Over the next five years, U.S. utilities are expected to spend $25 billion upgrading or rolling out advanced metering infrastructure (AMI). That’s a massive investment to ask customers to fund, especially given the current economic downturn and ongoing pandemic, leaving many regulators asking, “Is AMI a worthwhile investment?”
AMI has tremendous potential to serve as the foundational computational and communications platform to manage the emerging complexity of the grid and enable states to meet ambitious clean energy goals. However, fully realizing that potential requires a fundamental shift in how AMI is evaluated by regulators.
The first wave of AMI rollouts left many regulators, elected officials, and consumer advocates underwhelmed, in large part because the business cases were built almost entirely on cash register functionality and basic outage management. Recent proposals based on those business cases and evaluated using a traditional cost-benefit analysis have been denied in states such as Virginia, Kentucky and Massachusetts.
But in a handful of other states, regulators are taking a more forward-leaning approach to evaluating AMI proposals, asking not just “should we approve investments in AMI?” but the more critical question:
“What should the AMI system be required to do in the near-term and long-term?”
Using this framework, Connecticut, New Jersey and New York are all on their way to making the most of AMI.
In Connecticut, rather than waiting to respond to a utility proposal, the Public Utilities Regulatory Authority (PURA) proactively initiated a proceeding to solicit input from a range of stakeholders about how AMI could drive clean energy outcomes. This provided an opportunity for stakeholders including Utilidata to provide input into the necessary requirements for AMI. The Authority has subsequently asked for additional input on a number of key factors, including:
- Ways in which the Authority can ensure that the utilities pursue future use cases;
- Examples of apps enabled by AMI meters that could be procured and utilized to drive improved outcomes for customers and grid operations, and to enable other grid modernization docket initiatives; and
- Mechanisms the Authority should consider to ensure that AMI systems actually deliver promised outcomes.
In New Jersey, the Board of Public Utilities (BPU) also proactively requested AMI proposals, in this case from all the major utilities in the state. In November, the Board convened a public AMI Work Session to hear from stakeholders about how to cost-effectively leverage AMI to meet its full potential, critical capabilities AMI should enable, and the role of AMI in achieving New Jersey’s long-term clean energy and environmental objectives. Our Chief Technology Officer, Marissa Hummon, was one of the featured panelists and highlighted the importance of specifying outcomes and capabilities in the initial regulatory approval.
That message is one that clearly resonates across the border in New York, where the Public Service Commission (PSC) just issued an order authorizing an AMI deployment for National Grid that asked for a benefit implementation plan and identified grid-edge computing as a core capability of AMI. The benefit implementation plan – which will be an incredibly useful tool in ensuring successful AMI rollouts – must include a description of the quantified and unquantified benefits that AMI can enable and a prioritized list of the benefits the company intends to pursue, along with specific implementation action steps and schedules with specific interim milestones.
This innovative order puts New York at the forefront of unlocking the full potential of AMI.
Initial approval orders for AMI are where key commercial, technical and business model decisions are made. The process leading up to this regulatory approval is where utilities are most likely to make critical commitments. And we’ve seen that it is challenging, expensive, and often impractical to go back and retrofit AMI infrastructure with core capabilities and software, if they are not embedded in the meters from day one.
As other states evaluate AMI proposals, we hope they follow New York’s lead and go beyond the traditional cost-benefit analysis to ensure that utilities deploy AMI with capabilities that will deliver real value for customers and enable the achievement of clean energy goals.