can go to a town like Cary, and, rather than put a collector every square mile or so depending on the topography, we often can cover about 10 square-miles with one tower-based collector unit. Environmentally, it’s more acceptable to communities like Cary that don’t want devices strung up on towers every square mile.”
As for cost savings, Tracy cites the results of a project at Redwood City, CA, where the utility serves about 83,000 customers. “They had experienced a three-year drought, and there was a lot of pressure to take proactive measures to conserve water,” he recalls.
A Sensus AMI system collected data every four hours, and, as a result, they established water budgets for their customer base along with programs to address agricultural irrigation sites that consumed large volumes of water. “The pilot program was a great success and saved more than 80,000,000 gallons of water, which represented about a 15% of their consumption from 2009, compared to 2008, “says Tracy. “Some irrigation customers reduced their bills by as much as $75,000.”
Fast Payback Versus Project Life
Such savings are an important consideration when a utility is evaluating the financial impact of a decision to improve their water infrastructure, but in the case of the Town of Cary, A fast payback wasn’t a major issue in their decision, and it provides evidence of another factor driving the accelerated growth of AMR/AMI.
“The benchmark of three to five years for a return on investment is fair for decisions where markets change and there’s competition,” says Mills, “but it’s a safe bet that we are going to be in this business for another 20 years, and our payback is about nine years on a 17-year project life. We feel that’s adequate.”
Another safe bet is that no matter the payback time, some utilities are under severe budget constraints, yet still need to address their leakage problems. However, Transparent Technologies, in Boulder, CO, has a solution that can extend the life of a utility’s existing meter network, and add the benefits of AMR and AMI. The idea uses an electronic register with built-in AMR that can attach to existing meters and restore accuracy. Utilities can start with a drive-by system and later migrate to a two-way wireless broadband network using Transparent’s NexusNet product.
Transparent’s sending unit is embedded in the electronics along with the antenna and it’s targeted for southern and western parts of the US where meters are typically in shallow pits, though aboveground installations also work. “If you look at the country, the northeastern utilities have adopted AMI, because they have such great performance with equipment mounted on walls and buildings that can send information miles away to collectors,” says Ted Worth, president of Transparent Technologies. “But if you try that in Florida, you’re going to miss 40% of your meters, because these are belowground and often filled with water.”
As for the economics, swapping a register can save substantially over swapping an entire meter. “To give you an idea, radios are going to cost about $100 a unit, but if you can save the cost of not having to replace a $35 water meter, you cut your installation costs by about $15 and you restore the accuracy, which is typically about a $5- to $10-year edition in revenue,” he says. “And then, you add the typical labor and expenses of a meter read. Typically it’s about one dollar per meter, but when you go to AMR, it’s reduced to about five cents a meter read. So it all adds up to a substantial savings and quicker payback.”
Tracing the Roots of AMI
Worth referenced the substantial impact of AMR/AMI in the northeastern regions of the US, and Trevor Hill, CEO, Global Water, Phoenix, AZ, agrees, but notes that the trend is heading west at a fast clip. “Remember that AMI tracks its roots back to difficulties in meter reading on the East Coast during harsh weather,” says Hill. “It’s only in the last decade that we have seen it migrating to use as water scarcity management tool.”
An owner and aggregator of 16 utilities around the Phoenix area, Global Water began deploying AMI solutions and quickly found itself dealing with the same volumes of overwhelming data that others have seen. The company’s Information Technology (IT) department set about coming to a solution and developed FATHOM, an AMI software product that incorporates an array of MDM analysis tools that demonstrate the baseline for any competitive AMI technology. These include: hourly reads, real-time presentment, live customer interface, usage alerts, leak notifications, consumption comparisons, and ordinance enforcement.
“We did this for ourselves because a single volumetric data point tells very little information,” explains Hill. “There’s nothing about trends, or the customer, or where you’re flow is occurring. So we built these databases over the past five years that are totally useful for endpoint customers. If you sign up for one of our systems, you can specify that you get a text message on your cell phone when your bill surpasses $100 in a particular month, or for any day you exceed 300 gallons, or when usage exceeds the average mean for your neighborhood. Now we are parsing the data in specific ways for endpoint customers and also creating a means for discovering leaks and water efficiency problems inside communities.”
Hill says he has seen a slow uptake for AMI among utilities with less than 100,000 customers, and that much of the blame falls on their limited access to sophisticated IT departments. “By hosting all that data for them in our cloud environment, cities like Grass Valley and Covina can access the data in useful ways,” says Hill.
In November 2010, the City of Grass Valley, CA, selected Global Water to manage its growing AMI network. Grass Valley currently bills 4,200 service connections. Also in 2010, The City of Covina, CA, began using FATHOM’s customer information system and contracted for advanced metering infrastructure and asset management products. In January 2011, Covina added Global’s 24-hour call center and certain customer billing functions. Covina currently bills 8,600 service connections.
An interesting facet of Covina’s purchase, and another factor that bodes well for the growth of AMR/AMI, is the team effort involved in the financing. Funds were provided through a syndicate of underwriters led by Clarus Securities Inc. and CIBC World Markets Inc. Other members include RBC Capital Markets, TD Securities Inc., GMP Securities L.P., and National Bank Financial Inc.
Hill notes that another area of growth is the evolving transition between the past and future chain of sales for water meters. Says Hill, “There is a dichotomy in the sector right now because historically water meters were sold by representatives and distributors to tens of thousands of municipalities. The meter was a low-tech device that didn’t require much aftermarket support, and AMI vendors initially perhaps assumed that this new technology could be sold in a similar way. But, when you think about it, you realize that AMI endpoints are really just a part of a complex met network. And it’s the network that has the value, and how the data is sliced and diced.”
Changing Customer Usage Habits
In drought-challenged states throughout the West and Midwest, Hill predicts that much of the network’s value will come from conservation efforts that target end users directly. With an AMI system’s capability for real-time usage data, utilities and districts can develop plans with incentives to modify customer usage habits. Global has developed and implemented a rate design plan called “Rebate Threshold”. The plan establishes a mean average point for a community, and if a customer’s usage rises above that point, their cost for water rises correspondingly. If a customer stays below the mean average, they qualify for a partial refund or rebate funded by the high-usage customers.
“We see this moving into complex rate designs that motivate customers and supply them with alerts and warnings, so they have feedback in near real time,” says Hill. “It gives cities tremendous flexibilities. And cities are asking us about the most effective rate designs. They want to know if the AMI program could be funded by egregious water users, and we say absolutely.”
Accessible funding for smaller utilities and water districts should add even more momentum to the AMR/AMI marketplace. Whether it grows at the same healthy rate observed by the Scott Report in 2010 remains to be seen. But the industry is making technical strides in many different areas. Meters are improving in accuracy and reliability, and battery life expectations are rising to 20 years. Prices have fallen, and then, too, there are economical options for upgrading legacy meters with “drop-in” registers.
Numerous manufactures and software developers now offer powerful meter data management software, and the industry’s track record in reducing leakage will further help utilities gain confidence in the financial benefits of investing in new technology. And, finally, there is the continued success of companies that offer performance contracts with guaranteed paybacks. All told, it appears safe to say that the industry and technology has certainly reached a state of critical mass. Yet, as Hughes of American Water is quick to observe, there are hundreds of potential applications for the technology that have yet to be implemented. So, for utilities from large to small, the accessibility of a wide variety of AMR/AMI technologies looks very good.