Advanced metering infrastructure — the two-way communicating smart meters that now serve more than half of U.S. electric customers — allows utilities to offer their customers time-of-use pricing, automated demand response, near-real-time energy data feedback and other tools to better link them to the true cost of electricity and encourage them to save it. 

Advanced metering infrastructure (AMI) networks also collect masses of interval data — a gold mine for a raft of utility improvements, from sorting and targeting customers to optimizing efficiency spending and informing distribution grid outage recovery and conservation voltage reduction schemes. 

These are all proven methods to improve energy efficiency, and they can really add up when multiplied across millions of customers.

But today few U.S. utilities are capturing this full range of AMI capabilities, according to a new report from the American Council for an Energy-Efficient Economy (ACEEE) — and some are hardly capturing any at all.

That’s a waste of ratepayer-funded assets for those utilities that have already deployed AMI, although relatively few states have taken their utilities to task for failing to deliver on efficiency and customer engagement targets, with a few exceptions such as Illinois

But it’s also a warning to utilities that haven’t deployed AMI yet, according to Rachel Gold, senior manager of utilities at ACEEE and co-author of the report. Over the past two years, regulators in MassachusettsVirginia, Kentucky and New Mexico have blocked multimillion-unit smart meter deployments over concerns of cost-effectiveness as well as lack of clear metrics on how they’ll benefit customers. 

Regulators are also ordering utilities to set clear goals for efficiency and customer engagement gains, and coming up with methods to hold them to account, Gold said. 

Massachusetts regulators denied the state’s utilities’ AMI plans in 2018, ordering them to improve their strategies for managing and making use of the data to be gleaned from the devices. And New Mexico regulators rejected Public Service Company of New Mexico’s 500,000-meter rollout on the grounds that it failed to “take advantage of possible energy-efficiency measures, identify sufficient operational benefits, or provide meaningful opt-out opportunities,” the report states. 

While other AMI rollouts are being approved, they’re increasingly coming with regulator demands to optimize the efficiency opportunities they provide and reach beyond the lackluster efforts of first-generation AMI rollouts to empower customers with the data they generate. 

Energy efficiency: Not in utilities' best interest?

So what’s keeping utilities from making these gains?

On the regulatory front, “the utility business model is a key barrier,” Gold said. “The focus on capital investments may mean that getting deep energy efficiency savings over the long term are not in the utility’s best interest, unless they have strong performance-based incentives and decoupling mechanisms.”

In other words, as long as utilities make money per kilowatt-hour sold, they won’t invest in things that reduce those sales. 

But even in states such as California where decoupling, efficiency and AMI deployment have aligned, utilities still face institutional barriers to optimizing their smart meters. Data-sharing is a key challenge, both between utilities and customers and from department to department within utilities.

Other states have regulatory barriers between distribution system utilities and their customers, as with Texas, one of the first states to roll out AMI on a large scale.

In terms of engaging customers, “Utilities don’t really do customer acquisition in the same way —  they’re a monopoly,” Gold said. That gives them little incentive to hire and spend on the data scientists and digital marketing experts employed by tech giants like Google, Amazon, Apple and others that are starting to emerge as the preferred providers of the kind of "smart home” functionality that smart meters once promised to provide.

So what are utilities doing with smart meters?

That’s not to say some utilities haven’t tapped the potential of AMI networks from top vendors such as Itron, Landis+Gyr, Sensus (owned by Xylem), Elster (owned by Honeywell) and Aclara (through its GE Meters acquisition).

ACEEE polled the top 52 U.S. utilities by sales, about half of which had deployed AMI as of 2018. It then asked them how they’re using the smart meters.

Of the 26 utilities with AMI in place, only one — Portland General Electric in Oregon — was engaging in all of of the AMI businesses cases defined by ACEEE as of late 2018. Those include residential and commercial customer web portals that offer near-real-time data, data disaggregation for key end uses, behavioral tools like goal-setting, and connections to energy-efficiency programs.

We’ve written at GTM Squared about PGE’s innovative work tapping the “distributed flexibility” of its residential, small business and midsize commercial-industrial customers to form a key part of its future resource mix. These kind of capabilities are built on the data analysis and customer communications systems enabled by its 2011 AMI deployment. 

PGE didn’t get to this end state by accident, Gold noted. The utility created a new department to disseminate this data throughout the utility, she said, with “a couple of staff members whose responsibility is to get the AMI data as it comes in, make it clean, and present it to those who need it." 

"They really invested in internal communications — everyone knew how to get the data and how to use it.” 

Other high-scoring utilities include Nevada’s NV Energy and Chicago’s ComEd, both of which have been using AMI for five of ACEEE’s six defined use cases.

A long list of utilities are now providing their customers with behavioral efficiency messaging and offers from vendors such as Oracle’s Opower and Uplight (Tendril/Simple Energy). And most offer peak-time rebates or other incentives to shift energy use to off-peak hours, while some are moving further into time-of-use regimes that expose customers to high peak prices and low off-peak prices. 

The proven benefits of tapping AMI’s efficiency potential

Programs like these have proven their ability to deliver savings in the low single-digit-percentage range.

Near-real-time and behavioral feedback to customers can yield from 1 to 8 percent efficiency gains, based on how timely the messaging is and how closely it’s aligned with customers' specific needs. Behavior-based programs can deliver steady low single-digit-percentage gains.

But getting customers more deeply engaged requires data that’s as close to real time as possible, ACEEE says.

Time-varying rates have yielded efficiency gains of 1 to 7 percent where they’ve been implemented, with results dependent on how aggressive and widespread they are. While these rates must be designed to protect the poor, elderly and medically vulnerable, implementations in Arizona, Oklahoma, Sacramento, Colorado and Canada’s Ontario province have largely been well accepted by customers after initial concerns, once the money-saving opportunities started paying off, the report notes. 

“That’s the broad range, and you can do much more when you layer these things on top of each other,” Gold said. “If you have feedback, but add in disaggregation and targeting, you can do so much more.”