ID#: 807000115

Name: Gerald Mahadeo

ECNG 3013 – Electrical Transmission and Distribution Systems

Research Paper 1 – AMI Metering

Date Due: 8th March 2010.

Lecturer: Prof. Chandrabhan Sharma

Statement of Academic Honesty

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Abstract

Advanced Metering Infrastructure (AMI) metering is seen as the fundamental building block for demand response systems, of which dynamic pricing is one type of demand response initiative, as well as for the development of a “Smart Grid System” as a whole. There are several benefits to implementing AMI metering; benefits that can be enjoyed by the utility, end customer and society as a whole. This study would investigate the implications of a move made by the Trinidad & Tobago Electricity Commission (T&TEC) to replace traditional electromagnetic meters with AMI meters by considering the benefits of AMI, AMI and its relationship to demand response and dynamic pricing and unique issues and/or regulations that should be addressed in implementing and operating AMI metering.

From the study, it was found that there are several issues that must be considered when implementing AMI metering – security, system reliability, customer privacy, network integrity and interconnectivity – and as such it is imperative that regulations be set along these lines in order for successful and sustainable implementation and operation of AMI metering. Proper financial analyses and market studies are important in accurately determining the impact that implementing AMI meters can have. The benefits of AMI metering can only extend as far as the efficiency in which the system is operated. As such it is the utility’s responsibility to ensure that these benefits are realized.

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Table of Contents

Statement of Academic Honesty.........................................................................................II

Abstract..............................................................................................................................III

Introduction..........................................................................................................................5

Present State of Metering in Trinidad & Tobago................................................................6

Moving Forward..................................................................................................................7

Advanced Metering Infrastructure...................................................................................7

Benefits of Implementing AMI.......................................................................................8

AMI & Demand Response (DR), Dynamic Pricing......................................................10

AMI & Development of Smart Grids............................................................................14

Considerations & Regulations in Implementing and Operating AMI Meters...............16

Conclusion.........................................................................................................................19

References..........................................................................................................................20

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Introduction

There is an ongoing process by the Trinidad and Tobago Electricity Commission replace

the present “moving-disc” electromechanical meters to AMI meters. AMI stands for

Advanced Metering Infrastructure and is widely seen as the way ahead in the

modernizing of the electricity grid. AMI metering, if implemented and managed properly,

can have a myriad of benefits. It is a fundamental building block in implementing

dynamic response programs, dynamic pricing and ultimately in the development of a

“Smart Grid System”.

The AMI project would allow the utility to remotely read customers' meters via Cell

Connector Units (CCU). These CCUs collect and transmit readings to servers located at

the utility’s Head Office. Presently the project is 75% complete with about 300,000 of the

400,000 meters already changed over. [T&TEC via Web]

This study investigates the impact of AMI metering by considering the benefits of AMI

implementation from the viewpoints of the utility, the end customer and the society as a

whole. The relationship between AMI and demand response, dynamic pricing and the

development of a smart grid system would also be established.

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Present State of Metering in Trinidad & Tobago

The Trinidad and Tobago Electricity Commission (T&TEC is the sole power

transmission and distribution utility in Trinidad & Tobago. The electricity meter is the

mechanism by which the utility measures the energy consumed in kilowatt hours (kWh)

by a customer in order to accurately generate electricity bills. T&TEC uses one of the

following types of meters:

1. Dial Meters

2. Digital Meters

3. AMI Meters [T&TEC via Web]

Dial meters are based on the principle of electromagnetic induction in which the disc

rotates with an angular frequency proportional to that of the power being consumed. The

disc is coupled to a mechanical register that counts the number of revolutions of the disc

in a pre-determined time interval in order to acquire an aggregate of the energy consumed

within that time. Dial meters can only be read remotely by representatives of the utility

and as such, estimations are synonymous with this type of metering and subsequent

billing.

Dial meters are being replaced by digital meters, or solid-state meters. The most obvious

difference at a glance is the fact that the display readings are not register or dial pointer

type, but are LCD type. Solid state meters can also be read automatically and have the

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added benefit of recording key parameters such as maximum demand, power factor etc.

The introduction of solid-state or digital meters has been the first step in delivering…

“the largest and most comprehensive advanced metering system in that [Caribbean]

region of the world.” [Itron Inc. via Web]

Moving Forward

Advanced Metering Infrastructure

Metering has evolved significantly because of breakthroughs and innovation in related

technology. One of the main drawbacks to the dial type meter is that of communication.

Today, advancements in technology have enabled sophisticated communication systems

to be integrated into metering systems. Not only are meters now digital, but the

conversion to the digital metering system has ensured that the most basic component of

an advanced metering system has been implemented. Trinidad and Tobago has always

been seen as a leader in electricity production in the Caribbean, and has taken this

responsibility to another level.

At present, there is an ongoing process to remove the present electromechanical dial

meters, also termed “moving disc” meters to AMI metering. The move to upgrade to

AMI metering was announced in September 2007 estimating $TT240 million. In this

venture, 400,000 high-powered solid-state meters would be installed to residential and

commercial customers.

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Benefits of Implementing AMI

Advanced Metering Infrastructure or AMI is a metering system that encapsulates

communication hardware with associated system and data management software thereby

creating a communication network between advanced metering and the utility [FERC].

Not only is communication made possible, but proactive communication through proper

management can enhance customer satisfaction.

How exactly is AMI beneficial to Trinidad and Tobago? From a utility standpoint, the

benefits already make AMI the way ahead in terms of metering. These benefits are as

follows.

1. AMI enables T&TEC to remotely read the customers’ meters. Thus the need for

access to private property on behalf of the utility by meter readers is eliminated.

This comes with it the elimination of possible confrontation or even just avoiding

the uncooperative nature of homeowners at times.

2. The accuracy of metering and hence billing will be improved greatly as opposed

to the good faith estimates that were relied upon in the use of dial meters.

3. Consumption patterns can be monitored accurately

4. Security in the form of prompt meter tampering detection and overall reduction in

non-technical losses.

5. Interval data collection and unscheduled reads can allow the utility to introduce

“time of use” method of billing in which customers can be charged varying tariffs

at different times of the day so that the actual cost of generation, transmission and

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distribution is more accurately reflected in the energy charge that the customer

pays (as costs vary during the day due to periods of high and low demand).

6. Immediate notification of interruption of supply to a specific area in order to

facilitate faster restoration, thus to reducing downtime (and hence revenue loss to

the utility) as opposed to notification from disgruntled customer. Troubleshooting

becomes more efficient.

7. Savings due to meter reading labour cost reduction

8. Efficient dispatch and utilization of field personnel

9. Reduction in customer call volume

10. Demand response initiatives can be better facilitated (see below)

11. Better understanding of the distribution system for development and deployment

of smart grids. [T&TEC online]

From the point of view of the customer, the benefits of implementing AMI are as follows.

1. Elimination of strangers accessing private property for meter reading

2. Utility bill is reconciled with energy consumption by being provided with detailed

billing information. The customer will have more confidence in the billing

procedures of the utility.

3. Improved power outage response

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4. Customers will be able to access information and tools to reduce energy costs

From the societal point of view, AMI is also beneficial. AMI can facilitate integration of

renewable energy sources into the generation mix. It is also envisaged that AMI can

foster programs that reduce carbon emissions by energy conservation. Many of these

benefits are challenging to quantify. [PUCO via Web]

AMI & Demand Response (DR), Dynamic Pricing

Supply and demand has always been a key concept in most industries. However, because

electricity cannot be stored in large quantities (very costly), there is a struggle in

maintaining this concept. Electricity has to be generated on demand – consumed the

moment it is generated. This demand varies considerably with time, whether daily,

monthly or yearly.

At present, it cannot be known precisely when the demand will peak, and to what level it

will peak at. At times of peak demand, or even critical peak periods, generation assets

termed ‘peaker plants’ [USDoE via Web] are forced into service to meet the demand.

These assets are idle for the majority of the time. They generate no revenue, but at the

end of they day, they must be paid for. They are the most expensive to operate; or they

may be older and more difficult to use. For this reason, the true cost of electricity at the

Demand Response is the co-operation of the customer with the utility to respond changes

in supply conditions from normal consumption, or even as a response to incentives

offered to reduce electricity use at critical times – times when the electricity prices are at

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their highest; when reserve margins are low due to contingencies; or even when system

reliability is jeopardized – generally on days when demand threatens to outpace supply.

The main emphasis on demand response is on reduction of use at these critical times.

Demand response is designed to be both fiscally and environmentally viable means of

responding to occasional and temporary peak demand periods.

The underlying problem associated with demand response is that although the cost of

electricity varies on short time intervals, this cost is not reflected in the fixed rates that

the customer pays which represent an average cost of. The true cost of supplying

electricity is hidden to the customer. At present, there is no justification to the customer

to reduce consumption and as such, they are inclined to over-consume at times when the

cost of electricity is higher than average, and under-consume when the cost is lower This

can all change with the advent of AMI metering. [PUC Texas, 2006] [USDoE, 2006].

AMI is seen as a fundamental tool that can be used to implement performance based

demand response initiatives. AMI metering can be used to provide visibility to customers

by allowing them to receive notices in advance of times and locations in which electricity

prices would be high and when it would be most economical for heavy loads to be used.

Before, demand response was limited to commercial and industrial customers. AMI

systems are the enabling tool to permit greater use of demand response strategies by

providing intelligent, bi-directional communication networks and technologies. AMI

systems would not only increase participation by commercial and industrial customers,

but residential customers will also be integrated. [KEMA via Web]

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Some of the benefits of demand response are as follows:

More efficient market

Reduction in price paid for power

Reduction in environmental externalities and costs associated with adverse

impacts on the environment

Reliability benefits

Reducing incurred cost of developing demand response resources

[Hogan, 2009]

Demand response can elicited in one of two options.

1. Incentives

This type of demand response from customers at critical times is in the form of

contractual. Incentives may take the form of bill credits for measured load reductions

or even penalties to customers that enroll to this type of demand response program

but fail to fulfill contractual obligations at critical times.

2. Dynamic Pricing

Dynamic pricing involves providing signals to the customers via AMI metering to

encourage shifts in consumption patterns from high-priced (peak) to low-priced (off-

peak) times of the day. These prices are allocated based on the real cost of electricity

and thus can effect a reduction in the market price as well as a reduction in the need

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for peaking plants. If electricity is treated as any other market, then customers will

respond to changes in its price, just like in any other market.

Dynamic pricing can be brought about in different ways:

a. Time of Use (ToU) tariffs – Time of Use rates reflect the average cost of electricity

during different blocks of time, normally defined for over a 24-hour period. ToU

rates vary by the time of day (i.e. peak/off-peak) and are determined for lengthy

time frames – months or even years. AMI metering would record cumulative usage

during different time blocks and thus customers can be billed according to the

average cost of electricity in a given block. As opposed to RTP (see 1.b), these rates

are not dispatched on actual wholesale prices and are thus not dynamic.

b. Real-time Pricing (RTP) – Customers pay prices that are based on the wholesale

cost of electricity on a real-time basis – hourly / sub-hourly. Usually, RTP is offered

to large customers whose demand exceeds 1MW. Price signals are thus accurate

(being real-time) and incentives are awarded for reducing consumption at times

when the cost of electricity exceeds the average. [IEE, 2009]

c. Critical Peak Pricing (CPP) – Critical peak events may occur during system

contingencies; times when wholesale market prices are at its highest, or when

reserve margins are low. CPP rates involve specifying high rate (much higher than

usual peak rates) for usage during utility-predefined peak critical periods. In this

way, energy costs are reflected more accurately as the costs are only valid for these

periods. Usually, these periods are limited to about 100 hours per year.

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AMI & Development of Smart Grids

The electric grid delivers electricity from points of generation to consumers. There are

two main systems – the transmission system and the distribution system. The

transmission system delivers electricity from generation points, i.e. power plants, to

distribution substations. The distribution system delivers electricity from distribution

substations to the end consumer. [USDoE via Web]

At present, the electricity grid is limited in its functionality. Electricity demand is

constantly increasing at a rate such that there is increased strain on the electricity grid,

especially at times of peak demand. Thus there is a great need for some sort of

intelligence to be applied to the electricity grid in order to meet the standards required of

it in the 21st century. This can come about with the Smart Grid.

In a very simplistic way, a Smart Grid can be analogized to the Internet being brought to

the electrical grid. It is a modern, state of the art grid network that integrates advanced

functionality to the electricity grid in an effort to enhance reliability, efficiency and

security. This can be achieved by modifying the grid with powerful technologies in the

areas of microprocessors, communications, and information technology. Furthermore,

Smart Grids can also assist in the worldwide challenge of reducing GHG emissions.

Some of the hallmarks of the Smart Grid are as follows.

1. Automatic recovery from power disturbance events

2. Fostering active participation by consumers in demand response

3. Robust operation against attacks to the system

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4. Enhanced power quality

5. Enabling new products, services, and markets

6. Optimizing use of assets through efficient operation

At present there are many concepts that have been put into action as a move towards the

implementation of a Smart Grid. Of these, AMI metering has an integral part to play.

With respect to implementation if Smart Grids, AMI metering can provide consumers the

ability to use electricity more efficiently. Consumer friendly, Smart Grid imperative

concepts are enabled through the use of AMI. For example, if energy is priced on its real

time cost (dynamic pricing), these signals can be relayed to AMI controllers or

controllers on the major energy-consuming appliances of a consumer. Based on the

consumer’s usage, power is allocated accordingly to these devices. This interaction

occurs in the background, requiring minimal supervision and can offer substantial savings

on electricity. AMI as a standalone system will not have the anywhere close to the same

potential that it can have without the implementation of Smart Grids. [USDoE via Web]

It must be noted that AMI metering is just one of the elements of the array of enabling

technologies that Smart Grid what it is. These enabling technologies are what enable

interfacing, communication and control of the grid, thereby making the grid intelligent.

The success of implementing a Smart Grid depends on the effectiveness of integrating

these technologies, not the least of which being AMI metering.

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Considerations & Regulations in Implementing and Operating

AMI Meters

Before the first AMI meter can be installed in Trinidad and Tobago, the barriers that

impede the implementation of AMI need to be addressed. Proper financial analyses must

be carried out regarding cost recovery as AMI technology still remains relatively

expensive. There is also an underlying concern that technology used today may become

legacy tomorrow. Furthermore, although AMI has several implementation benefits, not

all may be applicable to Trinidad & Tobago; not yet at least. Thus it is imperative that

detailed feasibility analyses into AMI metering and market studies into demand response

and dynamic pricing programmes be carried out. This is the first step in ensuring

successful and sustainable implementation of AMI metering in Trinidad & Tobago

The second step is that a robust regulatory standard be set to address implementation and

operation of AMI metering. Implementing AMI poses several challenges on the utility’s

part. These challenges include security, system reliability, customer privacy, network

integrity and interconnectivity. These challenges can be addressed to full effect and

minimal risk only with proper planning and strategy. Thus, regulations in implementing

and operating AMI meters should fall along these lines as well. As such some of the

considerations and regulations that should be applied should address the following issues.

1. Commitment to installing AMI meters at all customer terminals.

T&TEC has over 400,000 customers. Thus it should be made

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mandatory that AMI meters be used. Target dates should be set

by which AMI meters should be installed in homes.

a. AMI meters procured from suppliers must conform to

minimum functional requirements set by the regulatory

body.

2. As a public utility, it is T&TEC’s obligation to inform the public of

a. AMI meter installations;

b. benefits of AMI metering; and

c. use of AMI metering.

3. Set standards or policies determining the technical and

functional requirements of the communication networks between

customer and utility – power line carriers, wide area networks,

4. Introduce legislation that enables smart metering initiatives and

conservation targets to be met due to the implementation of AMI

metering

5. Billing structure must be revised to accommodate the improved

functionality brought with AMI metering. Improved electricity bills

must at a minimum introduce

a. Dynamic pricing rates

b. Energy units used for each dynamic rate

c. Demand response – incentives / tax credits

6. Introduce demand response and dynamic pricing programmes

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a. Incentives for complying with demand response

procedures

b. Penalties for failing to comply

7. With regard to the issue of security and customer privacy, T&TEC

must ensure integrity and privacy of data.

a. AMI metering network should be subject to 7x24x365

monitoring to ensure that the customer data is protected

by resilient data security

b. Proper Meter Data Management (MDM) systems should be

implemented

c. Redundancy of data storage and data transfer components

on both the utility and customer end

d. Customer service improved – web services and portals to

be introduced

e. Data integrity, data security and MDM policies should be

established

8. Security systems, threat management systems, digital

investigative systems, access management must be improved /

introduced and sustained

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Conclusion

AMI metering introduces a wide range of possibilities that were non-existent with the

electromagnetic “moving disc” meters. The main advantage that AMI metering has over

the conventional type is that of communication. By allowing two-way communication

between the customer and the utility, consensus can arrive and both parties are satisfied.

AMI metering can only be brought about with robust standards that govern the security,

system reliability, customer privacy, network integrity and interconnectivity of the

system. The success of implementation lies in these standards or regulations. It is

undeniable that a move towards AMI would make T&TEC a more efficient and reliable

electrical service utility and will ensure that Trinidad and Tobago continues to lead the

way in the Caribbean as far as electricity is concerned.

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References

Borenstein, S., Jaske, M., Rosenfield, A. 2002. Dynamic Pricing, Advanced Metering, and Demand Response in Electricity Markets. Prepared for Centre for the Study of Energy Markets, University of California Energy Institute.

Brockway, N. 2008. Proposed Regional Approach for Smart Grid Deployment In the Mid-Atlantic Region. National Regulatory Research Institute.

Cough, R. Utility of the Future – Enhanced benefits by integrating OMS and AMI Technology. Prepared for GE Energy

Faruqui, A., Sergici, S., Wood, L. 2009. Moving Toward Utility-Scale Deployment of Dynamic Pricing in Mass Markets. Whitepaper prepared for Institute of Electric Efficiency

Hogan, W. W. 2009. Providing Incentives for Efficient Demand Response. Prepared for Electric Power Supply Association.

Johnson, B. 2007. Proposed Regional Approach for Smart Grid Deployment In the Mid- Atlantic Region. ACN Energy Ventures

Office of Electric Transmission and Distribution. 2003. “Grid 2030” A national vision for Electricity’s second 100 years. Prepared for U.S. Department of Energy

The Smart Grid: An Introduction. Prepared by Litos Strategic Communication for U.S. Department of Energy

Troxle, M., Brandt, A., Pender, J., Jaussaud, D. 2006. A Report on Advanced Electric Metering as Required by House Bill 2129. Report prepared for Public Utility Commission, Texas.

U.S. Department of Energy. Benefits of Demand Response in Electricity Markets and Recommended Actions for Achieving Them. Prepared for United States Congress

AMI as demand response enabling technology. [cited 2 March 2010] Available from Internet: <http://www.kema-powertest.com/cn/services/consulting/utility-future/smart-grid/ami-technology.aspx>

Department of Energy: Smart Grid (2). [cited 2 March 2010] Available from Internet:<http://www.oe.energy.gov/smartgrid_02.htm>

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Ministry of Energy and Infrastructure: Regulations. [cited 2 March 2010] Available from Internet: <http://www.mei.gov.on.ca/en/energy/electricity/?page=regulations>

Public Utilities Commission of Ohio. [cited 2 March 2010] Available from Internet:<http://www.puco.ohio.gov/>

Smart Grid: Smart Grid News – Grid Modernization and the Smart Grid. [cited 2 March 2010] Available from Internet: <http://www.smartgridnews.com/index.html>

Trinidad & Tobago Electricity Commission to Automate More Than 400,000 Meters with Itron Fixed Network Technology. [cited 2 March 2010] Available from Internet:<http://www.itron.com/pages/news_press_individual.asp?id=itr_016108.xml>

Trinidad and Tobago Electricity Commission. [cited 2 March 2010] Available from Internet: <http://www.ttec.co.tt/ >

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