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					AMR Benefits and Costs – Benchmarks and
Examples
Presentation at CB Associates Seminar
Sanjoy Chatterjee
schatterjee5@nyc.rr.com
(646) 732-2493



March 30, 2004
CONFIDENTIAL
        Today’s Discussion


• Types of business cases
    • Operational
    • Demand Response (e.g., CA)

• Benefits – Industry Experience and Benchmarks

• Cost Categories




                               Confidential –- March 30th, 2004   2
        Operational Business Case

$ per meter per month




         Benefits                              Costs




          Utility           AMI                           AMI Capital
                                                          Investment        NET
        Operational     Operations &
         Savings
                                                                        SHAREHOLDER
                        Maintenance
                                                                          BENEFITS




                             Confidential –- March 30th, 2004                         3
        Demand Response Business Case

$ per customer per month




                   Benefits                                           Costs




       Utility        Demand                            AMI Capital       AMI           NET
     Operational      Response                          Investment    Operations &   RATEPAYER
      Savings          Savings                                        Maintenance     BENEFITS




                                 Confidential –- March 30th, 2004                                4
Operational Benefits Beyond On-Cycle Meter Reading




                     Confidential –- March 30th, 2004   5
Daily Usage Screen: Off-Cycle Reads and Customer Service




                 Confidential –- March 30th, 2004          6
Revenue Mgmt: Unauthorized Usage Screens




                Confidential –- March 30th, 2004   7
Revenue Mgmt: Diversion Detection at KCPL




                 Confidential –- March 30th, 2004   8
         Other Revenue Management and Meter Operations


Discovery of electrical problems in field:
 • UI found significant increased revenue during the installation phase

Improved meter accuracy leads to revenue recovery
  • UE estimated meter accuracy improvement of 0.7% - older meter population than
    average
  • KC Retrofit center tested 5000 random meters before and after retrofit process and
    found an average improvement in accuracy of 0.25%
  • 3-digit demand registration improvement

Identification of dead meters earlier leads to revenue recovery
  • KCPL has ~0.1% of its meters die in field every year & it takes 4 months to identify
    and replace

Reduce number of meters in inventory
 • Reduction in inventory costs
 • Less training
 • Reduction in meter repairs, manpower, and parts



                                   Confidential –- March 30th, 2004                        9
T&D Operations: Real Time Read Screen




                 Confidential –- March 30th, 2004   10
Outage Management: Instrumenting the Distribution Network




  Customer                                                 CSR




                           
                  1 - Lights Out Call

                 4 - Assisted to check breakers


                                                        

                                              r
                                     ete
                                 r yM
      Meter                Que                       ON
                    2-                         ts
                                           por
                                  ter re
                               Me
                          3-




                   Confidential –- March 30th, 2004              11
     Outage Restoration




                                                Outage
                  Outage Flag                 Information        WMS Dispatch
Outage
Event
                                                System



                                                       NO



                                                   Meter           Trouble
                Auto-dialer        YES        Restoration Flag
                                                                    Crew




                          Confidential –- March 30th, 2004                      12
Transformer Load Monitoring




                          +


                                         +
                                                       Transformer Load
                                                        Duration Curve




                    Confidential –- March 30th, 2004                      13
               Industry Benchmarks


Gross savings in $ per meter per month

                                                                                          $0.60          $2.87


                                                                          $0.36
                                                      $0.29
                                     $0.56

                     $0.26
      $0.70



   Meter Reading     Off-Cycle        Billing &     Outage Mgmt              Revenue          Meter        Utility
   • Labor             Reads          Customer     • Singe No-              Protection      Operations   Operational
   • Supervision     • Move-in/        Service       Lights Trips                        • Avoided        Savings
   • Vehicles          move-out    • Call center   • Restoration                           testing
   • Injuries        • Re-reads    • Re-reads                                            • Avoided
   • Equip and                     • Cash flow                                             replacement
   • new meters                                                                          • Accuracy

      Source: North American Advanced Metering AMR, Frost & Sullivan
                                             Confidential –- March 30th, 2004                                          14
Demand Response Benefits




                   Confidential –- March 30th, 2004   15
    The Goal of Dynamic Pricing

     Avoid the need to construct additional peaking power plants or to make
      expensive wholesale power purchases during price spikes




Top 1% of the hours in PJM
 • Top 10% of demand
 • Top 90% of prices




                          Confidential –- March 30th, 2004                    16
            California Statewide Pricing Pilot – Background
• California joint agencies demand response proceeding
  –PUC, Energy Commission, and Power Authority
  –Rulemaking 02-06-001, begun June 2002
  –Establishing state policies for advanced metering and demand response
• Goal: avoid a repeat of the 2001 Energy Crisis


                                                Projected Reserve Margins




                    Rolling Blackouts




            Source: Mike Messenger, California Energy Commission

                                                Confidential –- March 30th, 2004   17
     California Rulemaking Progress

• Three subgroups
  – WG1: Policy
  – WG2: Large customer programs (>200 kW)
  – WG3: Small commercial and residential programs

• Decisions to date
  – Mar 2003:         Adopted statewide goal of meeting 5% of peak demand
                      via dynamic pricing by 2007
  – Jun 2003:         Established regular dynamic pricing tariffs for large
                      customers
  – Jun 2003:         Ordered implementation of Statewide Pricing Pilot
  – Nov 2003:         Ordered development of business case methodology,
                      including utility filings due March 31 regarding 2004
                      activities to meet 2007 goal




                              Confidential –- March 30th, 2004                18
          Statewide Pricing Pilot Overview
• Statewide
     – Pacific Gas & Electric, San Diego Gas & Electric, and Southern California
       Edison
     – Sample of 2,500 customers statistically representative of the entire state
     – Residential and small commercial customers
•   Goals
     – Measure peak demand reductions
     – Measure total consumption reductions
     – Assess customer preferences via participant experiences and market
       surveys
•   Customers put in three primary treatment groups
     – Time-of-Use (TOU)
        • Peak (2-7 pm weekdays) and off-peak
        • Peak to off-peak price ratio about 2:1
     – Critical Peak Pricing-Fixed (CPP-F)
        • Peak (2-7 pm weekdays) and off-peak
        • Much higher price – about 5x higher – during critical peak period (2-7
           pm) on up to 15 days a year, with day-ahead notification
     – Critical Peak Pricing-Variable (CPP-V)
        • Three differences from CPP-F
            – Critical peak period varies from 1 to 5 hours from 2-7 pm
            – Notification varies from day ahead to 4 hours ahead
            – All customers have smart thermostat programmed for automated
              response
                                 Confidential –- March 30th, 2004                   19
               Residential Dynamic Pricing Results: Price Elasticity

–Fifty-six analyses and projects in the past 25 years
–Average of -0.30 own-price elasticity
  • Equals 30% usage reduction for 100% price increase (off-peak to peak)
–California’s pilot providing one more data point

                                   Residential Own-Price Elasticities Recorded in Experiments/Programs


                              1975           1980           1985            1990          1995            2000   2005
                              0

                            -0.1

                            -0.2

                            -0.3
        reduction
        More peak demand




                                                                                   U.S./international
                            -0.4                                                   data
                                                                                        California data
                            -0.5
                                   Average result =-0.30
                            -0.6

                            -0.7

                            -0.8

                            -0.9



                           Source: King and Chatterjee, Public Utilities Fortnightly, July 1, 2003

                                                       Confidential –- March 30th, 2004                                 20
                     Residential Dynamic Pricing Results: Peak Demand Reduction

–Results of 30 residential time-of-use and critical peak pricing programs
–Results expressed as a percentage of customer’s total demand under non-
 time-based pricing




                            Average
                            reduction 24%
  More peak demand
  reduction




                                            Confidential –- March 30th, 2004      21
         Statewide Pricing Pilot Results - Residential
• Rates went into effect July 1, 2003
• 12 events called during summer 2003
• Analysis by Charles River Associates (contractor to joint utilities) completed January
 16, 2004 (draft report; final data may differ)


              Performance Measure                       Average from the   California SPP Result
                                                           Literature


   Price elasticity (mean own price)                           -0.30           CPP-F: -0.27
                                                                               CPP-V: -0.53
                                                                                TOU: -0.24
   Peak demand reduction – TOU                                  20%                24%



   Peak demand reduction – CPP without                          24%                20%
   automated response


   Peak demand reduction – CPP with                             44%                49%
   automated response

   Total usage reduction (conservation effect)                  4%         CPP-F: 6%
                                                                           CPP-V: 28%
                                                                           TOU: 9%




                                        Confidential –- March 30th, 2004                           22
                  Total Cost of Ownership (TCO) Categories*



Meters/Modules                                                       Meters and modules based on retrofit capabilities
Field Logistics                                                      Installation, retrofit, cross-dock
Network Equipment
                                                                     Network equipment and field installation, including site
Network Installation                                                 preparation (where needed)
IT Interface Design                                                  Utility IT team to build interfaces to different
                                                                     deployment systems
Total Upfront Capital
System Operations                                                    Operating data collection systems, data management,
                                                                     process management, manual reads (where needed)
3rd Party Comm                                                       Leased lines, wireless, telco, other backhaul
Network Ops                                                          Engineers, Technicians, Site leases, energy costs
Network Maintenance                                                  Maintenance, repairs and upgrades
Endpoint Replacement                                                 Replacement of failed meters and modules in the field

Other Utility Costs                                                  Utility in-house project team, overhead, facilities,
                                                                     vehicles, G&A
TCO

*Sales taxes and property and use taxes ignored


                                                  Confidential –- March 30th, 2004                                              23

				
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