Balanced Scorecard for AMI Program Management

Advanced metering penetration in the US has reached the point of transition when the rate of process innovation has started to surpass the rate of product innovation. An estimated 40 million smart meters have already been installed, and another 25 are making their ways to the cross-docks by 2015. The era of ferment is over; there is no more “piloting” by individual utilities, - the new entrants are gleefully implementing the best practices established by the early adopters. New business models have been enabled, and new markets have opened up. Utilities are venturing into leveraging AMI for business lines outside of Meter-to-Cash. Overall, AMI has been a grand success story, - so far.

Nevertheless, irrespective of the dominant designs established in technology and market, managing an AMI program is far from being simple. PMOs are challenged with meeting year-on-year regulatory commitments, sustaining customer favorability and steering organizational changes. In absence of a well-designed scorecard, they scramble through a random mesh of SLAs and metrics that do not line up to the overall objectives. Although it’s sort of an unconventional use of it, the classic Balanced Scorecard fits the bill extremely well if you look at the dimensions associated with an AMI program.

Below is an example of how the Balanced Scorecard approach can be leveraged for AMI program management. For the sake of simplicity, I have provided examples of only the aspects concerning meter deployment. Steady state parameters can be blended in pretty smoothly to this structure.

Smart Utility: A Dumb Story

Marcus always heard that your entire life flashes in front of your eyes the second before you die. First of all, that one-second is not a second at all. It stretches on forever…like an ocean of time. For Marcus, it was standing across his country river watching the unending transmission lines extending over the crystal water and straying into the woods. The proud face of his father on his first day at job as a trouble man at Smart Utility…the hard hat and the yellow vest…the glinting goblet that he raised in support of gun rights…

Marcus could be pretty pissed off about what happened to him…he was perceived an intruder as he approached a customer’s premise and was shot by the customer. But he did not obtrude; - he was merely there to investigate a trouble ticket. The customer did not inform the outage, but her smart meter did. So, maybe, just maybe, it was fair on her part to get scared of the uncanny apparition in the middle of the inky darkness and shoot in self defense. But how fair is that? Let it go...it’s hard to stay mad when it’s so much beauty in the world…it’s time to sleep…he closed his eyes as all his thoughts converged into a tiny singular dot of infinite locus just like the transmission wires lost into the horizon over the endless corn fields…

[After the last words of Lester Burnham in American Beauty.]

Some random bickering over AMI Investment Cases

For reasons not-so-difficult-to-understand, power utilities are extremely conservative when it comes to making their investment plans. AMI being the case in point, if you exclude the non-operational benefits from the equation, the Net Present Value comes out gravely negative for most business cases for most utilities. And for the non-operational benefits, which are primarily attainable through broader consumer load participation via market based demand response or direct load control, some of key enabling policy instruments are yet to be instituted owing to the lack of political will and organizational momentum.

It’s interesting to note that reliability gains are completely missed out from most AMI investment cases, with some notable exceptions (such as Connecticut Light & Power). In the base case, utilities can expect to save up to 10% of their outage restoration costs by leveraging the AMI events to reduce the average system interruption minutes (SAIDI). There are also achievable grid efficiencies delivered by business analytics with all the AMI and PMU (Phasor Measurement Unit) data.

At some point in the near future, utilities should sit back and perform a comprehensive value audit and recalibrate their transformation roadmaps. But, agreeably, that’s a broader subject.

AMI to Fix Connectivity Data

Big or small, almost all utilities have a chronic condition – data quality of their network connectivity models is less than desirable. For some, the device associations are inaccurate to the extent of 30 - 40%. In recent years, many utilities have spent tens of millions to physically walk the circuits to verify the connectivity data, but not many (if not any) have sufficiently leveraged the meter events to correct the model.

This, truly, is a low hanging fruit. Correlating meters that throw out power out events with the meters that are associated with the OMS created outage tickets can easily indicate the disassociation. Utilities can adopt a continuous improvement approach to analytically compare these two data-sets to identify the anomalies on a regular basis. This is a “slow and steady” strategy, but that’s the way to win the race at a time when commissions are holding tight to their wallets.

Leveraging AMI for Outage Management

By 2015, over 40 million advanced electric meters will be deployed by the US utilities. A significant number, however, it still makes up for only 25% of all electric customers. The good news is that almost all major IOUs, who are the traditional trend setters in the US electric market, have already dared the devil and are in the last laps of AMI deployment. Time has come to think “so, now, what?” All these utilities had compelling business cases to convince their commissioners, but now, billions of dollars later, the question remains whether they will really be able to offset the customer surcharge by achieving promised efficiency gains.  They have got some really cool toys, petabytes of data and some brilliantly fluffy ideas, - but they still need to figure out how to connect the dots.

I intend to write some fuzzy posts on these fluffy ideas in days (or months) to come, - but here is something that many utilities have already embarked on: enabling outage management process with AMI. There is a wide range of benefits - from instantaneous outage detection to nested outage determination to device analysis - but the biggest saver is the simplest: avoiding dispatch for those 30% to 50% of trouble calls for which there are no utility side issues.

Meter events can be leveraged to automatically determine when a meter suffers an outage and when it wakes back up. AMI systems can process this information, infer the outage and notify the Outage Management System (OMS). Upon restoration, OMS can auto-verify the restoration status by requesting AMI and detect nested outages, if any.

Implementation mechanics will vary largely depending on specific AMI technologies, but what I found thrillingly fascinating is the possibility that Meter Data Management Systems (MDMS), as they mature, will act as virtual Distribution SCADA. When it comes to outage notification, there is a huge hiatus between a SCADA-sensed breaker and a Customer-notified site – any intermediate fault location has to wait to be determined by the OMS. This gap can be potentially bridged by MDMS by utilizing the network connectivity model against the meter events. So far, most MDM vendors have been shaky about encroaching into the prohibited space of OMS, - but time will tell.

Texas nexus on Electric Vehicles

The auto show at the State Fair of Texas was not an iota less fascinating than the one for livestock. Spanning across 30o thousand square feet, it’s an orgy of cool cars – 2011 models of Chevy, Cadillac, Buick, GMC, Hyundai, Nissan, Ram and Toyota. Chevy Volt was probably the cynosure of the exposition.

I had the opportunity to attend both the VIP Reception (sponsored by Chevrolet) and the Panel Luncheon (sponsored by TXU Energy). It was reassuring to see how sincere Texas dignitaries are about Electric Vehicles and how effectively market participants are interacting with one another to make EV an early success in Texas.

As I touted in my last blog, two things have to go hand-in-glove to make EV justifiable to the cause – (1) high renewable portfolio standards (2) consumer incentives for off-peak charging. Texas is on track for both.

By the next few years, Texas will have more than 20,000 MW installed capacity of wind power; and Texas is building about $5 Billion worth of transmission lines (CREZ) from West Texas and the Texas Panhandle to the population centers. TDSPs (Transmission & Distribution Service Providers) in Texas are currently deploying 6.5 million smart meters, - which will provide the platform for dynamic pricing. Because of high night wind, off-peak energy will be greener.

Hail Texas! Here I come.

BTW – here’s Andy’s commentary on the panel discussion: http://smartgridsecurity.blogspot.com/2010/09/blazing-ev-and-v2g-trails-at-texas.html

Captain Haddock on Dynamic Pricing

“Thank you contacting Smart Utility. This is Smarty Pants. How can I help you today?” 

“Billions of bilious blistering barnacles, - my bill has ballooned three times.”

“Sorry to hear that, Sir.” Smarty Pants gets ready to tap on the mute button. “May I have your name and address, please?”

“Captain Haddock. 1234 Smart Lane. Smart City.”

“I see that your bill for this month is $450, and your average for the last 12 months was $150.”

“Tell me why, Vampire!” Captain roared.

“Hmm, your usage looks a little higher.”

“So, you numb-skulled fuzzy-wuzzy, why is my usage so ramshackle high if my usage is just a tiny-miny higher?”

“Can I place you on hold?”

“No. I am sick of that bleeping music. I was holding for last 20 minutes.”

“No problem, Sir. Just to comfort you, - lots of people have the same complain. So, don’t feel that you are alone, OK?”

“OK. Thank you.”

“Sir, I found the problem. We replaced your electromechanical meter with a smart meter.”

“Darn good. Why do I pay more?”

“Two reasons. First – your previous meter was very old, and so was recording readings lower the actual. Now you have an electronic meter which actually works.”

“I thought I am the only one losing my pace. Balkan Beetle! You have been subsidizing my whisky for all these years?”

“You should feel good about that. Second, I notice that you are in real time pricing. And you seem to be swimming in your heated pool between 8 and 9 AM every morning”.

“Gibbering ghost, how do you know that?”

“Ho ho. I can tell a lot about your personal habits looking at your data.” Smarty Pants continued boastfully, "We got our home area network, Sir. Let me see. You had a 10 days vacation last month after which you hosted a series of bacchanalia at your place...you gotta pay for all that, Mr Haddock.”

“Yes I went to Tibet. Holy moly, I have been violated. I don’t understand this... what pricing?”

“Dynamic pricing, Sir. You apparently opted for the most risky category – Real Time.”

“Yes, yes. I am the captain, I love risks... but explain this thing to me, baboon!”

“Ummm...I don’t know anything beyond this screen, Sir. But if you hold, I can transfer this call to my supervisor. She has just completed the train-the-trainer course. But I can tell you that your bill will be significantly reduced if you take your laps after midnight.”

“You fuzz-headed profiteer, you are not getting away with that. I will have my razor-toothed piranhas cut your wires.” Captain hung up.