Automated Meter Reading Strategy

1. Automated Meter Reading Strategy Jack Griffin Manager, Meter Data Management September, 2005

2. Agenda • Who is NSTAR? • Benefits of AMR • Business Case • Deployment Strategy • Implementation Strategy • Communication Strategy • Challenges • Lessons Learned

3. NSTAR Electric & Gas • Boston Edison, Commonwealth Electric & Commonwealth Gas merged to form NSTAR • 1.4 Million Customers • 1.14 Million Electric – 81 Communities • 260,000 Gas – 51 Communities • Total revenues approximately $3 Billion • Total assets approximately $6 Billion

4. Distribute Electric & Gas to 132 Cities & Towns including the metropolitan Boston Area.

5. Benefits of AMR • Reduce O & M Costs • Eliminate FTEs & costs to equip FTEs • Increase average meters read per day • Eliminate estimated reads • Fewer employee injuries / motor vehicle accidents • Reduce customer calls to the Call Center • Reduce damage to customer property • Reduce DTE complaints • Exceed service quality standards for meters read

6. Business Case • Automate the metering process for all meters except Time -of -Use in the areas defined as Mass Ave, Westwood and Southborough. • 190,144 KWh • Demand 18,622 KW • The project is financially attractive to NSTAR because it reduces O&M expenses. • The project will also improve revenues by increasing the precision around energy consumption & demand readings. In addition, lost meters are being recovered and unbilled accounts identified.

7. Business Case O&M Reduction -Annual Average Savings $4,899,175 NSTAR reduces O&M costs by reducing 46 FTEs from Meter Reading area along with the variable costs associated with equipping them. Variable costs include vehicles from the fleet, cell phones, uniforms & other items. KWh Improvement – Annual Average Revenue Increase $710,258 NSTAR will realize improved KWh recognition on all new meters that utilize solid state technology. Industry reviews and standards recognize about a 2% improvement from replacing electro-mechanical meters with solid state technology. - We used 1%

8. Business Case Demand Calculation Improvement -Annual Average Revenue Increase $609,046 The majority of the demand meters being replaced are mechanical or electro-mechanical. The ABB A3 is fully electronic and provides improved demand metering performance by about 0.7%. The solid state meters calculate the demand using a 5 minute rolling, 15 minute period calculation in lieu of a 15 minute block calculation. Recovery of Lost Accounts - Annual Average Revenue Increase $142,052 During the FY2002 deployment of 9,500 Demand AMR meters, NSTAR found meters that were not in the Customer Information System and therefore were not being billed. We believe this trend will continue to occur with future deployments.

9. Business Case • The financial analysis assumed that the major cost components are the cost of the AMR meters themselves and the cost of labor to install the metering. • The financial model used “best last price” for the cost of common meter types. “Best Last Price” minimizes the exposure to cost overrun, and presents the possibility that NSTAR’s actual costs may be lower than projected given that a competitive procurement process will be used. • Installation labor costs are exposed to some risk dependent on Meter Technical’s ability to complete installations at targeted rate per hour. • This risk is offset by management control and monitoring, confirmed unit per hour performance, and fixed labor rate costs per the Local 369 contract.

10. Deployment Strategy – by Office: Balancing Operational and Financial Factors • Key Financial Components in Magnitude order: • Reduced O&M • Improved demand measurement • Improved KWh Measurement • Recovering “Lost Accounts”

11. Implementation Strategy • Complete an entire town before moving to the next. • Identify large apartment complexes in the towns to maximize productivity. • Negotiate an agreement with Local 369 for use of non-traditional employees and outside resources as well as language to manage OT. • Non-traditional and outside resources install single phase residential meters. • NSTAR resources install demand / transformer rated meters. • Train & equip non-traditional employees with vehicles and tools. • Outside contractor is responsible for training and equipping their employees with vehicles and tools.

12. Implementation Strategy • Leverage the experience and knowledge of existing Meter Reading resources to gain access to difficult locations. • Use the warrant process to gain access to difficult locations. • Coordinate the use of FSRs & FSTs to avoid impeding normal business operations. • Identify strategic locations for meter deployment. • Coordinate pre-packaging of identified routes. • Coordinate with Meter Lab for tracking of inventory. • Hire Electricians to support the deployment to eliminate claims & media relations / DTE complaints. • Hired temporary staff to meet current reading percentages.

13. Implementation Strategy • Demand Metering in a Mobile AMR Environment • Traditional AMR Deployment Strategies left demands behind. • In 2002, Elster / Itron developed a 3-ERT meter that allows for capturing KWh, Peak Demand, and Reset Date • NSTAR developed 6 reset date programs and the needed IT infrastructure to support them. The reset date then forces NSTAR to align meter reading routes geographically on a cycle basis to post the consumption. • Developed “Swim Lane” method for identifying specific areas / Towns that require the same Demand Reset Program. • Started systematic process of moving reading assignments to match the geographic requirements.

14. Implementation Strategy – Data Currency • Manual Route: Cycle – Division – Route – “21-82-123” • 21 Cycles – 21 Work Days • Division – Geographic Area • Route – 3 Digit Code in CIS • Mobile Route – Cycle – Division – Split – 021 – 82-0 • “Split” is predefined by specifically identifying “CIS Routes” associated with the “Split”

15. Implementation Strategy – Data Currency Life Cycle of the Reading & Billing Process • “Day 18” for a cycle – “Request a Read” – MRI Day • Meter Reading Input File ( Itron P4 ) • “Day 21” – Schedule Read Day. • “Day 1” – Scheduled Bill Day. • “Day 4 – Default Day. • If we fail to read a meter by Day 4, CIS attempts to estimate bill Day 1 Billing is about 80%; by Day 4 – 99.5%

16. Implementation Strategy – Data Currency Tactical Question – When in the Billing Life Cycle do we want to change the Meter? We chose “Outside the Billing Window”. This basic decision and the infrastructure state we have then drives all other deployment activity. Each Day, we use specific FTP files from “Day 18” process and update our and our partner’s system.

17. Implementation Strategy – Data Currency • Daily file transfer updates our Partner’s system to provide them usage information, account changes (move in / Move out) and any internal activity that impacted the external plan. This continuous updating keeps them in sync with our best available information and provides them an indication of how well we are completing the exchange transactions. • We adjust deployment focus by ensuring teams are working accounts “Outside the billing window”. Essentially, once a cycle is “defaulted, teams are staged to execute that specific area. They are given a “Window of operations from Work Day 5 to Work Day 16.

18. Implementation Strategy – Data Currency • The Process Starting on Day 5. • Technician exchanges the meter. Using a NexTell phone, she answers the following questions: • What Meter are you looking at? • Response calls up Street address, name, and suite. • What is the reading? • Response validates against Average Daily use with a +/- 10 % range. – If “Fails” – re-read. • What is the meter you are installing? • Response is validated against the stock issued that day minus “already used numbers”

19. Implementation Strategy – Data Currency • The Process Continued • Technician places old meter in box from new meter and proceeds to next location. • At the end of the day, Technician closes out the day’s package by inventorying the old meters and new meters not used. Data systems updated that evening to update their inventory status. • Day 6 – Shop staff image - scan all old meters and enter reading. Out meter number and reading are matched against previous days exchanges. Exceptions reviewed, approved by Supervisory Staff.

20. Implementation Strategy – Data Currency • The Process Continued • Day 6 – Evening – Partner FTP’s completions to NSTAR. Overnight batch process posts completions to accounts. • Day 7 – Internal Metering Admin Staff review, correct posting failures. Averaging about 0.2%. • Day 18 – CIS assigns meter to be read. • Day 21 to day 4 – Meter Reading reads routes • Day 5 – Identify “Newly Installed Meters” stratifying by “Successfully Read or Not”. • Successfully read – Notify partner to invoice for exchange – Unsuccessful – “prove it is there and works”

21. Implementation – Customer Impact

22. Reduced O&M Costs Elimination of 46 FTEs Increase average meters read per day Meter Reader 300 Van 5,000 Eliminate estimated reads Eliminate / reduce calls to the Call Center Fewer employee injuries / motor vehicle accidents Improve customer satisfaction Reduce DTE complaints Exceed service quality standards for meters read Benefits Achieved

23. Communication Strategy Internal • Union Leadership was notified early in the process of the anticipated reduction in workforce. • Project updates are communicated to employees as they are received and quarterly meetings are held with employees to address their concerns. • Provide the Call Center, Billing, DTE & Community relations groups with our deployment schedules so that they may handle inquiries from customers. • Hold quarterly Steering Committee meetings to report on the Project’s status. External • Our Community Relations Representatives provided the local community agencies, Police and Fire departments with our deployment schedules. • Pre-recorded messages are left for customers two weeks prior to the exchange date notifying them that NSTAR will be visiting their home to exchange their meter. • Letters are mailed to our “hard –to- access” customer premises to schedule appointments to have the meters exchanged.

24. Challenges • NSTAR’s Field Service Dispatch Technology was not sufficient to handle mass-deployments. • Aggressive replacement schedule to replace 200,000 meters in 12 month period. • Starting an outside replacement project in the winter months. • Coordinating pre-programmed Demand meters with proper cycle/area. • Resource constraints – Balancing core work with project work. • High population of inside meters. • Monitoring high volume of meter inventory • Replacing demand and complex meters. • Revisiting areas where non-demand AMR meters are now in place to install the demands and transformer rated meters – “Swiss Cheese”

25. Challenges • Delayed deployment of contractor exchanges due to: • Need to award RFP & negotiate contract. • Leasing of contractor’s facility • System changes to enable use of Honeywell’s work management system. • Staffing • Unavailability of Itron ERTs for Elster Demand Meters • Delayed sample testing and pre-kitting of Boston routes. • Underground fed meter sockets posed issues with meter replacement.

26. Challenges Physical Challenges Crews Faced • Meter trough not connected to the house. • Customer has siding on house blocking part of meter trough & therefore crew could not remove the meter trough cover. Customer had to arrange for the siding to be removed. • Meter socket hanging off house. Needs to be repaired before exchange can take place. • Trough is rusted and needs to be replaced, cannot get cover off without breaking the latch. • Unable to change meter due to rotted dish pan trough jaws. Line jaws didn’t separate from line side of meter. • Unsafe underground conditions.

27. Lessons Learned • Develop a solid communication plan for internal and external customers. • Start deployments in Spring vs. Winter. • Set clear expectations for Senior Managers on what it takes to successfully complete the deployments. • Avoid the “Swiss Cheese” approach. • Allow sufficient planning for meter reading route cut over and IT system development.

28. Questions