Intelligent utilities: the time is here for the next step

The phrase intelligent utility has been bandied about for a while – often accompanied in earlier times with scoffs about it being an oxymoron. The term certainly applied during the build-out of the grid, and utilities in large part have enabled the productivity of a country, supplying energy for many industries with very little interruption. However, after the grid was actually built out, utilities began to invest more conservatively in both the grid and newer technologies, waiting for other industries to take the lead. They also lagged in process improvements, relying on traditional methods of doing business while considering their customer base somewhat captive.

Recent events and subsequent attention to those events have changed that thinking. One example was the significant power interruptions in 2001 and 2003 that forced regulatory changes such as those from the Energy Policy Act of 2005 (EPAct). Another was the financial restructuring and changes brought about by improper financial accounting and reporting practices at businesses such as Enron, causing yet other regulatory changes in risk reporting and compliance. Other factors include aging workforce or resourcing issues, global warming concerns, and much higher customer expectations of what a utility should be doing.

Intelligent utilities are made up of many related components

A utility has multiple networks, forming communications channels that sense and gather data, and systems that can respond to the data and signals without intervention – all of which make up what is often referred to as a smart or intelligent grid. The networks don't necessarily make a utility or its grid intelligent as products of information, gas or electricity travel through it; however, the addition of newer technologies, programs and information analysis can certainly help a utility achieve the intelligence needed to move to the level now expected by its stakeholders – governments, shareholders, local communities and its customers.

Some components contribute to the intelligent grid, while others help consumers make informed and effective decisions about energy consumption. A few of these components are explained below in more detail: smart metering, customer premises equipment, market and transmission system operator applications, rates and billing options, energy efficiency programs and controllers, and distribution company applications.

Smart metering not only enables a utility to better react to grid events – through intelligent grid capabilities – but also better serves customer needs and adds operational efficiency. Of particular interest to transmission and distribution companies is data used for load research, load forecasting and design, asset management, outage management at both the end-consumer level and transformer level, abnormal energy usage and control, and service crew dispatch. Utilities can also use smart meter information for customer service applications to support rate development, service disconnection and connection, faster handle times and first-time resolution of meter reading issues.

Smart metering or advanced metering infrastructure (AMI) is considered a subset of automated meter reading (AMR) – any metering system where the meter reader does not manually enter numbers from the meter – and it has three key characteristics:

• Solid-state or computerized meters that collect time-series or interval energy use data and are programmable to support features like time-of-use (TOU) rates.
• Two-way communications capabilities between the meters and the utility, other distribution and transmission operators or consumer devices. Standards-based communication protocols have been developed for networked meter communications around the ANSI C12.22 protocol.
• Supports more than meter reading, such as applications for demand response programs, usually in conjunction with a meter data management (MDM) system.

Customer premises equipment links the customer and the utility through smart metering. This equipment allows customers to make better-informed decisions about energy usage. New technologies continue to evolve – for example, the ZIGBEE is a wireless standard that addresses extended battery-life better than other current wireless standards, eliminates line of sight problems and was developed for home or industrial automation and controls. This is helping to foster a line of products developed for energy usage display, appliance control, heating and environmental building systems control, net metering and even plug-in vehicles. Other examples are systems for sophisticated ‘green’ buildings and similar retrofits to existing buildings.

Some vendors also offer monitoring and control as a service, based upon market pricing signals, load or other factors. These services may be offered to such diverse businesses as pet stores for regulating aquariums or exercise clubs for controlling swimming pools and spas. Power quality is increasingly important for residential consumers as well as commercial and industrial consumers as more home devices are connected, making better monitoring and management a must for many customers. Outage management ties into customer relationship management (CRM) systems, where customers may want to be notified through the access channel of their choice about the estimated duration of an outage. This can be accomplished with smart metering technology and links with the customer information system (CIS).

Market and transmission system operator applications need to be hooked into a generator’s systems to improve the level of understanding for what energies customers are using and when those are being consumed. Modeling products that allow operators and generators the ability to predict consumption behavior are important, along with products that can model prices and forecast demand. This will become increasingly important as the move to real-time pricing continues. Companies who manage utilities’ peak demands and loads must be hooked into these systems as well, to fully manage availability of energy and reduce peak buying or generating needs.

Creating optimal tariffs for PUC consideration is an important outcome of the information received from the smart meters and analysis of load profiles. Increasing energy efficiency is on most peoples' and businesses' minds, and can be accomplished while allowing utilities to earn an acceptable rate-of-return through decoupled rates. Other options include TOU pricing, demand response programs run by either the utility or a third-party, and interruptible load agreements. Real-time pricing, where the market price signals can trigger customer usage changes through pre-programmed management systems, is another way to make an intelligent utility.

The ability for a consumer to control energy consumption in a manner that the customer wants to, coupled with information to manage use and improve bill accuracy, is a large benefit. Utilities should be able to offer quicker customer service on meter reading issues, using smart meters to quickly resolve such issues on the first call and to everyone's satisfaction. Disconnections and reconnections with smart metering and the right applications can be accomplished at more convenience and with faster turnaround for the customer and the utility. These foster not only good relationships by allowing customers to pick when they want service on, but also make service order dispatch necessary in far fewer cases. Outage updates can be available in multiple access points, giving customers flexibility that works for them. Energy supply and availability through better outage management can translate to local economic gains, when businesses scouting new areas for expansion can rely on that area's energy availability. Personal choices that can affect global warming issues are becoming increasingly important to many citizens, with options on reduction of carbon footprints in work and travel and green building that allows a better sustainable future. Flexible options in sub-metering and usage, ranging from third-party companies that take care of every aspect for the business or individual consumer to self-installed systems monitored in-house, make it easier for customers to be involved at their comfort and expertise level.

A distribution company has many applications that together can help gather business intelligence. The CIS and its partner CRM will provide data on customer segments and demographics. This information, linked with the MDM, can help build a picture of what customer segments are interested in what rates or which rates should be offered. Furthermore, the outage management system can be linked in with customer access and outbound notification preferences. A common information model can be developed that uses information from smart meters, sensors on transformers and other grid equipment, and generation dispatch. This information will help in developing accurate and timely load forecasting for future generation planning or short-term needs, plus profiling or modeling to determine how to best handle outage situations. Load forecasting can be further linked to asset planning and design for load control and curtailment programs. Linking capacity planning to energy efficiency to operational efficiency creates the best way of high reliability and availability, while seeking to do it in a process and cost-effective manner.

The intelligent utility doesn’t wait

Some specific intelligent utility components are discussed above, but they don't actually define an intelligent utility. Instead, these components represent examples where utilities can introduce more proactive, responsive technologies and business processes. Utilities embarking on the intelligent utility path can take outward-facing steps as well.

Utilities shouldn't wait for further regulatory action to happen but can be working together with their public utility commission to help the members understand the changes that needed in policy now – such as types of rates, enactment times to implement rates, pilots and business case approvals--and how to make those changes work effectively for all of the constituents. EPAct certainly has given impetus to grid reliability and paved the way for implementing rate structures that support energy efficiency. Some states have taken steps to implement regulations that support the EPAct further, such as California, New York, Ohio, Pennsylvania and Texas. Still other states are considering decoupling rates to give utilities the chance to innovate while supporting energy efficiency. Utilities will need to apostle increasing commitment from their legislators and public utility commissions to allow correct depreciation levels for solid state equipment, support tax incentives when appropriate for both building out the necessary components of the grid and for economic development that meets energy efficiency and green building standards. Congress recently introduced a bill to provide tax incentives for smart meter installations, although it is in preliminary work stages.

Further rapid development of the smart grid will also depend somewhat on utilities taking innovative approaches to how they do business. These may include joining some of the existing coalitions and groups that are looking and working on the technologies and policies. These groups include IBM Intelligent Utility Network, the GridWise Alliance, the Smart Energy Alliance, the Galvin Initiative, the Energy Future Coalition and the Open Grid Forum. Utilities can also form unique alliances with their specific vendors to work on innovative technologies. These will both fit their needs and yet give the vendors a chance to expand their offerings and showcase them in a working situation. Giving impetus to technology at the executive level, through mechanisms such as a strategic technology working group reporting to and sponsored by senior management or adding a chief technology officer, will be critically important for the utility to give the time and effort needed.

More cities and states are adopting emissions strategies and targets, and also sustainable development strategies to change the mix of renewable energy sources, alternative transportation methods and reduction of greenhouse gas emissions. Utilities will be wise to work closely with these groups for both educational and policy purposes.

Utilities thinking and working outside the proverbial square-box will realize benefits in many areas, especially when they view the changes in a holistic way that includes process improvements, operational efficiencies and customer satisfaction. It is smart business for any industry and certainly makes a utility intelligent.