FINAL City LightPORT

TABLE OF CONTENTS

TABLE OF CONTENTS

Section 1: Executive Summary

Section 2: Business Case Update

2.1Business Case Methodology

2.2Assumptions

2.3Overview of AMI Benefits

2.4City Light’s AMI Benefits

2.3Overview of AMI Costs

Section 3 Advance Metering Technologies

Advanced Metering Infrastructure

Meter Data Management

Volt/Var Management

Distribution

Electric Vehicles

Communications Infrastructure

Workforce Efficiency

Section 4 AMI Use Cases

Appendix A: List of Acronyms

Section 1: Executive Summary

Beginning in late August 2014, Seattle City Light (City Light) engaged Leidos Engineering Services to perform work to validateits 2012 Business Case. The analysis from a previous 2012AMI study was reviewed to understand the circumstances of City Light at that point in time,as well as understand how the AMI technology has further matured since the original business case in 2009.

In 2012 there was first an intensive data gathering effort that was performed for twomonthsfocusing on how City Light performs business today in the areas where typical implementations of Advanced Metering Infrastructure (AMI) technology show improvements. Leidos leveraged the same proprietaryAMI business case model used in 2012in order to capture the calculations of AMI benefits, costs, City Light system parameters, and most importantly financial results of multiple AMI implementationscenarios. This business case model produced the results and graphics found within this report.

During the initial meeting Leidos was directed to perform analysis involving the following fivescenarios:

  1. A “Build, Own and operate” utilizing a point-to-point (Star) AMI technology solution.
  2. A “Build, Own and Operate” utilizing mesh AMI solution.
  3. A 3rd-party, hosted solution utilizing a mesh AMI solution.
  4. A “Build Own and Operate” utilizing a point-to-point Cellular AMI solution.
  5. A 3rd party, hosted solution utilizing a point to point Cellular AMI solution.

The work reviewed the advantages and disadvantages of today’s primary AMI network infrastructures involving Radio Frequency (RF)Point-to-Point (Star) and Mesh technologies, as examined in 2012. The team directed the review to also include Point-to-Point Cellular AMI identifying the benefits and cost associated with the cellular technology.

Beyond the AMI network, 3rd-party hosted solutions have become a major change in how businesses conduct portions of their operations. Hosted solutionsis where the management of data centers and software applications takes place off-site which allows for economies of scale to be achieved. This is advantageous for utilities like City Lightbecause they provide the operation and maintenance of computing hardware and software along with disaster recovery and cyber security. These capabilities, quite frankly, can beunachievablewithin the cost structures of many utility organizations. Leidos was directed to include “Managed Hosted Service” as part of the update of the business case analysis.

Business Case Results

The business case review produced the following financial results:


The “Build, Own, and Operate” scenarios 1,2 &4were modelled at three years of project deployment. The “Managed Service” models scenarios 3 &5 were modelled at two years. A “Managed Service” inherently has the systems already built, a large portion of integration already completed, and an operating data center with people managing a network in operation. Hence, the deployment can be done in less time with the ability of delivering the business benefit stream in one fewer year than in an own and operate scenario.

Overall capital requirements range from $94.7 million to $130.3 million with the cost of the meter replacement being the largest component of that capital requirement ranging from $88.0 million to $123.0 million respectively.

The meter replacement cost was higher than the 2012 study of $66.5 million for two reasons. First, the additional cost of purchasing a remote disconnect switch for 294,000 form 2S meter and 104,000 form 12 S meter adds $21.9 million. Secondly, the meter population has an additional 16,000 meters than the 2012 study.

Annual O&M cash flow ranged from $3.6 million annually to $6.2 million. The “Managed Service” scenario 3 &5, has a higher operating cost because the service is modelled as a monthly $0.75 / meter / per month fee. The operating cost of the Cellular PTP, scenarios 4 & 5, are also higher because they carry a $ 0.25 / meter / month operating fee to the cellular provider as a data feed for the data backhaul.

The next to last column of the financial table, “SCL Post Deployment Support” shows the level of ongoing support of the technology one the program is fully deployed. The managed service options are less support, two people. The service supplies all but network communication support of the collector system.

Whereas the “Build, Own, and Operate” scenarios, scenario 1 &2, require ten people to support the ongoing program. The “Build, Own, and Operate” PTP scenario, scenario 4 requires slightly smaller support of nine people. This is because the cellular network will have less communication backhaul work activity.

Benefits


The most significant benefits are shown in the above table. Differences from the previous study worth mentioning are in the - Meter Accuracy, Connects / Disconnects / & Account Transfers. Meter Accuracy in the previous study used a very conservative 0.5% benefit for the population when moving to solid state metering. Every utility is different based on quality of their electro-mechanical metering and vintage. A 1% accuracy improvement was taken as being more realistic.

The 2S and 12S meter population is planned to be specified with a remote disconnect with an indicative retail price of an additional $55 per meter. The reason for bearing this cost is in the area of business benefit in regards to operating this switch from the office (without rolling a truck) in those situations involving work orders to connect, disconnect, or transfer accounts. The remote switch saves office time, but the majority of the benefit for City Light lies in the 9,754 annual field trips involving 14,631 hours. Overall this function drives $1.5 million of benefit annually.

The other benefits previously reviewed simply changed because of updated labor rates assuring a “fully” loaded rate was used. Or the benefit was driven by revenue or sales which have increased in the two years since the previous study.

Leidos was specifically asked to include two new areas not taken given consideration in the previous business case, the leveraging of AMI data for Volt Var Optimization and Demand Management.

Volt Var Optimization (VVO)

Volt Var Optimization has evolved significantly since City Light’s 2009 study period. Vendors are now leveraging the voltage sensing capability of the AMI meter to tune the distribution infrastructure. This has resulted in the industry can take former traditional approaches of 1% voltage reduction to possibly increase to over 3.2%.

In regard to further analysis, Leidos brought in a leading vendor in VVO technology, DVI. The purpose was to demonstrate why greater voltage reduction can be achieved and thus greater benefit justified in the business case analysis.

The technology improvements were demonstrated in several areas on September 8, 2014 to City Light’s AMI project team and distribution staff with engineering and construction expertise:

  • Foremost, the ability to initially monitor every meter point. Utilities with AMI no longer need to fly blind with sampling of voltage recording to understand fluctuations of their system across variables of different seasons and demand loading of their systems.
  • The use of AMI voltage sensing meter data at the secondary voltage level, rather than past practices typically limited to primary voltage sensing of the distribution feeder.
  • The statistical use of algorithms to identify bellwether data points driving the low voltage points of a feeder.
  • The ability to adjust to different load patterns driven by seasonality used in the algorithms.

Two of the main obstacles to successfully implementing CVR are developing a practical method of controlling voltage that is adaptive to the dynamic changes that typical distribution circuits undergo and measuring the energy saved when the circuit is operating in the more precise lower voltage band. Techniques that control voltage using state estimation rely on primary level sensors and can only approximate the voltage drop on secondary conductors and service transformers affecting the customer meter.

After understanding this current technique of leveraging AMI meter sensing data with VVO, considerable discussion occurred at the committee level in regards to what reasonable level of benefit should be taken in the business case.

VVO was considered in two ways, for demand management purposes and overall daily operational efficiencies of the system. The consensus was reached that although a demand management purpose was obtainable, a conservative approach would to limit the benefit to overall system efficiencies (running the system with tighter voltage tolerances daily). Furthermore, because of the nature of City Light’s 26kv feeder system, it was felt taking benefit on 33% of the system would a better starting position versus a larger portion of the system.

This debate and modelling resulted in $2,596,641 of benefit under the rationale of operational efficiencies only using a 2% voltage reduction against 33% of the system.

Recommendation: Volt Var Optimization having a high benefit potential needs early validation considering previous analysis performed by Leidos. The benefit may even exceed expectations beyond operational benefit in the area of demand management. Leidos recommends testing this capability early in deployment with a pilot concept against City Light distribution infrastructure.

Demand Management

Leidos was asked to reviewthe ability of leveraging AMI with Demand Management a thorough vetting. With the understanding demand management may not have immediate value in the short term, or the next few years under City Light’s circumstances, however over the life of AMI system (20 years) it was certain demand management will become a necessary tool in City Light’s operations.

The downside of a broad Demand Management program can be the communication cost of integrating new devices beyond the meter, additional cost of load control devices, a heavy burden of administration costs, and the risk the designed program not being coincident with the peak intervals. As a starting point, an approach where there is a low burden of administration and installation of additional equipment was taken.

Multiple on-site and teleconference meetings were held with City Light Power Marketing covering potential areas from future periods of generation constraints, transmission constraints, to even periods where there are not expected to be system constraints however it may make sense to earn a greater margin at a wholesale level by using demand management at the retail level.

The Power Marketing group made the assumption demand management can provide AMI benefit at price point above the 95th percentile over a 13-year forecast. Understanding the MWH available during those periods also assumed AMI could provide 5% savings. To allow a low risk, low infrastructure approach, the 5% was reduced to 2% which produced a leveled $501,419 annual benefit for the program.

Cellular Point-to-Point (PTP) Technology

Cellular Point to Point Technology (scenario 4 and 5) is an additional technology considered in the analysis which was not covered in the 2012 study. The cellular technology refers to the back haul of data from the meter to the data center. Cellular uses a meter with anintegrated communications board capable of using a cell phone carrier for communications.

The analysis keeps all other parts of the system equal in comparing systems, which centers the comparison of on the value of AMI proprietary system against the common carrier system.

In regard to benefit, the cellular PTP is optimum where sparse customer density exists whereas RF PTP or RF Mesh systems are not viable. In the case of RF PTP the 3500 customers to 1 tower ratio used becomes too low and cost prohibitive. Or similarly in the case of RF Mesh the 800 customer to 1 collector ratio becomes too low and cost prohibited.

The other area where cellular PTP has benefit compared to proprietary network is the case where a RF mesh network has a utility where water meters need data backhaul with no electric meters to network the data back.

Neither of these circumstances exist at City Light, and therefore, there is no apparent benefit for choosing cellular.

On the cost side of considering Cellular PTP, a premium occurs with the cost of the metering deployment. Considerable discussion has occurred on what the cost of the cellular PTP meter can be obtained. As example, the price of a 2S meter for a RF mesh meter of $80 goes to $180 for cellular PTP meter. This price premium adds $30.2 million the overall capital cost of the project if all cellular PTP meters where used system wide.

O&M cost also are higher for Cellular PTP. A $0.25 per meter per month charge by the cellular carrier is expected. ($1.3million annually)

Recommendation: Considering the customer density of the SCL territory, cellular communications backhaul should only be considered where significant communications issues exist for the proprietary network. Therefore, a small handful of locationscould be expected.

These benefit values were used consistently across all five scenarios of the modeling. Although the likelihood of achieving this overall operational efficiency is stronger in the “Managed Service” scenarios because many components are prebuilt, the implementation period can be achieved in shorter period, and the service is tested. Hence there is considerable less implementation risk in scenarios 3 &5, “Managed,” versus scenario 1, 2, 4 “Build, Own, & Operate”.

Section2: Business Case Update

Leidos (formerly SAIC) Engineering Services, Robert Maurer and Brandon Garcia, have been engaged to update the 2012 Business Case work performed by SAIC.

This section discusses the benefits and costs associated with various Smart Grid investments and provide an economic evaluation of Smart Grid applications for City Light. The Leidos business case model is an Excel based spreadsheet and should be used in conjunction with this section to fully understand the benefits and associated cost of the technologies.

The benefits have been derived from the specific circumstances currently existing at City Light. The costs outlined herein have been developed through research of publicly available data (mainly EPRI, NETL, City Light, the Energy Commission, the Department of Energy, and the Battelle Group) as well as information used in detailed business case models we have developed for other utility clients.

New areas of consideration compared to the last evaluation were also reviewed. Additional expertise in the areas of Volt Var and Demand Management were brought in for analysis of City Light ability to leverage AMI technologies and shall be discussed in this section.

2.1Business Case Methodology

Leidos and City Light planned a multiple-day business case workshop to be held at City Light to review business case modeling and ascertain benefits from subject matter experts (SMEs). In August 2014, the Leidos team held an initial meeting with Smart Grid committee to demonstrate the methodology and agree upon scope. Specific City Light data was received involving areas such as labor rates, number of billing complaints, existing labor to read electro-mechanical meters and turn on and shut offs where gathered in advance.

Three other workshops occurred between September and October, 2014.

Meeting 1 – Leveraging AMI to maximize Volt Var benefit assisted with help from DVI.

Meeting 2 –Using AMI to maximize future Demand Management Capability, assisted by Tangent Solutions

Meeting 3 – Data review with Smart Grid Committee members for validation of SCL data.

This workshopwith the City Light data preloaded in the Leidos AMI business case modeling tool. The workshop accomplished the objectives of determining consensus on overarching assumptions, providing indicative industry cost data for AMI implementations, and the discussion and tuning of benefits applicable to the specific circumstances at City Light.

On November 6, 2014, Leidos presented to the AMI Advisory Committeethe initial results of the modeling. And lastly, prior to issuing the draft report results where communicated to the Steering Committee on November 24, 2014.

2.2Assumptions

The following overarching assumptions were identified during the course of the workshop:

  1. Address each of the three competing RF Architecture Technologies, of interest to SCL (Mesh, Star, and 3G/4G/LTe) in the Communication Architecture section
  1. Address the benefits of an accelerated implementation timetable (estimate is two years plus 6 months stabilization) compared to the current published schedule.

Taking these assumptions into account, the Leidos business case model focuses on 5implementation scenarios.

  1. A “Build, Own and operate” utilizing a point-to-point (Star) AMI technology solution.
  2. A “Build, Own and Operate” utilizing mesh AMI solution.
  3. A 3rd-party, hosted solution utilizing a mesh AMI solution.
  4. A “Build Own and Operate” utilizing a point-to-point Cellular AMI solution.
  5. A 3rd party, hosted solution utilizing a point to point Cellular AMI solution.


A “Build, Own, and Operate” refers to the situation where a utility installs and implements AMI technology and after implementation the utility is fully responsible for day-to-day operations. As Figure 1 below depicts, managing the daily operations of all major components, the metering, the two way communications from the meter to the collector to the Meter Data Management System, the hardware and software involved with the AMI headend, MDMS, Portals, and interfaces such as the CIS system.