WHITE PAPER: Interval Billing for Smart Meters

Interval Billing for Smart Meters: A Policy Imperative for Regulators and Utilities
A White Paper by eMeter, a Siemens Business
Chris King, Chief Regulatory Officer, eMeter, A Siemens Business and Chair of the Brussels-Based Smart Energy Demand Coalition

Introduction
Utilities calculate electricity bills using either register reads or interval data from smart meters. The use of register reads creates numerous operational and policy problems. Because register reads have a long tradition in the industry, their use should be permitted. At the same time, not permitting the use of interval data also having a long history results in inconsistency of data between consumer bills and other uses (e.g. web presentment, load forecasting, settlement, etc.), higher costs, more estimated bills, reduced flexibility, increased complexity, and other serious problems. Policymakers have a simple solution: permit both options and allow the market electricity retailers to decide whether to use register reads or interval data for billing. eMeter/Siemens is confident that the market will select the optimal solution.

Background
Electricity retailers have traditionally billed customers using either register reads or interval data. Smart meters can provide both types of data and offer the option of billing either way. A brief history is helpful for understanding these two methods.

Register Reads
Register reads go back to the invention of the electricity meter in 1873. The first meters, a type still in use for the majority of customers, accumulated consumption (kWh) in the same way a car odometer accumulates miles. The register the meters memory, in the form of a mechanical display showed only one value: total accumulated or cumulative consumption from the installation date of the meter. A register read is the number recorded by the human meter reader each month, quarter, or other period when the meter reader views the meter and writes down the value (today, the values are entered into handheld computers). Significantly, an interested customer can read his own meter and see the register number. In 1894, electricity meters measuring and recording maximum demand were invented. For these meters, the demand indicator, or register, begins at zero, then increases each time the electricity demand (kW) reaches a new peak. The register remains at the peak value until the meter is visited by the meter reader typically monthly who records the value and resets the demand indicator to zero. In new digital meters demand measurements used for billing are typically not instantaneous; instead, they are measured by computing the average demand for a short period, typically five or fifteen minutes. The peak demand is then the largest of these measurements over the billing period.

2012 eMeter, A Siemens Business. All rights reserved.

WHITE PAPER: Interval Billing for Smart Meters

Most customers have been billed using register reads since 1873. This is done by taking the most recent meter register read and subtracting the previous register read to determine the total kWh consumption for the billing period. This consumption is then multiplied by the rate to determine the bill (the bill usually has taxes, fixed charges, and other charges to reach to final amount). When demand billing is required, the peak demand register read is multiplied by the demand rate per kW to determine the demand charge for the period.

Interval Billing
Beginning around 1950, electricity retailers introduced new metering systems that record electricity consumption continuously for consecutive time periods commonly known as intervals. Typical intervals of measurement are 5, 15, 30 or 60 minutes. These load profile recorders were used initially for large industrial and commercial customers. These meters allowed utilities to provide credits for participation in demand response programs interruptible and curtailable rates as well as offer time-of-use rates. Over time, electricity retailers have developed additional rate programs based on these meters, including hourly pricing, critical peak pricing, and peak time rebates. Initially, the recorders used paper charts, then moving to magnetic tapes, then to electronic storage in non-volatile RAM the current state of the art. With todays smart meters, this consecutive interval measurement and storage is performed in the digital meter. Using data from these recorders, electricity retailers calculated bills using interval data. First, interval data was reported for each of the fifteen-minute or hourly intervals throughout the billing period. Then, the bill was calculated by multiplying the energy consumption value for each interval by the price in effect during the interval and summing the charge per interval over the entire billing period, typically monthly. For demand-billed customers, the highest 15-minute interval, the peak demand, is typically used to calculate the demand charge. Interval billing is used for most large industrial and commercial customers, worldwide, accounting for hundreds of billions of dollars, perhaps a quarter, of all electricity bills. Interval data has other uses. Most importantly, with the advent of competitive wholesale markets most of which have half-hourly or hourly price changes interval data is used to perform market settlements as well. In addition, interval data is used universally to forecast generation requirements. Further, interval data from samples of customers is used for designing rates for all customer classes. These functions involve and affect all customers of all types; therefore, more accurate data interval data provides benefits to all customers of all types.

Smart Meter Billing

Smart meters provide both register reads and interval data. In addition to cumulative consumption registers, some smart meters provide a peak demand register or time-of-use registers. For time-of-use registers, the meter generally either creates and sums interval data storing them in the memory registers or has separate cumulative registers for each of the different time-of-use periods. For simple rates such as total consumption or time-of-use, both register reads and interval data can be used for bill calculation. However, for other rates critical peak pricing, peak time rebates, curtailable rates, demand response incentives, hourly prices, etc. interval data is required.

1 Some smart meters create interval data by taking a snapshot of the cumulative consumption register at predefined periods 15 or 60 minutes subtracting the previous amount and recording the difference as the interval value.

2012 eMeter, A Siemens Business. All rights reserved.

WHITE PAPER: Interval Billing for Smart Meters

In many jurisdictions, electricity retailers are using interval data to bill all customers with smart meters, including time-of-use customers. Important examples are Texas, California, and Ontario, with nearly 20 million smart electric meters installed. In Europe, all large customers with smart meters are billed using interval data, though most smart-metered small customers are on simple total consumption rates and billed using monthly register reads. Also, everywhere in the world, interval data is used for settlement of wholesale markets.

Argument for Register Reads

Some industry participants argue that time-of-use registers should be in smart meters themselves and that calculation of time-of-use bills should be based solely on those registers. This paper describes why this approach is undesirable and argues that the market electricity retailers should be able to decide whether to use register reads or interval billing for time-of-use rates and definitely should be able to use interval billing for any and all rates. There are two basic arguments given in favor of having time-of-use registers in smart meters. The first regards the ability of the consumer to view the meter display and see the same register values that are shown on the bill. However, very, very few consumers look at their meters, and even fewer compare the register values with their bills. Moreover, the total consumption register remains on all smart meters, so consumers can use the total consumption register to validate the energy consumption presented on their bills. In this regard, Ontarios rule which may be regarded as a best practice is that the register reads for total consumption must be shown on the bill, and that the total consumption calculated from the registers must match the total consumption calculated from the intervals. The second argument for time-of-use registers in the meter is to protect consumer privacy. The notion is that some consumers will not want their interval data provided to anyone. Having the smart meter calculate timeof-use register values will allow for time-of-use billing without sending the interval data out of the meter. This situation is easily addressed by allowing the use of time-of-use register data for billing such customers though this creates serious policy problems, as described below.

The Problems with Register Reads

Some industry participants would go so far as to prohibit interval billing. This not only would prevent the use of this far superior approach to billing but also create and exacerbate the numerous problems associated with using anything but total consumption register reads e.g. time-of-use for billing. These problems include inconsistency of data between consumer bills and other uses (e.g. web presentment, load forecasting, settlement, etc.), reduced flexibility, increased complexity, higher costs, and other serious problems.

Data Inconsistency
Using register reads for bill calculation directly contradicts, in process, the data used for settlements, load forecasting, rate design, online web presentment, and other uses. For all of these other uses, interval data is used, not time-of-use register reads, when interval data is available. In addition, the reality is that 100% of all the interval or register data is never available from all meters. This necessitates performing validation, editing, and estimation (VEE) of smart meter data to create complete data sets for use in billing and all other purposes. Because data in the meter has not had VEE applied, the data necessarily differs from the data used for other purposes.

2012 eMeter, A Siemens Business. All rights reserved.

WHITE PAPER: Interval Billing for Smart Meters

For settlement, interval data is always preferred. Where interval data is not available, register reads are used and combined with class average load profiles to create artificial interval data for settlement. These artificial load shapes result in cross-subsidies between consumers and between electricity retailers, because the average load profiles do not reflect actual consumption patterns of individual customers. Accordingly, actual interval data is used for billing when available, such as in the case of all large commercial and industrial customers in Europe or all smart meter customers, including residential and small business, in California, Texas, and Ontario. Reflecting actual customer load shapes in market operations rather than using artificial averages promotes transparency and is a specific goal of smart metering. For online web presentment when data is made available to the consumer on the retailers website, which is one of the basic functional requirements of smart meter regulations in most states and countries interval data is required to inform consumers of their detailed usage patterns. These patterns, in turn, are needed to understand and better manage their consumption, and to achieve the increased efficiencies desired by policymakers to reduce overall consumption and carbon emissions. Load forecasting benefits from using actual interval data rather than registers as well. Using more granular actual consumption information allows planners to create more accurate forecasts which in turn allow better scheduling of resources and leads to more efficient operations. Actual load information helps planners estimate the capacity and expected life of distribution assets. With only monthly consumption register data these benefits of smart metering are not available. This could also be very important for prepayment customers, where retailers typically forecast how long a consumers prepayment will last before it runs out. Clearly, a more accurate forecast is more beneficial to such customers.

Reduced Flexibility
Requiring use of smart meter register data for billing would be a devastating blow to the goal of policymakers of having smart meters be a flexible tool that can support multiple applications for consumers. Time-of-use pricing is only one of many such options. Other pricing options, such as critical peak pricing, peak time rebates, demand response credits, and hourly pricing, would not be possible. This eliminates their availability as ways for consumers to save money by shifting load or charging vehicles at the lowest possible cost hourly prices sometimes drop to zero or even go negative or consciously increasing use of renewable energy, especially wind, which is most abundant at the lowest cost and highly fluctuating times. Creative retailers in competitive retail markets with smart meters are offering Free Saturdays and Discount Nights and Weekends as rate plans; these can only be done with the detailed interval data provided. With the availability of interval data and its use in billing both retailers and policymakers retain complete flexibility in devising potential pricing options to achieve consumer savings, carbon emission reductions, energy efficiency, or other consumer and policy goals. And with the detailed interval data the retailer or the consumer can analyze the usage patterns and recommend the optimal rate, pricing programs, or renewable energy options. Another application is showing consumers how much each appliance is adding to their bills. In a survey in Washington DC, consumers said this was the most valuable information they could receive about their energy use. Interval data allows for surprisingly accurate estimation of appliance energy usage, while register data is far more limited.

2012 eMeter, A Siemens Business. All rights reserved.

WHITE PAPER: Interval Billing for Smart Meters

Higher Costs and Complexity

Including time-of-use registers in smart meters is inherently more costly. It requires more memory and more calculation capability. It also adds costs at all levels of the data management chain, because every application communications head end, meter data management, VEE needs to be able to handle both the interval data and time-of-use registers. This requires more complex software. Most significantly, time-of-use registers in smart meters requires far more synchronization of devices, because the rate schedule in every individual meter must be synchronized with the rate schedule in every retailers billing system . This means synchronizing tens of millions of devices in a country such as the UK with hundreds of thousands or millions of changes every day across the total customer base. Customers move in and out, they change rate plans, they switch suppliers, they switch from credit to pre-payment, they add or remove in-home displays, they link their smart phone to their HAN, and make other changes. The problem is that automatic synchronization is never perfect, with exceptions requiring expensive manual handling and resolution. Having a single source of truth interval data that has been processed via VEE not only eliminates inconsistencies in data between various uses but also greatly simplifies synchronization. And it is inherently easier to understand. The information presents directly how much energy is used during each period. No calculation is required, no estimation of energy use based on average profiles, or marrying register values with a prior period reading and complex time-switching logic to determine time-of-energy use.

Analogies from other Industries

We wouldnt expect to pay a wireless phone bill based on a continuous running minutes counter nor would we expect consumers to verify their bill by subtracting this months counter from last months to determine usage minutes. We would be especially wary of using such a counter to indicate when those minutes were used. Similarly, if were looking to promote creative pricing and value programs such as Friend and Family rates or Weekend or Evening rates we would expect to have the equivalent of the Call Detail records to perform this billing and to justify the billing to the consumer. Most other purchases we make are based on transaction and purchase details and reflect the individual decisions we make. If we are to expect consumers to be more aware of their energy purchases we need to provide the same level of detail we see in a credit card statement or bank statement. In this we suggest that the detailed interval data presents the call detail or the purchase decision that is implied by our use of energy. And with this data both the consumer and the supplier will benefit from the creative options that will result.

3 Even simple TOU rates require complex time-switch schedules with seasonal calendars and daylight savings changes. More opportunity for error is introduced when meters are tasked with maintaining energy or demand prices. And of course, error correction is extremely difficult if not impossible without a complete erasure of the meter configuration and reprogramming.

2012 eMeter, A Siemens Business. All rights reserved.