Traverse City Light & Power is targeting a multi-million dollar upgrade of its system to smart meters in 2017 – a move that will allow the utility to wirelessly read customers’ meters, connect and disconnect power remotely, and charge peak pricing based on grid demand.

TCL&P board members recently unanimously approved soliciting bids this fall to switch to an advanced metering infrastructure (AMI) system. The project would replace the utility’s existing analog meters – which require technicians to go on-site and take field readings once per month – to digital smart meters that can both send and receive data wirelessly.

The move would change “the utility from a reactive model to a proactive model,” according to TCL&P Manager of Telecom and Technology Scott Menhart. Instead of 12 readings per customer per year, the utility could monitor hourly or daily usage throughout its entire grid remotely, tracking “the peaks or valleys of our system,” Menhart says. The new meters can help prevent outages by immediately alerting staff to energy spikes or malfunctioning equipment before those issues cause power interruptions; they can also facilitate faster responses when outages do occur.

“Today, staff has to wait for enough phone calls to come in to get an idea of outage damage before restoration times can be determined…this lack of information tends to upset customers very quickly,” according to a TCL&P staff memo to board members. With AMI, staff can “address small issues before customers are even aware (of them), and prioritize and quickly release public statements on large outages...we will instantaneously (know) all customers that are offline with a very good degree of accuracy.”

Converting TCL&P’s network to AMI – including meter replacement, infrastructure, installation and software – is expected to cost an estimated $3.8 million. TCL&P has enough cash reserves to pay for the project and will not need to bond or borrow for the expenditure, according to internal documents.

Following a September RFP process and October review and approval of bids, TCL&P hopes to select a vendor and begin replacing meters in the first quarter of 2017. The switch is expected to be fully complete by early 2018. Meter upgrades would take place systematically “by route,” according to TCL&P Executive Director Tim Arends – there are just under 60 routes in the utility’s network – with customers receiving advance notice and then experiencing a brief outage on the day their meters are replaced.

The project's rapidly approaching start date means Traverse City commissioners will likely accelerate discussions this fall about simultaneously converting the city’s water meters to smart meters, according to City Manager Marty Colburn. Menhart says there is a “tremendous benefit” to TCL&P and the city upgrading their electrical and water/sewer systems to AMI at the same time. Upgrading all the meters at once would raise the project price tag from $3.8 million to $5.5 million, with costs split proportionally between TCL&P and the city.

City commissioners Tim Werner and Amy Shamroe – both of whom sit on the TCL&P board – expressed support for those discussions, citing the cost savings anticipated in the project. Switching to smart meters is expected to save the city approximately $1.4 million per year, with the largest revenue return coming from more accurate meter readings. Water meters tend to “degrade considerably faster than electric meters,” notes Arends, meaning greater savings on the water side than electrical. The cost savings in both areas could pay off the meter upgrades in under five years, according to staff estimates.

So how might the switch impact customer rates? Some consumers are likely to see an increase: “more accurate” meter readings translates to higher bills on properties where slow or outdated meters aren’t currently capturing correct usages. TCL&P’s ability to introduce peak pricing through smart meters – for example, raising rates during the middle of summer afternoons when a majority of customers are taxing the grid with air conditioning units – could also lead to increases for those who maintain heavy energy usage during those periods.

But Arends notes the new smart meters will also provide consumers the ability to log online and track their daily energy usage, enabling them to make immediate adjustments to lower their bills. “Right now, we charge the same rate all day, and there’s no incentive for when people use their energy,” he says. “But if people take advantage of (peak pricing) by doing their laundry at night, or turning off the air conditioner for an hour in the afternoon, they can lower their rate. They can make a conscious choice of when they use their energy...which helps everyone in the grid by reducing those peak demand charges."