AMI Should Benefit All Consumers

Article published in the May 2025 Newsletter of the Global Smart Energy Federation.

The justification for investments in Advanced Metering Infrastructure (AMI), which includes smart meters, backhaul communications, backend Meter Data Management System (MDMS), and then billing/bill delivery systems, etc.  have been in vogue for over 20 years in many developed countries and for over 10 years in developing countries. In many jurisdictions, this has enabled time-of-use (TOU) rates. From erstwhile Automatic Meter Reading (AMR) to AMI 1.0 then AMI 2.0 now AMI 2.0+ (prepaid), the falling cost of this technology is moving the business needle towards mass deployment.

 The ability to “time slice” energy consumption (and hence derived demand profiles) in 15-minute intervals, is seen as a very valuable move to get a good insight on consumption patterns and contribution to co-incident peaks. This was not possible with traditional mechanical meters. Utilities for their part rely on these “time slices” to get short duration aggregated loads on a given feeder for better real-time load management, rather than be limited by a static planning assumption. This allows better insight into the maximum load “headroom” on each individual feeder based on its own load characteristics, rather than a blanket standard. However, there is no published data, that there has been any substantial value release in utility asset utilization because of this “headroom”.

 Smart meters enable remote turn-offs, raise-lower power limits and better cash management (through pre-paid schemes). AMI has eliminated labour costs associated with monthly meter readings. Smart meters have also enabled a much easier way of catching energy thefts. Evaluating historic data, current load patterns, and sub-feeder loadings, such thefts are more easily discernable than with mechanical meters. In India and Brazil, smart meters are built physically robust, electronically tamper-proof and 4KV “zap” proof, as part of meter standards.

 However, AMI also has a few business and technical challenges i.e. (1) escalating costs due to rapidly changing telecom standards (faster obsolescence relative to utility power assets); (2) lack of analytical support to residential load flexibility to avoid unnecessary service upgrades; and (3) inability to provide value to small consumers in helping them budget electricity costs. One would argue that AMI offers no direct benefits to small consumers as data is available only as historical records. While such records influence long-term choices (energy efficient appliances and avoiding TOU peak rates), they do very little else, especially in real time load management. The consumer’s own smart meter data is yet to be monetized for the consumer’s benefit.

 In a roundtable discussion at the India Smart Utility Week 2025 held in March in New Delhi, the value of AMI across all consumer segments was discussed. The participants included central/state policy makers, regulators, utilities, industry and other practitioners and experts. While there was consensus that utilities benefited the most (operations, optimization, pre-paid scheme, remote disconnects and theft prevention), there was no consensus that the millions of residential and very small retail businesses benefited from AMI (particularly, those that had tariff-subsidy for the first 300 kWh and others with very low monthly consumption <700 kWh).

 Broadly speaking, an AMI rollout of one million smart meters together with its telecom backhaul and MDMR, etc.  likely costs about $80-100 million even with a low-cost smart meter averaging $70/meter. Then there is ongoing maintenance, IT operations, and technology obsolescence upgrades. For example, the conversion from 3G to 4G or 5G requires extensive upgrades to the AMI system. The question is, should the above cost be borne by residential and small retail customers who derive little or no benefit from AMI.

 In a recent article published in T&D World by Nora M. Brownwell (former FERC Commissioner, former NARUC President and former Chair of PG&E), “Smart Meters Alone Can’t Fix Our Problems: Why We Need a New Approach to Consumption Data”, she articulates capturing time-use-data for consumer load flexibility (EV charging, peak usage management). In other words, provide digital data-driven tools for consumer betterment. This data should also ensure low-to-moderate (LMI) consumers empower themselves to make effective choices regarding costs. The article further states, “despite significant market penetration, AMI/AMR have yielded few practical benefits for end-customers”.

 In my view, the value of AMI can be enhanced in select areas, where the consumer benefits directly. Whether provided by the utility or by third-party, the real-time availability of meter data allows better load management. These are outlined below:

 1.       Provide Smart Meter Data Hop-to-Homes: Alter the “star-topology” data flow (meter-MDMR-consumer) with a “duplicate” spin-off reading wirelessly to the home Wi-Fi network (much like security systems). This would be akin to the old M30 spinoff reading in analog metering. This would enable third-party software decision support platforms to better manage load flexibility.

 2.       Provide Prepaid Meter Decision Support: Pre-paid consumers receive top-up text alerts. Such alerts are binary (“pay-up or else”) raising budget concerns for the poor consumers. However, if early actionable text messages are sent, such as “5 days prepaid left - limit A/C use”, it will go a long way to manage bills.

 3.       Enable Load Flexibility: Residential loads need prioritizing to manage its heavy appliances (EV charger, air conditioners, hot water tanks, space heating and dishwasher, heat pump, etc.). Either an in-house platform or a subscription-based cloud platform could use smart meter data and run algorithms to ensure priorities are met without sacrificing comfort and needs. 

 4.       Incentivize Load Management for Grid Stability: Utilities should offer rebates and “influence” load management based on network congestion, stability, power quality and generation imbalance. This could be offered as “well-done” one-time rebates or a subscription-based scheme for limited load control.

 There is so much more to be done using AMI data to help consumers and not just utilities. If utilities are not wanting to go down this path, then smart meters and AMI investments should not be put in rate base but rather be viewed as utility’s in-house tool to improve their operations.

The true value of AMI should directly benefit consumers and offer ways of lowering their bills