Articles
Utilipoint Powerhitters - Cree Edwards
Utilipoint, November 22, 2002
Why does the electric industry need advanced metering?
Utilities have virtually no idea what happens to their product, over $200 billion worth per year and environmentally sensitive, after it leaves the substation. The only feedback they get is when customers call to say the lights are out. The result is billions of dollars of inefficiencies. $600 billion of generation, transmission, and distribution capacity is used, on average, only 50% of the time. Wholesale grid operators have to issue hundred-million dollar energy bills based on estimated load profiles. And engineering analyses, rather than real data, are used to make huge investments in distribution systems. Moreover, $25 billion per year of power is unaccounted for through losses, theft, and other reasons. Finally, customers lack the information and rate choices to manage their electric bills.
What needs to happen in the industry to increase the pace of implementing your systems? We need to fix the problem of improper incentives. Right now, utilities take most of the risk, and ratepayers get most of the rewards. This encourages utilities to add extra capacity. At the same time, if utilities become more efficient, regulators cut rates. Utilities should be allowed to share the benefits by earning more if they are able to reduce costs and improve customer service.
What role does eMeter Corp. play in the energy industry?
eMeter's role, as an advanced metering expert, is to help utilities transition from hundred-year old manually-read metering technology to today’s modern systems. This is a huge step with many pieces and parts: upgrading meters, adding communications, managing the data, and delivering it to customers. We design, build, and operate advanced metering systems for utilities, or provide advanced metering as a service, if desired. Our Power Information Platform™ acts as middleware, the glue to connect a variety of meters and communications networks to a variety of utility legacy information systems, including billing, outage management, and CIS. The key is that we partner with utilities to assist them with objective, independent advice on how to pick technologies to meet their needs and then assist them in designing, building, and operating the various technologies. This results in the lowest cost of ownership option for the utility because they avoid the mistakes associated with getting up the learning curve for large-scale, data intensive advanced metering projects.
How are companies using your systems?
Our utility customers are providing data and services to their customers based on the advanced metering information collected and managed by our systems, strengthening the relationship and increasing customer satisfaction. Our customers are also beginning to use the data to improve operations.
What is your target market for your systems?
We sell our software and services to utility companies primarily.
What is it that differentiates you from your competitors?
Making large-scale advanced metering systems work in the utility legacy environment is a huge challenge. We bring unmatched experience and domain expertise. We have made largescale systems work. While at CellNet, our team designed and installed systems that are now in use for nearly 10 million customers around the U.S. We learned that collecting data from meters is only a starting point. The hard part is making it all work together. It takes many years to implement a large-scale system, and years after that to implement additional applications and optimize business processes.
What are your key goals for the next twelve months?
We continue to grow the company, adding customers, capabilities, and partners. This includes integrating more metering types and communications interfaces to our software platform, which already includes telephone and different flavors of wireless networks. We are also on a path toward profitability in this timeframe.
What has been most surprising to you about the past two years in the marketplace?
The California energy crisis hit the industry hard. We are excited that one of the outcomes has been the recognition that integrating wholesale and retail markets is essential for the market to work; a key part of this is demand response, which depends on advanced metering. The industry is recognizing the meter as the utility’s point-of-sale, and the need to integrate it with utility systems. Federal Express, Wal-Mart, and others have shown how doing so can transform their businesses, dramatically increasing efficiency, customer service, and profitability. It’s a ten-year process, and one that many utilities are interested in starting.
You were a co-founder and Chief Executive Officer at CellNet Data Systems, so you have experience bringing a start-up company all the way to an IPO. How has this experience helped you in your current role at eMeter Corp.?
A key lesson from CellNet was understanding the uncertainty and dynamics of utility decision-making regarding large-scale systems. These are a result of regulation. We are growing eMeter based on actual projects in hand rather than projections; this enables us to manage through the uncertainties of regulation.
Do you have plans to raise additional capital or to IPO soon?
We will raise funds in 2003 to continue our growth trajectory. This will be done privately.
What lies ahead for the advanced metering systems market, and how will eMeter Corporation respond?
We see gradual acceleration of the market as current trends mature further. Early adopter utilities are just completing their installations and beginning to mine the data they are collecting, with business process improvements coming more slowly but just as surely. In addition, ratemaking is evolving to provide incentives to utilities and rewards to customers for better managing their energy use, and the right rate incentives will cause a cascade of industry and customer investment in system automation, home automation, and other technology to enable response to price signals. With the evolution in wholesale markets, regulatory policy, and metering and systems technologies, this is a very exciting time to be in the business.
