Malcolm Unsworth
President & Chief
Executive Officer

Bruce Angelis
Managing Director
Software Products

  EET&D   :  There’s been a lot of controversy lately about the Stimulus Bill, and in particular, the long-range impact it will ultimately have on our industry. Your comment (above) about consumer engagement, acceptance and eventual adoption of what you refer to as a “digital transformation” raises some interesting questions about the return on these Smart Grid investments. So, let’s leave the economics to the economists for now and start off with this concept of a consumer ROI. How is the technology you are providing helping utilities face this digital transformation?

  Unsworth   :  Many of today’s utilities are no longer satisfied with deploying meters from one vendor and data collection systems from another. Instead, utilities are searching forvendors who offer complete, end-to-end solutions, customized to their unique needs. That’s part of the Smart Grid vision that most in this industry share, and it’s one that Itron believes will usher in a more robust, reliable and secure energy future.

  EET&D   :  In your mind, where would you say the concept of Smart Metering intersects with the Smart Grid?

  Unsworth   :  Smart Metering and the Smart Grid are ultimately about an increased level of real-time control of the electricity network, coupled with the ability to influence consumer behavior through access to information – resulting in better management of dwindling energy resources. Smart metering provides the foundation for a smart grid, both by acquiring more detailed information and by providing the communications infrastructure to deliver that data – not only to the utility but the customer as well. And smart meters deliver much more information than traditional meters. This is why utilities are adopting meter data management (MDM) solutions and evaluating vendors to ensure they select the right solution to provide valuable storage, analysis and application of actionable meter data.

  EET&D   :  You mentioned MDM, which has become much more of a high-profile topic lately. And even though MDM systems aren’t really anything new, they are finally being brought into the mainstream of AMI discussions and projects. What is the significance of MDM in today’s Smart Metering/Smart Grid evolution?

  Angelis   :  MDM solutions have been around for a while, but in a smart grid world they need to operate at a much higher level. With granular reads collected as frequently as every 15 minutes – or even on-demand – utility systems are inundated with more data than ever before. MDM solutions today have to be able to handle the onslaught of data collected by smart meters. These solutions must work at scale with both new and existing systems to meet the needs of the utility and its customers. The more flexible, secure and scalable the solution, the better. Realistic scale testing and benchmarking is necessary to prove the solution. Selecting the right MDM solution to manage these massive volumes of meter data in a secured environment, one that can interface with smart metering and upstream systems, is not only important to achieve a reasonable ROI, but is critical for attaining the transformational changes that will position utilities for success in a rapidly changing business landscape.

  EET&D   :  Along with MDM and the accompanying Advanced Metering Infrastructure (AMI) comes enormous increases in the amount of data that utilities will now be expected to manage and accurately interpret and manipulate. But besides the pure data transport, storage, and management issues, there is also the now constant threat of security breaches – physical and especially cyber. What can utilities reasonably expect in the way of security protection as these data volumes continue to increase exponentially?

  Unsworth   :  Some of the most innovative utilities in America – like Southern California Edison and CenterPoint Energy – are implementing systems that they are confident will allow them to detect, isolate and limit the overall impacts of security threats or intrusions. To fully achieve that objective – for both the utilities and consumers – utilities and their vendors alike must be willing to make a mutual commitment to engage and develop partnerships that build confidence in their ability to successfully address the demands, and potential vulnerabilities, of this dynamic new environment.

  EET&D   :  Speaking of commitments, a lot of utilities are rethinking their dependency on information technology and what that means in terms of carrying out critical functions across the enterprise. Has the role of IT changed with regard to that dependency?

  Angelis   :  Utility dependency on information technology is fundamental to virtually every aspect of operations, and nowhere is that dependency more evident than in the so called “meter-to-cash” chain – the cash register of the utility enterprise. But because not all utilities are created equal – in size or in structure – reliance upon IT resources can vary greatly. The onset of smart metering has created a larger demand for IT support than ever before.

Utilities require vendors that can deliver systems successfully and at a reasonable cost, regardless of what their IT environment may be; they want systems that will integrate seamlessly. Making good on that commitment requires an ongoing effort to stay focused on core business, but also being able to go beyond traditional metering to embrace the broader adoption of operational, environmental, regulatory and technology requirements that will proactively support Smart Grid goals and objectives.

  EET&D   :  How can utilities be assured that their suppliers not only possess the requisite security knowledge and expertise, but also feel confident that they sufficiently understand the business applications involved to provide adequate protection without causing system functionality to suffer?

  Angelis   :  Itron is a diligent and long-time participant in the utility industry, with over 30 years experience designing solutions that are tailored to the challenges utilities face. This affords us with a unique ability and insight into all aspects of utility operations. We have more experience in automating – and securing – meter data collection networks than anyone in the industry. Each year, millions of dollars worth of utility transaction data flow through our systems worldwide. As a result, utilities feel confident that we can deliver solutions that will keep them, their customers and their data safe and secure. Itron continues to make investments in cyber security across our development lifecycle as the threat landscape evolves.

  EET&D   :  What is it going to take for security to be addressed by the AMI community as a top industry priority?

  Unsworth   :  Itron has consistently taken the position that security for advanced metering and the Smart Grid is a very complex, multi-faceted endeavor – but also one of critical importance. Security needs to be a major industry initiative, and is one that we have made – and will continue to make – a top priority. Metering systems must be designed with security as a core design criterion. Perhaps Bruce can elaborate on that a bit more…

  Angelis   :  Yes. We agree with the Federal Energy Regulatory Commission (FERC) and National Institute of Standards and Technology (NIST) that Smart Grid systems are critical cyber assets that must be secured. Itron has collaborated with Department of Energy (DOE) national labs to develop security testing for advanced metering systems, and we have been working closely and deliberately with our customers and the industry for several years now to specify, design and test our advanced security architecture for smart metering networks.

  Unsworth   :  I might add that we were also key participants in the Utility AMI Security Working Group, a major industry task force created to delineate security threats and develop a wide range of defense guidelines for the industry. Itron continues to participate in and lead industry-wide efforts to create standards for networks that are not only open but also secure.

  EET&D   :  Security is – as one might expect – quite a diverse and complex subject, but could you perhaps give our readers a few examples of the kinds of things that these measures are designed to address, at least categorically?

  Angelis   :  Sure. Without getting too technical, there are several major elements that must be addressed, carefully and holistically. A few of the most important ones are: Architecture, Standardization and Communications Integrity.

First of all, there’s Architecture. We’ve built an extensible architecture that allows us to partner with other industry leaders to offer a complete and secure solution for smart metering. CenterPoint Energy was the first utility in the nation to roll out this advanced security architecture with their AMI system in 2009, and we established the Itron Security Center to track, address, and immediately respond to any security issues that may arise when that system was installed.

Secondly, we have Standardization. Technologies and standards exist today to support secure deployment of AMI. But because these technologies and standards must evolve and improve over time, AMI systems must be flexible enough to accommodate efficient upgrades over the network. As with any aging system, there are already many places in the existing energy infrastructure that could be exploited by cyber or terrorist attack. But we believe that the design diligence and other mitigation measures incorporated into current Smart Grid deployments will, in fact, not only increase the operating efficiency of our electric grid, but also provide significantly more security than exists in today’s operating models.

Communications Integrity is another huge area of concern. In 2009, we upgraded our software with new security measures designed to protect our smart metering solution as a critical cyber asset. These enhancements were made primarily because of the two-way communication nature of the system, and the ability to connect and reconnect service with every device. This design included or improved upon previous features, such as strong authentication and encryption for all over-the-air messages, ensuring that everything received by the meter is confidential, complete and authenticated by the system.

  EET&D   :  Isn’t privacy another big issue that must be confronted?

  Unsworth   :  Yes, of course. One of the biggest concerns regarding privacy is keeping customer data out of the wrong hands and from those who would use the data for illegal purposes. First, no personally identifiable information (PII) is stored or transmitted in our smart meter system. As an added level of privacy, we employ asymmetric cryptography to protect the privacy of metering data as well. Finally, two-way communications allow the utility to be immediately notified of any tampering at the meter, in near real-time. And, as mentioned earlier in our discussion, we have completed a security assessment with DOE’s Idaho National Labs, which is repeated after every major software release as standard practice.

  EET&D   :  These days it seems like the pace of technology is faster than ever before – probably because it really is. And utilities have a longstanding reputation of being not only risk averse, but many would argue, change averse.

And utility customers are probably even worse when it comes to something as well established and as basic a commodity as electricity. So how does one go about empowering utilities to be agents of change – especially as regards meter implementation and customer adoption?

  Unsworth   :  It starts with having a complete solution, rather than just parts of the puzzle. Through our long history of acquisitions, organic growth and extensive R&D investments, Itron is fortunate to have very complete and robust end-to-end solutions. Our MDM system allows us to work with both new and existing technologies to achieve economies of scale and help provide the best possible customer service. It interfaces easily with multiple meter data collection systems – across communications platforms – and scales to up to 10 million meters.

  EET&D   :  When you talk about scalability we usually think size in number of meters, but what about adaptability to various sets of utility requirements and operating environments?

  Unsworth   :  In order to deliver successful solutions, vendors need to design flexible systems that allow them to contribute at different points across a utility’s operations. Experience is a key factor when delivering an optimized solution for each utility’s specific needs.

This is easier said than done, and requires a portfolio that offers not just advanced measurement, data collection and meter data management solutions, but also analysis and application tools to complete the equation. Load forecasting, web presentment tools, load management and revenue protection services can all leverage smart meter data.

  EET&D   :  Going back to the ROI question, how important is it for that traditional ROI – the one measured in dollars – to be a part of the solution?

  Unsworth   :  Naturally, it’s important to achieve a reasonable ROI, but in our opinion, it’s perhaps even more critical to achieve the transformational changes that can position utilities for success in a rapidly changing business landscape. And considering the declining condition of our present energy infrastructure and our increasing dependence on fossil fuels, we cannot wait any longer to begin utilizing technology that will reduce energy consumption, peak energy demand, and carbon emissions.