Study Shows Technology Best Solution For Utility Transformation

July 2014, Vol. 241, No. 7

Much of the world’s developed gas, water and electric infrastructure is aging and in need of modernization. Many utilities still rely on the same electric grid that was built 100 years ago, and many of the water and gas pipes that were laid decades ago.

Increasingly, the traditional utility business model is being challenged, and innovations are constantly changing the energy mix and how resources are used, particularly in natural gas. Every day, utilities are asked to be more efficient and resourceful.

To help quantify the challenges facing gas, water and electric utilities, Spokane, WA-based utility metering giant Itron conducted a worldwide study of the utility industry – the Itron Resourcefulness Index. This annual index surveyed countries around the world to gauge how resourceful each considers the industry, what current challenges each face and what might present barriers to advancing the industry.

The findings indicated that a majority of utility executives and consumers believe utilities need greater operational efficiency with almost universal agreement among utility executives that the industry needs to be transformed to meet the changing landscape.

Technology innovation has transformed the natural gas sector over the last five years. On the supply side, hydraulic fracturing and horizontal drilling have resulted in a production boom that has dramatically changed gas reserves and forecasts. The United States has led the boom, but other countries have begun to experiment with new drilling approaches and are seeing significant shifts in the potential for supplies.

The huge increase in supply has decreased prices and led to increased use of fuel. Natural gas use in the electricity sector alone rose by more than 20% in 2012, according to the U.S. Energy Information Administration (EIA) , and forecasts are so positive that the fuel is being used in an increasing number of homes and for an increasing number of purposes, such as powering cars.

But the revolution in supply has not led to increased adoption of gas usage measurement tools or advanced measurement technology. In fact, the increased supply has made efficiency improvements seem less pressing. While the windfall energy supply has eased concern over resource shortages, the extra gas supply should be used responsibly.

The Resourcefulness Index found that 94% of utility executives across gas, water and electric utilities believe the industry needs to be transformed to achieve operational efficiencies. Within the natural gas sector, utility executives are least concerned about a definite need for industry transformation, with 29% noting concern, compared to 48% in electricity.

But that doesn’t mean the sector has no worries. Four out of 10 natural gas executives remain uneasy about their ability to deliver adequate services to meet demand. Meanwhile, only 13% of customers feel they receive an adequate level of information from gas utilities; this was the lowest stated consumer engagement rate of utility types surveyed.

Even though the resource is abundant and pricing is stable, natural gas utility executives are still challenged to meet long-term demand and better engage consumers about resource use.

Role Of Technology

While IHS forecasts about 870,000 new jobs and $118 billion in new U.S. gross domestic product by 2015 as a result of the shale gas boom, much of this forecast is predicated on production growth numbers. These projections don’t assume any potential benefits of demand management improvements that could come from technology implemented on the end-use side.

A great deal of work needs to be done to ensure the natural gas boom is being best deployed and that maximum efficiency is being promoted through the use of measurement and management technology. Underscoring this need, the index found 44% of utility executives and 31% of consumers believe natural gas utilities need to improve operation efficiency.

There’s also work to be done to better engage consumers in the use of natural gas resources. Itron’s Resourcefulness Index found that nearly nine out of 10 consumers report they are not receiving sufficient information from natural gas utilities about usage, pricing and efficiencies.

Measuring and monitoring technology has an important role to play in helping benchmark usage, pinpoint leaks and inefficiencies, forecast demand, and better engage consumers with critical usage and billing information. Utility executives across gas, water and electric utilities stated a willingness to invest in technology to improve efficiencies with 51% saying what they would first do with a larger budget is increase investment in technology.

Of those, 68% would invest in information technology (IT) services and 58% would invest in the “Internet of things.” Furthermore, 74% of utility executives believe investing in tools to manage big data is critical to modernizing infrastructure.

Gas executives showed the least willingness to invest in technology with 46% saying they would invest in technology if they had a budget increase. The reticence to invest isn’t surprising, considering both consumers and utility executives say gas utilities are the least in need of transformation compared to water and electric utilities.

Resourcefulness In Practice

Efficiency can be found in practice at utilities across the country. For example, Alabama Gas Corporation and Atlanta Gas Company have implemented technology to reduce costs, improve efficiencies and better manage natural gas resources.

Alabama Gas Corporation (Alagasco) implemented advanced metering technology across 494,000 meters in 2010. The automation cut meter reading routes by 95% and significantly reduced both the cost and required resources associated with meter reading. The deployment has also improved customer service and lowered operational costs by using data-logging information to investigate and resolve bill complaints. This includes using endpoint configuration reports to ensure data meter reading accuracy.

Atlanta Gas Light Company (AGL) implemented an advanced metering system for similar efficiency reasons as Alagasco, but AGL quickly found additional tracking benefits. After an explosion damaged more than 65 homes near Atlanta in 2010, AGL was able to determine – using the meter system and the flow data it collected – that AGL gas lines did not cause the explosion.

The effect of advanced technology is critical to the gas utility industry. This technology provides critical data to better measure natural gas resources, helping ensure increased demand is met and that natural gas is safe and accessible around the world.

The transformative effect of the shale boom clearly demonstrates how important technology innovation can be. Meanwhile, these results show the same urgency to solve problems with technology has not been universally applied on the demand-and-use side of the market equation.

Technology that provides transparency into delivery and use of natural gas resources remains a core asset to guaranteeing that natural gas remains a part of the energy mix in the United States and abroad for generations to come.

U.S. Department of Energy. U.S. Energy Information Administration. Natural Gas Monthly February 2014. Washington D.C.