Metering. Overview. Market

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1 Metering Overview The term metering encompasses a wide range of products: residential utility meters are prolific examples, as are the many commercial sector installations which range from small units, similar to domestic meters, through large capacity meters used by industrial scale manufacturers, to the utility companies themselves monitoring their throughput in millions of units per day. Market There is a drive to achieve more accurate and representative metering to allow individuals and companies to understand their own usage and ultimately to inspire a reduction in consumption. Residential metering provides a constant and largely predictable demand for these products through replacement schemes. The number of new residences being built each year is set to increase from 185,000 in 2006 to 240,000 by each unit requiring the appropriate meters to be installed. Meters in commercial and industrial applications often have similar or shorter replacement timescales to domestic installations and the utility companies themselves are increasing their use of metering systems to better monitor their resources. When the meter replacement market is combined with those meters required for new residences and supply monitoring it is clear that this is a growing industry sector. With increasing demands for accuracy, ease of use for the customer and ease of reading for the utility provider, meters have continued to develop. The increasing focus on smart metering means that it is likely that they will continue to do so. 1 Prime Minister s announcement, July. 1

2 Gas meters A gas meter is used to measure the volume of fuel gas which is consumed within the property. Supplies of gas are almost universally metered in the UK. Approximately 80% of domestic residences are connected to the mains gas supply, a figure that has remained static over recent years. 2 Approximately 21.5 million domestic gas meters monitor consumption: 11% are prepay meters, the rest are credit meters. 3 Users of domestic prepay meters generally pay a higher rate, which is a reflection of the more complicated meter and its associated increased purchase and maintenance costs as well as the specialised back-office administration system required. All gas meters are exclusively owned by the utility company that is responsible for the distribution of the gas, with the National Grid owning around 99% in the UK. 4 In 1999 the decision to eliminate imperial meters from the primary metering market was taken. As approximately 1 million gas meters are replaced each year, this gives a long change-over period. Meanwhile gas is supplied to approximately 442,000 non-domestic sites, each with at least one meter monitoring consumption 5, many with more. Three different designs of gas meters are in common use, with their selection depending on the total volume of gas to be measured. The majority of domestic gas meters are diaphragm meters, which use two or more diaphragms to propel the gas through in a near even flow, while the linear motion of the diaphragms is transformed into rotary motion that can be recorded. Larger volume supplies use rotary meters, capable of handling increased quantities and greater pressures of gas, or turbine meters which measure the speed of gas moving through the system without impeding the flow. Electricity meters Electricity meters are used to measure the amount of electrical energy used in a residence or a place of business. The UK has almost universal coverage through the electricity distribution network, reaching 99.6% of residences. 6 There are 26 million domestic electricity meters in the UK, with approximately 14% being prepayment meters. 7 Meanwhile, commercial meters number 2.5 million, but as many non-domestic customers have more than one electricity meter in use, the 2 Association of Liquefied Gas and Equipment Distributors (ALGED), Letter of 23 August, Domestic Retail Market Report, June. 4 National Grid website, 5 Information given through Ofgem enquiry. 6 Regional and local electricity and gas quality indicators for 2004, published April Domestic Retail Market Report, June. 2

3 number of meters cannot be taken as a direct reflection of the number of commercial customers. 8 Domestic electricity meters are based on electromechanical induction, although, over time, creep can adversely affect their accuracy. 9 Residences with prepay meters generally pay a slightly higher rate for their electricity, once again reflecting the additional costs associated with a more complicated meter. Agreements that allow domestic customers to take advantage of varying tariffs, for example Economy 7, require a more advanced meter capable of monitoring time as well as level of consumption. Variable tariffs are common for industrial electricity users and consequently the meters used are often more complex. For the largest installations current transformer operated three phase meters are used. New domestic electricity meters use solid state technology, so contain no moving parts and instead use a current transformer to measure the current and display the reading on LCD screens. This technology can be located remotely from the main current carrying conductors and the meters are generally smaller. This has clear advantages for both customers and suppliers relating to ease of use and ease of registering consumption. It also has significant implications for the future development of smart meters. This technology is fairly standard for industrial meters now and is becoming more common in residential electricity meters. Features that are being introduced into the higher end of the market include memory options that record levels and time of consumption, allowing varying tariffs to be taken advantage of (for example prices may vary according to the time of day, time of week and time of year) and usage profiles to be generated. Such electricity meters can be fitted with communication technologies enabling automatic and remote reading and removing the necessity of meter readers being physically present. Billing is then based on actual useage, rather than estimated, allowing consumers a more direct understanding of their consumption and a greater degree of control over their energy use. 8 Non domestic customers - information provided in response to a request under the Freedom of information Act Information from Ofgem enquiry. 3

4 Water meters Water meters are used to measure the amount of water consumed at a particular site. The proportion of metered householders in the UK is estimated to be 32% in -2008, which, assuming a residential property figure of 26 million, reveals that over 8 million domestic water meters are installed. 10 While this level is low for a developed country 11 the percentage of metered residences is increasing. Water companies choose to install water meters in all new homes and a campaign encouraging homeowners to install water meters retrospectively is increasing metered coverage by 2% a year. 12,13 Water utility companies also have the right to install meters when there is a change of occupier at an address and charge the new occupier according to that meter, although the degree to which water companies use this power varies significantly. Installation of a water meter may also become compulsory if a residence has high water consumption through use of garden sprinklers, a large pond or a pool for example. 14 Compulsory water metering of residences is allowed only in areas where water scarcity status has been declared. At present only Folkestone and Dover Water has been awarded this status, and the company aims to meter 90% of residences by ,16 Metering of non-residential sites is much higher, with 87% of commercial premises having a water meter, equating to 1.3 million meters. 17,18 Charges to non-residential customers vary in proportion to the volume of water used and the volume of wastewater discharged. Smaller commercial properties often pay the same rates as residential customers, but the standing charges may be higher depending on the size and type of their water meter. Seasonal tariffs do exist for non-domestic water users, but are only offered by four water companies. 19 Several other companies are considering this basis of charging, along with interruptible tariffs, all of which require meters capable of recording usage patterns under the varying tariffs. Domestic and small commercial installations commonly have positive displacement meters as these have high accuracy with low to moderate flow rates. There are four classes of water meter: A, B, C and D. Classification is 10 Water and Sewerage Charges -08 Report, Ofwat. 11 Wikipedia, Water and Sanitation 12 Tariff Structure and Charges Report, Water UK 13 Guardian Unlimited, 1 March Ofwat Opting for a Water Meter, June. 16 Folkestone and Dover Water website, Water Scarcity. 17 Defra Report: Assessing Current Levels of Cost Recovery and Incentive Pricing, Annex 6, August Security of Supply, Leakage and Water Efficiency, Report, Ofwat. 19 Tariff Structure and Charges Report, Water UK. 4

5 dependent on the meter flow range, with most domestic houses having a storage tank which means that a meter of class D - 15 or 20mm - is sufficient. For homes with a direct water supply class C meters may be more appropriate. It is, however, the responsibility of the utility company to install the appropriate meter. Regulation of meters Any meter used for the purpose of billing must be approved and certified: gas meters in accordance with the Gas Act, 1986; electricity meters in accordance with Schedule 7 of the Electricity Act, 1989 and domestic water meters being governed by the Measuring Equipment (Cold-water Meters) Regulations, under the Weights and Measurements Act The only exemptions are large, sitespecific meters whose construction is non-standard, and commercial or industrial water meters. 20 Here the customer and supplier reach a private agreement for a meter with equivalent accuracy to be used. 21 The use and performance of meters has been monitored and standards enforced by the National Weights and Measurements Laboratory (NWML), an executive agency of the Department of Trade and Industry, since 1 April Previously Ofgem, the Office of Gas and Electricity Markets, had this responsibility and many working in this area were unaware responsibility had transferred. 23 In all cases a particular design of meter must be approved by NWML. The inspection and testing process must be paid for by the manufacturer of the meter and this typically costs between 3,000 and 17, Once a gas meter has been accepted, the manufacturer submits all meters for examination and approval. For electricity meters a representative sample number of meters is tested against the national technical standard and, if approved, the batch may be installed. Water meters can either be tested in full by an approved inspector from an independent certification body, or a representative sample of a batch can be submitted for testing, so long as the manufacturer can test their own meters and their process satisfies NWML requirements. Meters are then stamped to identify the manufacturer, the place and date of manufacture and the group of which the meter forms part, in such as way as to make the meter tamper-proof. Each meter is certified to record consumption for a set period of time its certification life. This is between ten and twenty years for electricity and gas meters, after which time the meter must be replaced either with a new 20 Information from Sensus and SBWWI, Society of British Water and Wastewater Industries 21 Ofgem, Factsheet, Meter Approval and Verification. 22 Website not updated in response to DTi being disbanded yet. 23 National Weights and Measurements Laboratory Website, 24 National Weights and Measurements Library services. 5

6 meter or with a recertified meter. Water meters do not yet have established replacement systems as most are still well within the first certification life. Once the meter has been installed there is an obligation on the meter owner to ensure the meter continues to register accurately and is kept in good working order. Suppliers must arrange for a meter to be read at least once every two years, with most still being read manually. Many aim to read meters more often than this, usually every six months.,25,26 In October 2006 the Measuring Instruments Directive (MID) was introduced, designed to create a single market for measuring devices across Europe. It covers residential, commercial and light industrial meters, but excludes prepayment systems. Manufacturers must now introduce new designs of meters through the MID system and are free to obtain approval for mechanical meters from designated bodies in any member State of the European Union. 27 Certification, and consequently recertification, will no longer be necessary for meter designs introduced under MID. Instead, meters will be assessed by testing a sample s accuracy after a set period of time, probably seven years. If the accuracy is good the meter type will remain in service for a further period of time. If accuracy is poor the meters will be replaced. Such arrangements are closer to how much of Europe assesses its meters, than to the British system. NWML approved meters can still be manufactured and sold until November 2016, and meters in service can be used for their full life. The implications for recertification and remanufacture are unknown. Recertification and remanufacture of meters Meters contain significant amounts of raw materials and require a sizeable amount of manufacturing to create, especially the older models. Thus they still retain some asset value to the utility company who owns them. For a significant proportion of meters the expected product life is significantly longer than its certification life. For example a meter may have a product life of twenty years, but a certification life of ten years. Thus many utility companies have recertification policies and recertification is still an active part of their business. A utility company will remove the meter after nine or ten years of service, clean and repair it to the appropriate standard, test it in accordance to NWML standards and award recertification if it passes the tests. The meter will then be used for another ten years. If a meter has a certification life of ten years, but is returned after two years, it will be cleaned and tested and put back into the Energywatch, 27 National Weights and Measurements Laboratory Website and Library Services, 6

7 market; recertification is not necessary until a further eight years have elapsed. Overall the prevalence of recertification has fallen in recent years. Companies who still operate a recertification policy estimate that between 10% and 50% of meters are recertified. Recertification of meters cannot be said to increase the useful life of a meter, as many utility companies assume more than one certification life within budgetary forecasts. However recertification can be considered as remanufacture because stringent quality tests are in place which ensure the item performs to the same standards as a new item would, with repair and refurbishment carried out to ensure that this is achieved. Once recertified, items are treated as new. The manufacturing companies who initially produce the meters generally have nothing to do with the recertification process today, it having ceased to be economically viable for them. They also usually perform no repairs, preferring to replace a faulty meter with a new one. Previously it was standard that repair and recertification were carried out on all meters. Where possible meters of all types were remanufactured and installed for a second lifetime, possibly more. This arrangement, although still in operation within many utility companies, is declining sharply. The reasons for the decline in recertification and remanufacturing rates are twofold: 1. The price of new meters has fallen dramatically. It costs a similar amount to recertify/remanufacture an end-of-life meter as it does to purchase a new solid state one. New meters have the added advantage that they come with a manufacturer s guarantee for one to five years. 2. The technology of metering has evolved rapidly in recent years. A move to smaller meter systems which use solid state technology rather than depending on moving parts has taken place in recent years. The evolution of meters continues with the communication features in the higher-end meters likely to become common in standard meters. As meters are installed for extended periods of time, generally between ten and twenty years, the utility companies want to take advantage of these new technologies. Customers are usually pleased with this development as the meters are less cumbersome than older models while often giving a more userfriendly interface. The advances in industrial metering have made monitoring consumption easier, with companies able to have their actual consumption measured and billed for. 7

8 Large industrial meters, many of which are site specific and can involve significant amounts of electronic components, are often uneconomic to reuse or remanufacture mainly due to high transport costs. Recertification and remanufacture of water meters does not occur, neither is there the intention of introducing such a programme. 28 The type of water meter commonly installed in residences in Britain under-register as they get older and water utility companies have chosen replacement policies, rather than recertification policies. The installation of domestic water meters has only been common for eight years and so the meter investment pattern is different to gas or electricity meters. Within water utility companies many of the meters for assessing losses within their own distribution networks are buried under roads or pavements, and access is therefore extremely costly. Reliability is the key issue for such utility companies - they are not willing to risk using meters that will not last a full life time and the perception is that remanufactured meters will not last as long as newly manufactured meters. Neither will they have a manufacturer s guarantee covering the first few years of operation. It is possible that remanufacture of newer meters will begin to take place, but a significant barrier to this is that the expertise currently held relates to the older mechanical systems which will one day be obsolete. Remanufacture of newer meters will only happen if it is economically viable, if they retain sufficient asset value and if they are designed to make this feasible. Currently, as functionality keeps increasing, meters are not retaining their asset value and remanufacture of new meters is not economically viable. Remanufacturing meters for the secondary or submetering market Most meters are examples of primary metering: the meter is owned by the utility company, and the customer is billed and pays the utility company direct for the services delivered. Secondary metering is encountered when a landlord uses the primary meter in a building to monitor overall consumption, but the property is sub-divided into a number of units. In order to record and charge appropriately for consumption in each sub-unit secondary meters are installed. As these meters are not owned by the utility company they are not bound by the same standards and regulations as primary meters and consequently remanufactured meters are often used. 28 Information from Sensus and SBWWI 8

9 Many of the meters purchased for remanufacture have been removed from service because their certified life time has expired, rather than because they are broken. The remanufacturing companies follow very similar methods to each other: the meter is inspected and broken and worn parts are replaced. The exterior is often painted and the counter reset to zero. Accuracy tests are performed, usually ensuring the meters are accurate to within ± 1%. The products are then released, provided with a guarantee of between six months and two years. The testing procedure and guarantee are at the discretion of the remanufacturing company. There are no voluntary codes agreed between meter remanufactures. While meter remanufacturing companies introduce thousands of meters into the secondary metering market each month, the majority of end-of-life meters are not recovered and are sent to landfill or sold for scrap. Many of the companies engaged in the remanufacture of meters stated that in primary metering situations only new meters were acceptable. However, as discussed above, this is not the case. Companies remanufacturing for the secondary metering market face the same problem as those remanufacturing meters for the primary market: their current expertise relates to the older mechanical systems, while the newer meters may not be economically viable or even possible to remanufacture. Future technology Metering technology has evolved significantly over the past few decades. Solid state meters with LCD displays have developed in place of purely mechanical meters. These are smaller and have a more user-friendly display than previous generations of meters. In commercial and industrial metering, the recording of multiple tariffs and regular reading, often remotely achieved, has become possible. Meters installed by the utility companies to monitor their own distribution systems are available with incorporated GPS location devices as well as remote reading systems. Such features reduce the meter reading burden, whilst providing more up-to-date and accurate information. The term smart meter doesn t have a single definition. Instead it is a new term used to describe a future generation of domestic utility meters that incorporate an electronic box and a communications link. 29 Many of the functions that are being discussed as smart metering already exist to some degree in industrial metering solutions. The intention is to help domestic consumers realise the potential to reduce usage through displaying consumption patterns over time as well as improving the accuracy of billing. Work in this area has shown that providing direct feedback on consumption levels and displaying this information 29 BEAMA s response to the Metering and Billing Consultation. 9

10 prominently, yields a reduction in consumption of 1-26%, 30 with the Energy Saving Trust and the Carbon Trust expecting average savings of 5-10%. 31 By displaying consumption of gas, electricity, heat, water, with production of embedded renewable and possibly even the amount of recyclate and waste leaving the premises, households would be provided with a wealth of information they currently have very little access to. The use of such cross utility display systems has the potential to reduce the overall cost of any system. Examples already available display electricity, gas and water consumption, although this is in addition to the three individual meters. With the support of Ofgem and the Government, gas and electricity suppliers are discussing the introduction of smart metering. The British Government has proposed the introduction of smart meters universally within the next 15 years. 32,33 Trials are already underway: between 2004 and 2006 the Carbon Trust held trials with 582 SMEs, who were provided with meters that gave billing updates in combination with smart metering displays. Potential energy consumption savings of on average 12% were identified, while 5% savings were achieved during the trial, demonstrating the potential of smart metering. 34 The first large scale trial of advanced meters is due to begin soon, administered by Ofgem. 15,000 British homes will be installed with smart meters, while a further 8,000 homes will receive stand alone display units showing energy use in monetary terms. Over the next two years the trial will test how customers react to these new devices and to clearer, more frequent, energy bills. 35 This evolving technology presents real opportunities for energy savings to be made. Encouraging the remanufacture and reinstallation of older meters that will not enable these energy savings is consequently counter productive. However, now is an ideal opportunity to future proof meters, ensuring components can be updated at a later stage, and include design for remanufacture and design for recycling. 30 Sarah Darby (ECI) report for DEFRA 31 Energy Saving Trust website, Carbon Trust website, 32 Lords Hansard, 25 th April, Column WA 135 and WA Information from Carbon Trust website, 34 Advanced Metering for SMEs, Carbon Trust, May. 35 Ofgem Press Release, R/31, July 12 th,. 10

11 Model Remanufacture of meters, although still a significant part of the metering business, is declining each year. The focus of utility companies is on installing new cheap units. Remanufacture of the current stock of meters would ensure diversion from landfill and generate CO 2e savings. However these savings will not be as significant as the energy savings predicted if the meter stock is switched to smart meters and consumers reduce their energy consumption by the estimated 5-10%. Therefore encouraging remanufacture of the current stock of meters, while still worthwhile, does not present benefits if such a policy discourages the adoption of smart meters. The best approach would be to encourage the remanufacture of current meters in the mid-term, and to ensure that design for remanufacture is incorporated into new generations of meters including smart meters. Assumptions: The number of domestic residences grows at the steady rate of 185,000 per year, and each will be fitted with a gas, electricity and water meter. Commercial premises have only one gas and electricity meter installed thus generating a conservative estimate. The number of meters used in commercial premises is static. The weights of the meters are as follows (derived from averages of meters currently available): residential gas meters - 1.7kg; commercial gas meters - 50kg; residential electricity meters - 1kg; prepay residential electricity meters -1.5kg; commercial electricity meters kg. On average 1kg of meter is composed of 50% metal and 50% plastic (older styles are predominantly metal, while newer models are predominately plastic). A ten year recertification period exists for all meters. 30% of domestic meters removed are suitable for recertification each year, while for commercial meters this figure is 10%. 11

12 Table 1: Summary of Domestic s over a 15 year period Overall output and assumptions Level of remanufacture remains at current rate of 30%, thus slowly increasing as the number of domestic units increases. Levels of remanufacture decrease at 5% a year due to cheap imported meters. Design for remanufacture of meters is included in the new generation of meters, thereby delivering increased levels of remanufacture, at 7% per year. Possible policy interventions Encourage remanufacture through Government focus and OEM support Units saved from landfill ( 000) Tonnes diverted from landfill ( 000t) CO2e ( 000t) None Ensure design for remanufacture is incorporated into design of the new generation of meters, through government intervention As such meters would largely be retained by the original purchasing company, remanufacture would present a cost saving the level of which is dependent on labour costs to remanufacture the meters, and is currently an unknown figure. 12

13 Figure 1: Effect of Domestic choices No. of units remanufactured ('000) Remanufacture of Domestic Meters Year Table 2: Summary of Commercial s over a 15 year period Overall output and assumptions Level of remanufacture at 10%. Levels of remanufacture decrease at 5% a year. Design for remanufacture of meters is included in the new generation of meters, thereby delivering increased levels of remanufacture, at 7% per year. Possible policy interventions Encourage remanufacture through Government focus and OEM support Units saved from landfill ( 000) Tonnes diverted from landfill ( 000t) CO2e ( 000t) None Ensure design for remanufacture is incorporated into design of the new generation of meters, through government intervention

14 Figure 2: Effect of Commercial choices No. of units remanufactured Remanufacture of Commercial Meters year The level of remanufacture remains at its current rate of 30% for domestic meters and at 10% for commercial meters. This generates an increase of the number of units diverted from landfill and CO 2e savings year on year through increasing housing stock. This scenario takes no account of the new technology entering the metering sector and the potential energy savings this could generate. Over the 15 year period this scenario would divert 24.5 million units from landfill, thus preventing 36,100 tonnes of waste from going to landfill, and represents CO 2e savings of 110,800 tonnes. 2 Levels of meter remanufacture fall by 5% each year, a scenario that is close to the current situation in the market today. This is largely due to the rising cost of labour and the falling cost of meters, creating a situation where it is uneconomic to remanufacture meters. Over the 15 year period this scenario would divert 17 million units from landfill, prevent 24,900 tonnes of waste from going to landfill, and would represent CO 2e savings of 77,000 tonnes. 3 Remanufacture of current meter stock is maintained at 30%. In addition design for remanufacture of meters is included in the new generation of meters, thereby delivering increased levels of remanufacture at 7% per year as these newer 14

15 meters allow easy, practical remanufacture. To achieve this it would be necessary to ensure design for remanufacture is part of the discussions and developments taking place concerning the new generation of meters. Such a scenario presents an opportunity to divert 43 million units from landfill, thus preventing 128,000 tonnes of waste from going to landfill, and represents potential CO 2e savings of 195,300 tonnes. Conclusions The metering sector encompasses products designed for the domestic, commercial, industrial and utility markets. Meters are advancing technically at a considerable rate, presenting the opportunity to use smart meters as a means to reduce consumption of gas, electricity and water. Recertification of meters was a very traditional part of the metering industry. Whilst it is still a key part of many utility companies business models, the cost of new meters has fallen significantly in recent years, which, combined with advances in technology, has resulted in rates of recertification/remanufacture falling. Remanufacture of domestic gas and electricity meters also occurs for the secondary metering market. Tests on the remanufactured meters are not standardised, but all remanufacturing companies work to very similar standards, and all provide a warranty of varying length. The future focus of this sector is on smart meters which offer real opportunities to reduce consumption of gas, electricity and water. Such meters are likely to incorporate a high level of functionality and electronics, and unless design for remanufacture is undertaken it is unlikely they will be remanufacturable at the end of their first life. 15

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