A customer's premises is generally visited by a meter reader from each utility that serves it. These meter readers come at different times of the month and use their own meter reading technologies. A customer wishing to move might have to provide the same information to each utility and arrange three different final meter readings, often all on the same day. These redundancies can result in excess costs, inconvenience and frustration. Changes in technology and socioeconomic/market factors, as well as competition and deregulation, are compelling utilities to reexamine this situation. Deregulated energy utilities are looking for new sources of revenue and opportunities to share costs as well as encourage customer stability. Water utilities are looking for ways to enhance service and stay competitive.

Joint meter reading and customer service is a logical area in which to address these needs. The objective of this research report is to help utilities examine joint meter reading and customer service, and identify what services could be shared, what technologies could be used, who would own them, how they would be operated, and how the parties would benefit.

Meter reading includes periodic sequential reading for billing; off-cycle reads for final bills and high bill investigations; and monitoring consumption for load profiling or time-of-use service. Meter reading is a business process. It consists of several tasks, and is part of the larger processes of customer service and revenue generation.

Meter reading technology ranges from simple manual reading to two-way fixed radio network automatic meter reading (AMR). The degree of collaboration between utilities can range from each utility reading its meters on its own schedule using a shared system to combined billing, remittance processing, customer service and collections. Institutional arrangements can range from turnkey outsourcing to creating a third party entity in which the utilities own shares.

Sharing meter reading and billing among utilities was virtually unrecognized before the advent of AMR. Neither regulatory pressure nor financial incentive could overcome the difficulties associated with labor issues, lack of alignment of billing cycles, and unwillingness on the part of utility managers to give up control of their processes. Previous surveys of utilities on this subject also indicated reservations about performance levels, data security and coordination.

Since 1990 there have been several trials and limited deployments of joint meter reading among utilities. However, none of these efforts resulted in any large-scale joint metering projects. However, in the currently deregulating utility environment, several utilities have begun to provide contract meter reading and billing services to others.

Equipment Standards and Joint Meter Reading

One oft-cited barrier to joint utility meter reading is a lack of standards and interoperability for meter reading technology. Without standards, for example, a water utility that wishes to collaborate on meter reading with two different electric utilities that serve its area might be forced to use two different kinds of meters, reducing the options for quantity discounts and increasing maintenance costs. If one electric utility later decided to upgrade its meter reading system, the water utility might be forced to follow suit or abandon the joint arrangement.

The effort to create AMR standards is being coordinated by the Automatic Meter Reading Association (AMRA). The approach divides the entire meter reading process into a series of distinct steps through which the information must be transferred. It requires that manufacturers and users agree on where the interfaces between system components are located and how the information will flow from one component to the next. The interfaces must be flexible enough to allow innovation.

Developing standards is a formalized, complex process. Evolving technology, utility restructuring, integration of various utility information systems, and regulatory mandates make interoperability a moving target. Under utility deregulation, joint meter reading arrangements must accommodate customers who switch energy service providers. Recently, the California Public Utilities Commission began the process of legislating open architecture and standard interfaces for meter reading equipment to support a competitive electric industry. Other states are expected to follow.

Object-Oriented Approach to Modeling Joint Meter Reading

The research project used an object-oriented methodology to identify parallels between the meter reading processes used by different utilities and to develop models for joint meter reading. In the joint meter reading workshops, this approach helped participants develop a shared lexicon and analyze alternatives for service delivery. Business objects include organization units (for example, the Customer Service department), processes (such as testing for a high bill, or generating a meter reading route) and resources (such as a meter or a meter reader). Classes of objects (e.g., electric meters) can be "subclasses" of a larger group of objects (e.g., meters) and inherits all the properties of that "superclass."

Objects can be defined in terms of their responsibilities, components, collaborators, and attributes. In a business process model, one object makes a request of another, which returns a response. From the perspective of the first object, the internal mechanisms of the second object are unimportant. For example, the meter reading system could be manual or highly automated as far as the billing system is concerned. Object modeling may also be used to analyze the resource costs of joint meter reading, the total elapsed time to carry out a process, the volume of requests from one object to another, and so on.

The Business Case for Joint Meter Reading

At some point, utilities wishing to collaborate on meter reading and customer service will probably have to develop a business case. The business case should include tangible benefits, and costs, such as labor savings, and intangible benefits and costs, such as enhancing competitive strategy. Indirect benefits and costs affect third parties, such as customers or the environment. Decision makers assign weights, either explicitly or implicitly, to the intangible and indirect benefits and costs. The business case for joint utility meter reading hinges on economies of scale, in which increasing the size or output of a task requires a less than proportionate increase in the cost. Reading two meters at the same location, for example, will cost less than twice as much as reading one meter.

Any joint undertaking, particularly involving capital investment, will generate a series of benefits and costs over the lifetime of the project. Alternatives should be evaluated using discounted cashflow or net present value.

If a joint meter reading or customer service undertaking can create economies of scale, the distribution of the savings between the parties could be an issue. This is typically a matter of negotiation, not easily generalized. Transaction barriers, such as the costs of negotiating contracts, displacing employees and changing business processes, must be overcome.

To illustrate how to use economy-of-scale factors to estimate the potential benefits of joint meter reading, two simple examples are presented in this report. In the first example, three utilities that share manual on-cycle meter reading could save between 20 and 45 percent of their combined annual meter reading costs. In the second example, three utilities would realize a thirty percent savings in the total cost of installing, operating, and maintaining a fixed radio AMR system. This report presents relative economy of scale factors for the capital, operating, and maintenance costs of the components of various approaches to meter reading.

Three Joint Meter Reading Examples

As part of the research project, in-depth interviews were conducted with utilities that have created ventures for joint meter reading. Boston Gas (MA) created AMR Data Corporation, an unregulated company attempting to provide meter reading and other services to the ninety municipal water and electric utilities within Boston Gas’ service territory. It took Boston Gas representatives some time to understand how to sell their concept in the municipal environment.

Public Service Electric and Gas Company (NJ) created Sunburst Customer Solutions to provide meter reading, billing, payment processing, collections and customer service to municipalities. Sunburst is not unregulated; it is designed to generate additional revenues to help cover Public Service’s fixed operating costs.

Portland (OR) Bureau of Water contacted Portland General Electric and PacifiCorp, which serve respectively 80 and 20 percent of the Bureau's customers, to share a load monitoring system. The first phase involved 500 single-family residential customers. The second phase will involve large industrial customers and wholesalers. All three utilities anticipated a number of significant benefits from the project.

The common theme in each of these examples is the time it takes to build trust and understanding.

Case Study Workshops

Five case-study workshops were conducted as part of the project, to assess the technological, operational, economic, cultural, and institutional aspects of joint meter reading. Workshops were held in Colorado Springs, CO (the "base" case, since one utility provides electric, gas and water service); El Paso, TX; St. Louis, MO; Honolulu, HI; and Laurel, MD. Each of the two-day workshops was preceded by a series of interviews. Workshop participants defined and modeled their various meter reading and customer service business processes, identifying the business objects. An object-oriented approach was used to provide a consistent modeling approach and enable the participants to focus on both the common areas and the specific differences in their utilities’ processes.

As an exercise, workshop participants divided into smaller groups to "create" new companies to provide meter reading and related services to all of the utilities. The small groups were asked to develop a mission statement and a business case. Following this exercise, participants identified and prioritized obstacles to joint meter reading and customer service, including regulatory, institutional, labor and human factors. They then broke into small groups to develop possible strategies to overcome the top barriers.

Surveys of Utilities and Regulatory Commissions

Surveys were conducted of utility members of the AMRA, as well as the public utility regulatory commissions of the United States and Canadian provinces, to get a sense of the level of interest and activity among utilities. Both the utility and the regulatory commission respondents recognized the logic of reducing costs through combining services.

The utility survey revealed few instances of joint meter reading or customer service, although a significant portion of the utility respondents had engaged in discussions about joint meter reading. The top motivators were cost savings, economies of scale, the need to improve service to customers and reduce concerns about duplication of services, and potential business opportunities. The overall level of interest in joint customer service was modest. Most utilities seem reluctant to give up any aspect of their relationship with customers.

Only a few respondents in the public utility regulatory commission survey were aware of any joint meter reading or customer service activities in their state or province. Commission respondents thought that the greatest benefits from joint utility meter reading would be improved efficiency, reduced costs to customers, less intrusion into customer's premises, and increased customer satisfaction. They suggested the biggest potential problems would include coordination of meter reading and billing processes between the utilities, confidentiality of data, employee displacement, and the capital costs of any new system.

Institutional Arrangements

Not surprisingly, in the new competitive utility environment, issues such as allocation of savings, ownership, and control were troublesome for some workshop participants. A "consolidation" workshop focused on institutional arrangements for joint meter reading and an approach to equity issues. Ultimately, only two broad categories of arrangements were defined: either one organization sells services to another through an outsourcing or contractual arrangement, or the utilities collaborate through a working agreement, partnership, or jointly owned third-party entity. Certain joint meter reading and customer service functions may be more suitable to one type of institutional arrangement than another.

The consolidation workshop considered the pros and cons of sharing various meter reading technologies, as well as billing, customer service, remittance processing, and collections under both buy/sell and partnership arrangements. Buy/sell arrangements are more prevalent and more suitable if the technology is well established, if the seller is considerably larger than the buyer, and if the seller is a for-profit corporation. Conversely, collaborative arrangements may be more appropriate if the technology is still in development, and if the parties are relatively equal in size or at roughly the same point in sophistication. Even in a collaborative arrangement, one of the entities or another must be "in charge" of any particular function. Institutional arrangements are also influenced by traditional utility regulation, non-profit status, physical and operation alignment of service territories, and physical alignment of business processes, capital costs, stranded investments, and bundled services.

Based on existing literature and the workshops and interviews, a stepwise approach to exploring and creating a joint meter reading arrangement was developed. This process typically begins with informal discussion, followed by an executive commitment to the exploration process, and the creation of a joint team. The team analyzes current processes, identifies opportunities, and develops the business case. In many cases, a pilot is in order. With process analyses and pilot data in hand, the business case can be refined, the project approved, contracts negotiated, implementation planned, and the new system rolled out.

Although creating a joint meter reading or customer service arrangement appears to be a lengthy process, the utilities involved in this study demonstrated that they can cooperate for the ultimate good of their customers.

CONTENTS
1 INTRODUCTION	1-1
The Joint Metering "Problem"	1-1
Forces Compelling Utilities to Consider Collaboration	1-1
Deregulation	1-2
Joint Meter Reading and Customer Service as a Customer Retention Strategy	1-2
Competitive Opportunities for Water Utilities	1-2
Dimensions of Collaboration	1-3
Joint Meter Reading Defined	1-3
Meter Reading Technology	1-4
Shared Customer Service Options and the Degree of Integration	1-5
Institutional and Organizational Arrangements	1-6
2 PREVIOUS METER READING AND CUSTOMER SERVICE COLLABORATIONS AMONG UTILITIES	2-1
Early Considerations of Shared Automatic Meter Reading	2-2
AWWARF AMR Study	2-2
Suburban Philadelphia AMR Trial	2-3
New York State Public Service Commission Policy on Joint AMR	2-4
The Peel Group Trial	2-4
Holyoke (MA) Joint AMR Trial	2-6
Multi-Utility AMR Trials Under Electricity Deregulation	2-7
Yorkshire Residential AMR Trial	2-7
Victoria Residential Joint AMR Trial	2-8
Brisbane Large Meter Joint AMR Trial	2-9
Union Gas Limited’s Meter Reading Service and Billing Service Initiative	2-10
3 THE ROLE OF STANDARDS AND INTEROPERABILITY IN JOINT METER READING	3-1
The Effectiveness of Interoperable Equipment	3-2
Standard Interfaces Reduce Equipment Costs and Risk	3-2
Bundled Services Help Add and Retain Customers	3-3
Open Architecture Increases Corporate Strategic Options	3-4
Standard Interfaces Preserve Future Options	3-4
“Standards” Has Many Meanings	3-5
Open Architecture Interfaces Are Developed Systematically	3-6
The 7-Layer Model, UCA, and the AMRA Reference Model	3-7
Utility Restructuring Accelerates Standards Development	3-7
Integrated Automation: More Than Interoperability	3-9
Developing Standards isa Formalized, Complex Process	3-10
Evolving Standards Make Interoperability a Moving Target	3-11
Alternative, Non-Standards-Based Strategies	3-11
Standards and Security Issues	3-12
Adopting an Action Agenda for Interoperability	3-13
4 GENERALIZED MODEL FOR MULTI-UTILITY JOINT METER READING	4-1
Why Model?	4-1
Object Models	4-2
Using Object Models to Compare Processes	4-5
5 THE BUSINESS CASE FOR JOINT METER READING	5-1
Elements of Economic Evaluation	5-1
Direct versus Indirect Benefits and Costs	5-1
Tangible versus Intangible Benefits and Costs	5-2
Economies of Scale	5-2
Present versus Future Costs and Savings	5-3
Distribution of Benefits and Costs	5-3
Transaction and Exit Barriers	5-3
Example: Shared Manual On-Cycle Meter Reading	5-4
Productivity Improvements from Combining Routes	5-5
Example: Shared Fixed Network Radio Automatic Meter Reading System	5-7
6 CASE STUDY INTERVIEWS	6-1
AMR Data Corporation Provides Meter Reading and Billing Services to Municipalities	6-1
Portland Bureau of Water, Portland General Electric and PacifiCorp Joint Load Research	6-3
Elements of Success	6-6
Future Plans	6-6
PSE&G’s Sunburst Customer Solutions Offers Meter Reading Services to Municipalities	6-7
Marketing to Municipal Water Utilities	6-7
Operational Approach	6-8
7 CASE STUDY WORKSHOPS	7-1
Introduction	7-1
Pre-Workshop Interviews	7-2
Workshop Agenda	7-3
Participants' Responses to the Workshop Process	7-4
Developing “Parallel” Processes	7-6
Colorado Springs Utilities	7-8
On-Cycle Meter Reading	7-8
Off-Cycle Meter Reading	7-12
Special Meter Reading Needs	7-12
Future Needs	7-13
Workshop Highlights	7-13
El Paso Workshop	7-14
El Paso Water Utility	7-14
On-Cycle Reading	7-14
Off-Cycle Reading	7-15
Future Needs	7-15
Southern Union Gas	7-15
On-Cycle Reading	7-15
El Paso Electric	7-16
On-Cycle Meter Reading	7-16
Off-Cycle Reading	7-17
Workshop Highlights	7-17
St. Louis Workshop	7-22
City of St. Louis Division of Water	7-22
On-Cycle Meter Reading	7-22
Off-Cycle Reading	7-22
Meter Maintenance	7-23
St. Louis County Water Company	7-23
On-Cycle Meter Reading	7-23
Laclede Gas Company	7-23
On-Cycle Meter Reading	7-24
Off-Cycle Meter Reading	7-25
Special Meter Reading	7-25
Ameren UE (formerly Union Electric)	7-25
On-Cycle Meter Reading	7-25
Off-Cycle Meter Reading	7-26
CellNet Data Systems	7-27
Workshop Highlights	7-27
Off-Cycle Meter Reads	7-30
Business Case Exercise	7-32
Barriers, Issues and Concerns	7-32
Honolulu Workshop	7-32
Board of Water Supply	7-34
On-Cycle Meter Reading	7-34
Hawaiian Electric Company	7-34
On-Cycle Meter Reading	7-35
Workshop Highlights	7-35
Laurel, Maryland Workshop	7-38
Baltimore Gas and Electric	7-38
On-Cycle Reading	7-39
Off-Cycle Reads	7-39
Special Reading Needs	7-39
Washington Suburban Sanitary Commission	7-40
On-Cycle Meter Reading	7-40
Off-Cycle Reads	7-40
Customer Service	7-40
Workshop Highlights	7-41
8 SURVEYS OF UTILITIES AND REGULATORY COMMISSIONS	8-1
Survey of Utilities	8-1
Survey of Regulatory Commissions	8-4
9 CREATING A JOINT METER READING PROJECT	9-1
Alternative Institutional Arrangements	9-1
Steps to Creating Joint Meter Reading	9-6
APP. A. ALTERNATIVE METER READING TECHNOLOGIES	A-1
Manual Cards	A-1
Hand-Held Data Entry Terminals	A-1
Electro-Mechanical Remote Register Meters	A-2
Remote Electronic Meter Reading	A-2
Automatic Meter Reading	A-2
Powerline Carrier	A-3
Telephone	A-S
Terrestrial Radio Frequency	A-6
Satellite	A-7
Broad Band	A-7
Public versus Private Networks	A-8
Dedicated Fixed-Radio Network AMR	A-9
BIBLIOGRAPHY	B-1
Questionnaire for State Public Utility Commissions	B-3
Questionnaire on Joint Meter Reading for Utilities	B-4

LIST OF FIGURES
Figure 3-1	If Two Electric Utilities Choose Different Meters, the Water Utility Has a Conflict	3-4
Figure 3-2	UCA Reduces Links (Heavy Lines) and Associated Costs	3-10
Figure 3-3	The Two-Cost Curve	3-10
Figure 4-1	Relationship between Business Objects	4-2
Figure 4-2	Business Objects	4-3
Figure 4-3	Key Object Relationships	4-4
Figure 4-4	Inheritance among Objects	4-4
Figure 4-5	On-Cycle Meter Reading Using Hand-Helds	4-5
Figure 4-6	Object Mapping Pinpoints Parallels in Processes	4-6
Figure 4-7	Meter Reading Sub-Process	4-7
Figure 4-8	Meter Reading Sub-Process (Detail)	4-7
Figure 4-9	Each of the Meter Classes Is a Specialization of the Superclass	4-8
Figure 4-10	Combined Meter Reading Using Mobile AMR	4-13
Figure 5-1	Example: Joint Manual Meter Reading among Three Utilities with Overlapping Service Territories	5-5
Figure 5-2	Multi-Utility Fixed RF AMR Configuration	5-8
Figure 7-1	Case Study Workshop Formats	7-2
Figure 7-2	Workshop Example: On-Cycle Meter Reading Objects for Hawaiian Electric	7-9
Figure 7-3	On-Cycle Meter Reading Objects for Honolulu Board of Water Supply	7-9
Figure 8-1	Percentage of Utilities that Have Had Discussions Regarding Sharing, Outsourcing or Providing Automatic Meter Reading	8-3
Figure 8-2	Percentage of Utilities Interested in Sharing, Outsourcing, or Providing Meter Reading to Others	8-3
Figure 8-3	Level of Interest in Sharing, Outsourcing or Providing Billing Services to Others	8-4
Figure 8-4	Level of Interest in Joint Customer Service	8-4
Figure 8-5	Regulatory Commission Expected Benefits of Joint Utility Meter Reading	8-6
Figure 8-6	Regulatory Commission Issues Concerning Joint Utility Meter Reading	8-7

LIST OF TABLES
Table 1-1	Meter Reading System Options	1-5
Table 4-1	On-Cycle Meter Reading Process Using Hand-Held Units	4-5
Table 4-2	Comparison of Meter Reading Steps	4-9
Table 4-3	Comparison of Meter Reading Steps	4-11
Table 5-1	Example of Shared Manual Meter Reading	5-6
Table 5-2	Calculations for Shared Fixed Radio AMR System	5-10
Table 5-3	Economies of Scale Factors for Component Investment, Operating and Maintenance Costs	5-12
Table 7-1	Expectations of Workshop Participants	7-5
Table 7-2	Workshop Example: On-Cycle Meter Reading Scenarios	7-7
Table 7-3	Workshop Example: On-Cycle Meter Reading Scenarios Aligned by Task	7-10
Table 7-4	El-Paso Meter Reading Objects	7-18
Table 7-5	Specialized Meter Reading Needs Among the El Paso Utilities	7-20
Table 7-6	El Paso Workshop Top Issues/Barriers and Strategies for Overcoming Them	7-21
Table 7-7	St. Louis County Water Co. On-Cycle Meter Reading	7-28
Table 7-8	Laclede Gas On-Cycle Meter Reading	7-29
Table 7-9	Ameren UE On-Cycle Meter Reading with CellNet	7-29
Table 7-10	City of St. Louis Water Division Off-Cycle Re-reads	7-31
Table 7-11	Business Case Exercise for Hypothetical Joint Meter Reading Entity	7-33
Table 7-12	Comparison of Board of Water Supply and Hawaiian Electric On-Cycle Meter Reading Processes	7-35
Table 7-13	Comparison of Board of Water Supply and Hawaiian Electric Off-Cycle Meter Reading Processes	7-36
Table 7-14	Comparison of Board of Water Supply and Hawaiian Electric New Account Processes	7-36
Table 7-15	Specialized Meter Reading Needs, Honolulu Board of Water Supply and Hawaiian Electric	7-37
Table 7-16	Characteristics of WSSC and BCE On-Cycle Meter Reading Processes	7-42
Table 7-17	Comparable Off-Cycle Meter Reading Processes	7-42
Table 7-18	Specialized Meter Reading Needs	7-43
Table 7-19	Business Case for Collaborative Meter Reading Services	7-44
Table 7-20	Joint Utility Meter Reading Issues and Strategies	7-46
Table 9-1	Buy/Sell versus Partnership Arrangements for Manual Meter Reading	9-2
Table 9-2	Buy/Sell versus Partnership Arrangements for AMR	9-3
Table 9-3	Buy/Sell versus Partnership Arrangements for Billing	9-3
Table 9-4	Buy/Sell versus Partnership Arrangements for Customer Service	9-4
Table 9-5	Buy/Sell versus Partnership Arrangements for Remittance Processing	9-4
Table 9-6	Buy/Sell versus Partnership Arrangements for Collections	9-4
Table A-1	AMR System Categories	A-4