Berkeley Lab Research News


New Study Examines Electric Utilities' Market Testing of Electronic Information Services

How to Receive Future News Releases
By Allan Chen, [email protected]

January 28, 1997

BERKELEY, CA -- Wireless radio technologies are ahead of cable-based broadband communications in electric utility market tests of electronic information services for residential customers, according to a new study from the Ernest Orlando Lawrence Berkeley National Laboratory.

Utilities are racing into this potentially lucrative market in search of new sources of revenue as many states consider deregulating electricity markets and introducing retail competition.

One reason that wireless may dominate in the market for residential customer energy information services is that its installation cost per house is currently much cheaper than that of cable-based systems.

The study also found that energy services such as time-of-use rates and customer-controlled load reduction offered through these systems provided energy cost savings ranging from seven to 15 percent of residential customers' energy bills at several utilities. These savings were worth between $60 and $175 per year.

Charles Goldman, principal author of the study and a staff scientist at Berkeley Lab's Energy & Environment Division, along with colleagues at the University of Delaware and Energetics Inc., surveyed 21 pilot projects across the country run by electric utilities offering electronic information services to their customers.

"The range and type of services varies among utilities, driven in part by the capabilities of a utility's communications system," says Goldman. "We found that some utilities testing these waters are offering a few energy-related services such as automated meter reading and time-of-use pricing. Others are offering, or planning to offer, a comprehensive package of services that also include energy information, innovative billing, home security, long-distance telephone, cable TV service and Internet connectivity."

Currently, utilities are testing out different approaches, and most are offering these services to customers in pilot programs for free, but this won't continue: "We expect that a small number of big winners will emerge from these trials, probably four to seven leading firms that act as system integrators for teams of product vendors meter companies, and communications and software firms," says Goldman.

Most of the programs in the survey involve one of four technology types: broadband cable-based networks, fixed wireless radio networks, mobile wireless systems, or telephone-based systems.

"A utility's long-term strategic vision helps explain why it's chosen a certain technology," says Goldman. "Many utilities involved in broadband projects seek to become full-service retail providers of energy and non-energy services, and these view both as potential sources of revenue."

Utilities that have deployed wireless radio networks tend to "focus on near-term improvements in their operations to reduce their rates," he adds. These utilities are using wireless networks to offer customers services like automated meter reading services; time-of-use rates, in which customers pay less for electricity when overall electric demand is lower; and energy information services, which help customers make energy-efficient choices by telling them how much energy each of their appliances is using.

"Wireless radio technologies are farther along in terms of large-scale deployment, compared to competing communications systems," says Goldman. "These projects, for example, at Kansas City Power & Light, Public Service of Colorado and Baltimore Gas & Electric, typically involve partnerships that are less complex than broadband arrangements.

"The utilities involved in broadband cable development appear to be eager to get involved in the burgeoning home-based information, entertainment and communications market."

A few of these utilities, including Entergy and Central & South West, have decided to build their own communications infrastructure while most others have decided to partner with cable or telecommunications companies.

The study found that every utility in the survey was offering automated meter reading, and half were offering time-of-use pricing for residential customers. These utilities used an interactive thermostat or in-home display device to indicate prices in up to four periods per day (low, medium, high and critical). Half the utilities were offering a limited set of energy information services -- for example, running totals of monthly electric bills and usage, electricity usage of several individual appliances, and comparisons of current and past energy use.

Although many utilities plan to offer non-energy services such as electronic home security and personal communications, only three were actually offering these services at the time of the survey.

Utilities' own cost data indicated that wireless radio systems are considerably cheaper than hybrid fiber-coax cable (broadband) systems. One-way mobile wireless systems cost about $100 to $150 per house installation. These use radio-equipped vans that drive by houses, collecting meter readings from electric meters retrofitted with electric modules. However, these systems have more limited functionality in terms of types of services that can be offered.

Fixed wireless networks cost utilities between $180 and $600 per house to install. These systems usually have a two-way radio network from the local pole-top collector back to a central utility location, rather than all the way to the customer premise. Finally, broadband cable projects were currently the most expensive between $1,000 and $3,000 per house, according to the survey.

Large-scale deployment of broadband systems may hinge on the ability of utilities to meet aggressive cost targets ($300-500/house) and develop attractive applications for which customers are willing to pay. Developers of broadband projects for electric utilities face a formidable competitive challenge if fixed wireless radio networks are deployed first on a large-scale and capture most of the potential energy-related benefits. These investments in a competing communications network infrastructure may foreclose or seriously limit deployment of broadband networks to customer premises by electric utilities because project economics may hinge on realizing benefits to the utility system, such as reductions in utility costs of operation and peak demand savings, as well as revenues derived from a broad array of non-energy and energy applications.

The research team plans to continue monitoring emerging trends in utility communications services. "We're convinced that these pilot projects foreshadow the future direction of residential customer energy services," says Goldman.

"Impact of Information and Communications Technologies on Residential Customer Energy Services," LBNL-39015, was authored by Charles Goldman of Berkeley Lab's Energy & Environment Division, Willet Kempton, Anita Eide, and Maithili Iyer at the University of Delaware, and Mindi Farber and Richard Scheer of Energetics Inc.

For a copy of the report, contact Patty Juergens, fax: (510) 486-6996, email: [email protected]

Berkeley Lab is a U.S. Department of Energy national laboratory located in Berkeley, California. It conducts unclassified research and is managed by the University of California.

Search | Home | Questions