The simplest question ever should be how much a smart meter costs – but it’s definitely not. And it turns out the answer is the answer every attorney is trained to give to every question: “it depends.” Before I get to the answer, let’s remember that the cost really isn’t the issue; it’s the total business case. Only when the benefits exceed the costs should smart meters be rolled out, and that’s what every PUC and government has determined in approving these rollouts.
At today’s exchange rate of 1.2362, the lowest reported, full-scale, all-in capital cost for a smart meter deployment has been Enel’s: 65.63 EUR, or $81.13, per meter for 30 million meters. The highest public figure for a contracted and approved rollout is $532.47 per meter by a utility in Texas for 231,000 meters.
But one can’t simply compare these. Total capital costs includes the meters, the communications network, and the back-office IT systems, including installation of everything. However, sometimes the reported costs include write-off of existing meter assets, and sometimes they include complete replacement of existing IT systems such as billing and CIS. Lower costs are reported by utilities leveraging existing IT systems and using a software platform strategy to minimize their IT costs. The cost of capital figures in as well, with municipal utilities having access to tax-free municipal bonds.
The table below shows several publicly reported figures, most based on regulatory filings. Any utility embarking on a business case analysis may want to look at the detailed model developed by McKinsey and Company and available on the eMeter website here. But as with the figures below, the model is only a starting point, and each utility needs to do its own analysis.
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