Assessing the Return on Investment of AMI

By David Rubin


Advanced metering infrastructure (AMI) is widely considered to be the gold standard in modern communications networks among utilities of all kinds. It provides myriad advantages over older Automated Meter Reading (AMR) systems, from providing regular and timely meter reads to its ability to accommodate two-way communications.

AMI also offers flexibility to accommodate future needs, whether it is providing the communications backbone for more than one distribution network or expanding to include additional technologies that enhance network operations. It’s a system that can transform the nature of a utility’s relationship with its customers.

Understanding the real return on investment of AMI goes beyond a simple metric. At first glance, AMI may look like a more substantial and onerous investment than AMR, largely because of the capital expenditures associated with the cost of creating the infrastructure. However, that cost of the infrastructure must be offset by the costs of truck rolls and staffing needed to operate an AMR system.

Other Costs to Consider

But the value of AMI should not be measured only in terms of the hard costs. A large part of the return on the investment in AMI involves the value of the intangible benefits the volume of data collected by AMI delivers such as the insights provided into network operations, improved customer service, increased interaction between a service provider and its customers, and ultimately, a different perspective on the water network beyond billing.

AMI is not just a cash register for the utility — it also creates a very different paradigm than AMR. In fact, if AMR is about meter reading and billing, then the province of AMI is really about network operations and the relationship between the utility and its customers.

Of course, when introduced, AMR represented a leap forward in billing procedures for water utilities. Automated and digital, AMR was a significant step up from manually reading water meters. But whether walk-by or drive-by, AMR still necessitated having people in the field to drive by and get close to every meter.

From purely operational and cost perspectives, AMI, as a fixed network, eliminates this need, saving on labor costs and the expense of deploying trucks into the field to gather data. AMI works all the time and requires no manual intervention, with each endpoint transmitting data, usually over an RF network, to a permanently installed data collector. That collector automatically sends the collected data back to the utility on a schedule.

AMI is also a powerful tool in helping utilities reduce non-revenue water caused by real water loss through leaks and breaks in water mains and apparent water loss from meter reading and billing errors or unauthorized consumption.

One of the benefits of a fixed network AMI system is that in addition to reading meters it can collect data from additional sensors and edge devices on the distribution network.

Finding On-Premise Leaks

Because AMI regularly reads meters and sends that data to the utility, the network can quickly help to identify leaks. For example, the Aclara RF™ system, in its default state, reads a meter every hour, and sends those readings to the utility every six hours. The utility gets a continuous stream of time-stamped, 24/7 information for each day that comes in very soon after the reads were generated. Not only is there a lot of data, it’s also more granular, not only supporting accurate billing but much more.

Utilities can use algorithms to analyze the data they collect with AMI and flag any increased water use, allowing customers to rectify problems early on. Additionally, if the AMI system detects 24/7 water use, a highly unlikely scenario for most homeowners and businesses, the utility will know that as well and can alert the customer to a potential leak.

DC Water’s High Usage Notification Alerts program, for example, uses analysis of AMI data to detect 24/7 usage. Customers can set thresholds at which the utility notifies them of continuous usage. DC Water’s program recently helped one customer find a hidden leak in their home, possibly saving the customer hundreds of dollars in wasted water charges.

This is a huge advantage over drive-by AMR. With AMR, if the truck went by yesterday, and the toilet started leaking today, the customer would not know that they are using a lot of extra water until they received a bill based on the new level of water usage. This would be at least 30 days from the next reading.

Some utilities using AMR, however, do not take readings every month, but instead rely on estimated readings for billing until an AMR reading is taken. In the case described, when the truck would once again drive by, get a new reading, and pass it through the billing system, the customer would get an unexpectedly large, single-read bill a short time later, and would likely complain to the utility.

Some utilities are willing to write down a portion of an extensive bill, and in that case, resolve the customer’s complaint. However, in doing so, the utility will experience apparent water loss that will impact its revenue. On the other hand, they may insist that the customer pay the entire bill – but neither scenario represents a good outcome. Either the customer is angry, or the utility has lost revenue. AMI provides the ability to head off these situations and create a more satisfactory and timely solution.

Utilities are beginning to use AMI networks for more than reading meters. For example, the Aclara ZoneScan II correlated leak detection system helps identify hidden leaks on water distribution networks.

Resolving Distribution Leaks

Of course, leaks may also occur elsewhere in the water distribution system. To help mitigate real water loss, many utilities are integrating advanced leak detection systems into their AMI networks. That is something that is not possible with AMR, because a big part of a leak detection system is real time, automatic retrieval of data. Driving a truck round once a month doesn’t work, but if the network has an umbrella of data collectors, and the utility has a leak detection system that sends in data every morning from what it found overnight, that is a nice leverage of an AMI system and expands the capabilities of what the utility could do.

An example is the Aclara ZoneScan II Correlated Acoustic Leak Detection System, which is fully integrated through the Aclara RF AMI. This acoustic leak detection system helps water utility operators quickly and efficiently locate leaks within a few feet using a full system correlation of data collected from sensors placed along the distribution system. The ability to identify leaks even if they don’t surface helps reduce non-revenue water loss as well as service disruptions on the distribution network and furthers conservation efforts by containing leaks.

 Intangible Benefits of AMI

Another intangible benefit of AMI has to do with the improving the overall nature of the customer relationship that it engenders. Unlike AMR, AMI offers the power to interact with, engage and empower its customers, and respond to the changing demands of today’s consumer.

For example, there are various consumer engagement tools that utilities can employ that help customers track their ongoing usage. These range from simple text messages that alert customers to high consumption to sophisticated customer portals that let them understand how they are using water and take action to reduce usage. These consumer engagement tools create a personal and empowering experience for customers so they can understand and take ownership of their water costs.

Going forward, utilities will future proof their AMI networks for both growth and increased automation. More data, more analysis, more data mining we haven’t even thought about yet that will require the continuous, granular data of an AMI system that an AMR system cannot provide.

By adding analytics and finding additional ways to employ their AMI networks, water utilities are building a far more advanced and encompassing smart infrastructure solutions (SIS) for managing their water distribution systems.

The versatility of this approach provides greater network visibility, manageability and actionable information for utilities and their customers. By integrating a range of hardware, software and data technologies, SIS will allow water utilities to reclaim lost revenue and mitigate the impact of non-revenue water losses.

AMI represents the future for utilities, empowering them to deliver the best service to their customers while maximizing their network operations. Perhaps that is the best measure to assess the return on investment of all.


David Rubin is director of product management at Aclara. Rubin leads the water AMI team and has 20 years of hands-on technology experience and a strong business background. He is responsible for the strategic direction and implementation of new water products including Aclara’s core AMI offerings, its Aclara ZoneScan leak detection system and the company’s smart infrastructure efforts.

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