What are the potential downsides to an automated meter reading system?

The last Utility Information Pipeline dealt with factors to consider when conducting a Return on Investment (ROI) analysis for implementing an automated meter reading system. In that article, I asked readers who have implemented AMR or AMI systems to share their experiences.

The general manager of a rural water utility, a long-time newsletter subscriber, emailed me and relayed some of the issues his utility has faced in implementing a drive-by automated meter reading system. This issue highlights some of the points he raised, along with issues I’ve heard from other utilities that could be considered potential weaknesses of an automated meter reading system.

Here are some of the potential downsides to implementing an automated meter reading system…

Damage to meters

The utility manager I mentioned above reports that, on average, between .7% and 1.0% of their meters are damaged each month. Damaged meters means incurring repair or replacement costs (which, for some utilities, may be charged to the customer if the customer’s negligence caused the damage). Damaged or malfunctioning meters won’t communicate with the radio receiver, requiring them to be read manually. Of course, this negates any labor savings achieved by automating the process for reading these meters.

Vegetative overgrowth

A frequent complaint of utilities using radio read meters is these meters can become overgrown by grass, weeds, or nearby bushes and shrubs. This poses a problem when the meter must be visited, either for a routine turn-on or turn-off or for disconnection for non-payment.

Faulty meters

Many utilities report receiving defective meters from the meter manufacturer. If this is a manufacturing defect, it can affect many meters received in a single shipment. Defective meters require troubleshooting and, once it has been determined the meter is at fault, replacement. This requires additional time from the utility’s field service personnel, mitigating some of the labor cost savings of not reading manually.

Not “lifting the lid” each month

One of the misgivings I hear most often from utilities about moving to either an AMR or AMI system is each meter is no longer visited each billing period. When reading meters manually or with handhelds, the meter reader must visit every meter (and lift the lid for water meters) each month. This allows the meter reader to visually inspect each meter on the route and note any issues or possible damage to the meter. To mitigate this impact, I know of utilities with a policy of reading a portion of their meters manually each billing period to insure each meter is visited once a year.

Resistance from customers

Some utilities have experienced pushback from customers who consider a meter that measures their usage at frequent intervals to be an invasion of privacy. Others have concerns about the potential health impact of being subjected to additional radio waves. Even though these concerns may be easily dismissed by those who are knowledgeable about radio read systems, they can be very real to your customers. So real that some states require utilities to allow reluctant customers to opt out of having a radio read meter installed at their home.

I’d love to hear your experience

If you’ve upgraded to an automated meter reading system, whether AMR or AMI, I’d love to hear your version of the pros and cons of implementing the system. Please give me a call at 919-232-2320 or email me at gsanders@logicssolutions.com. I’d like to schedule a time to talk with you about your experience.

Is an AMR or AMI system for you?

Are you trying to determine if moving to an automated meter reading system is the right decision for your utility? If so, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a customized ROI analysis or business review could help.

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© 2018 Gary Sanders

How do you justify an automated meter reading system?

Recently, a new newsletter subscriber emailed me and asked “We are searching for any information that would support (or not) investing in radio read meters. Our Board has already voiced the opinion they won’t pay for themselves. Can you offer any advice on various areas of savings/cost you have seen after purchasing and installing such a system?”


Having completed a business review and Return on Investment (ROI) analysis for a municipal water system, this reader’s question made me realize this is a great topic for a newsletter.

If you’ve already upgraded to an AMI or AMR system, please don’t stop reading. You can do me a favor as you’ll see below.

What is an ROI analysis?

An ROI analysis compares the expenses of implementing something new, in this case an automated meter reading system, to the increased revenue and cost savings achieved and derives a pay-back period for the system. Both one-time and recurring expenses and revenues are included in the analysis.

Costs of implementing an AMR/AMI system

The costs associated with implementing an automated meter reading system include:

Purchasing new radio read meters

The single largest cost associated with implementing a radio read metering system is, of course, the new radio read meters. Be sure to take a census of the meter sizes and types currently installed and insure that you are using the proper cost associated with each size or type of meter.

Purchasing new meter boxes or meter box lids, if required

When dealing with water meters, existing meter boxes may be too small or, in some cases, metal meter boxes or lids may interfere with the radio signal.

Labor cost to install the new meters

The second largest cost incurred with implementing radio read meters is the installation of the meters. Will you use an outside contractor or will your field service staff install them?

Purchasing the meter reading software

Don’t forget to include the cost of the new meter reading software. In addition, be sure to include the ongoing annual maintenance for the software as a recurring cost in your ROI analysis.

Upgrading your billing software upgrade, if necessary

Finally, if your billing software isn’t compatible with radio reading, or if you need to purchase an additional module, be sure to include that cost. As with the meter reading software, be sure to include any increase in annual maintenance as a recurring cost.

Increased revenues and cost savings

Increased revenues and cost savings associated with implementing an automated meter reading system include:

Sale of scrap meters

The only one-time revenue source from implementing a radio read system is the sale of the old meters (and meter boxes, if applicable) as scrap.

Revenue gain from new meters

The area most utilities rely on to cost justify a radio read meter system is the increased revenue from installing new meters. Especially with water meters, meters are known to register less usage as they get older. Remember, meters are like people – they slow down with age.

The revenue gain from new meters is also the area where your ROI analysis can be the most deceiving, if you assume revenue increases that don’t materialize. Two areas where your analysis can go wrong are:

  • unreasonable assumptions about how much your existing meters have slowed down
  • rate elasticity – as the price increases, usage decreases

One way to try to insure your assumptions about the inefficiency of your current meters is to conduct a pilot meter replacement policy. This would involve replacing a sampling of meters of different ages and sizes and observing the increase in usage over several billing periods.

If you’ve upgraded to an automated meter reading system and tracked the increased usage from new meters, please give me a call at 919-232-2320 or email me at gsanders@logicssolutions.com. I’d like to schedule a time to talk with you about your experience.

Staff time savings from no longer reading meters

The biggest cost savings associated with implementing a radio read meter system is the reduced time involved in reading meters each month. If you are moving to an AMI system, you will save 100% of the current time, vehicle use, and gas. If you are moving to an AMR system, you will still incur some time and expense for meter readers to drive the routes, but it will be much less than walking the same routes.

Reducing time for re-reads

In theory, a radio read system will provide accurate readings, without the element of human error which is present when using handhelds or reading on paper. In reality, there will always be some meters that aren’t transmitting properly, which will require follow-up from your field service staff. Hopefully, the time to check these non-transmitting meters should be less than what is currently being spent re-reading meters with questionable readings.

Savings from not offering of leak adjustments

If you’re implementing an AMI system and plan to do proactive leak detection, I recommend adopting a policy of not offering leak adjustments. In this case, you will save the lost revenue associated with leak adjustments.

Completing the ROI analysis

Once you’ve arrived at all of your one-time and recurring costs, increased revenues and cost savings, you are ready to complete the ROI analysis. This involves calculating the net up-front cost (one-time expense less one-time revenues) and dividing it by the annual increased revenue and cost savings. The final number will be the payback period in years.

Are you contemplating implementing an AMI system?

Are you wrestling with trying to decide if you can justify moving to an automated meter reading system? If so, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a customized ROI analysis or business review could help.

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© 2018 Gary Sanders

The case for proactive leak detection

I know of utilities with AMI (Automated Metering Infrastructure) systems who aren’t doing proactive leak detection. My question is why wouldn’t they?

Certainly, an AMI system is the most convenient way to read meters. Unlike using handhelds, or even an AMR system, AMI systems require no labor to collect meter readings for billing. But to view an AMI system as simply a labor-saving meter reading tool is a huge mistake.

Review of AMI technology

AMI systems are preprogrammed to read each meter at set intervals – sometimes only once each day, other times as frequently as several times per hour. These frequent meter readings calculate incremental usages, which can be compared to historic usage patterns for the account. When a large increase in usage is detected and does not return to normal, this generally indicates a leak or other situation requiring the customer’s attention, such as a hung toilet.

What is proactive leak detection?

Using proactive leak detection, a utility with an AMI system monitors the system outputs each day and immediately contacts the customer to alert them to the prolonged excessive usage. This places the responsibility for finding and fixing a leak on the customer. Logically, it only follows, if the utility has immediately notified the customer of a potential leak, the utility now shoulders no responsibility for providing leak adjustments of any sort.

Advantages of proactive leak detection

When potential leaks are being monitored on a daily basis, and the customer rectifies the problem promptly, water is conserved. This is especially important in times of drought or if your utility purchases water for resale from another utility.

Another advantage of proactive leak detection is not having to deal with leak adjustments. For many utilities, leak adjustments can be a time consuming process, involving contacting the customer to provide documentation the leak has been fixed, researching normal usage patterns, performing the calculation to determine the amount of the leak adjustment, and, finally, applying the leak adjustment to the customer’s account. Imagine never having to do another leak adjustment!

Is your leak adjustment policy up-to-date?

Have you implemented an AMI system but still offer leak adjustments? Or has it been a while since you’ve reviewed your leak adjustment policy? If your utility falls into either of these cases, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help.

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© 2018 Gary Sanders

What is an acceptable percentage of estimated readings?

I’m originally from upstate New York, where water meters are located in basements or cellars to keep them from freezing. The small town where I grew up operated a water system and, with limited staff, frequently estimated meter readings. My mother was aware of this and, after several billing periods without her meter being read, was convinced they were overestimating her usage. So she called and made arrangements for the meter reader to come and read her meter. Much to her chagrin, they had been underestimating her reading all those months and her next water bill was much higher than the bills she thought were already excessive!

 
Estimated meter reading
 

An inquiry from a colleague

Last year, I had a professional colleague contact me with the following questions:

“Do you by chance know if there is an industry standard for estimated meter reads?  I know you would want this number to be as low as possible but is there an industry target that would indicate a utility’s meter reading capabilities?”

My response was:

“I’m not aware of any industry standard for estimated meter readings. Off the top of my head, I would think anything greater than about 2% would be excessive unless there were extenuating circumstances (such as snow in an area like ours in North Carolina where utilities aren’t prepared to read in that kind of weather).”

This is where you get to help…

Previous Utility Information Pipelines have addressed meter reading best practices and alternating actual readings and estimates as a way of reducing costs, but none have addressed routine estimates.

In order to better answer my colleague’s question, I’ve put together a short survey asking how your utility handles estimated meter readings. Please take a few minutes to complete the survey by clicking here.

The results of the survey will be published in the next Utility Information Pipeline.

Do you need to review your meter reading practices?

If your meter reading could be improved upon, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help.

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© 2017 Gary Sanders

Do you document customer interactions?

The last issue discussed reading inactive meters for vacant accounts and included a poll asking if your utility reads inactive meters.

Poll results

Ten utilities responded to the poll, and here are the results (clicking on the the graphic will open a larger image in a new window):

Do you read inactive meters

If you missed the poll, you can click here to take it.

While only ten utilities responded to the poll, I’m pleased to see that 70% of the respondents do read inactive meters. I’m especially glad to see the one utility that still reads on paper is reading inactive meters!

What really surprised me is the utility that reads using an automated meter reading system and doesn’t read inactive meters. Frankly, this baffles me. Unlike reading on paper or with handhelds, where the meter reader must take additional time to read inactive meters, reading with an AMR or AMI system takes no extra time. So why not read inactive meters?

Documenting customer interactions

Does your utility keep a record of all customer interactions? For example, if a customer calls to complain about a high bill or request additional time to pay their bill, do you log a comment for that?

Documenting each conversation with a customer can prove invaluable if the customer complains to management or your board.

Documenting each conversation with a customer can prove invaluable if the customer complains to management or your board. Customers tend to remember their version of a phone call and having an accurate record of what transpired during the call can easily resolve a “he said, she said” situation when the customer suffers from selective memory.

I encourage all of our customers to enter a comment for any conversation with a customer beyond the routine “how much is my bill and when is it due?” questions. Any good billing system allows you to enter comments for each customer. If yours doesn’t, it’s time to look for new software! If your billing software won’t allow you to enter comments for each customer, give me a call and let’s discuss how a business review could help determine what other shortcomings your software has.

Share your stories

Have you experienced a situation where having documented a customer conversation proved invaluable later? If so, please click here to take a moment share your story in the comments section of this post on my blog.

Are you using your software to your best advantage?

If you aren’t sure your utility is using your software to its best advantage, or if you realize it’s time for new software, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help you understand what new software could do for you.

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© 2015 Gary Sanders

Poll results and vacant accounts

The last issue revisited how the number of days between meter readings and sending bills can adversely contribute to increased days of exposure.

Poll results

That issue included a poll asking how many days pass between reading meters and mailing bills. Twenty utilities responded, and here are the results of that poll:

If you missed the poll, you can click here to take it.

If your utility is one that mails bills within two or three days of reading meters, congratulations, you’ve figured out how to do it efficiently!

If your utility falls in the four to seven day range, this is what I would call normal – there’s room for improvement, but it’s not excessive.

However, if your utility takes eight or more days, as the majority of the responses, I consider this to be excessive. I would encourage you to evaluate why it takes so long and see if you can find room for improvement. If you can’t figure out how to reduce the time between reading and billing on your own, please give me a call to see how a business review could assist you.

Reading inactive meters

While we’re on the topic of meter readings, let’s revisit reading inactive meters for vacant accounts, a topic I touched on briefly while discussing meter reading best practices.

From the best I can tell, in most cases the practice of not reading inactive meters is a symptom of the TTWWADI syndrome

From the best I can tell, in most cases the practice of not reading inactive meters is a symptom of the TTWWADI syndrome, dating back to when most utilities read meters on paper and entered them manually. Not reading inactive meters was thought to be a time saving tactic for both the meter readers and office staff.

With the advent of handhelds and automated meter reading systems, there is no reason not to read inactive meters. Reading inactive meters is your best tool for detecting customers who may have moved into a vacant home without properly initiating service. For water utilities, it’s also the best way to determine if there is a leak at a vacant property.

Do you read inactive meters?

Does your utility read inactive meters? Please take a moment to to take this quick poll and I’ll publish the results in the next issue.

Do you operate as efficiently as possible?

If you aren’t sure your utility is operating as efficiently as it could be, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

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© 2015 Gary Sanders