RFID Talk Blog

RFID enhances revenue generation for utilities

The Orangeburg, S.C. Department of Public Utilities has tagged 4,000 utility poles with RFID tags, and hopes to tag an additional 5,000 this summer. The largest municipal electric utility in South Carolina stands to boost revenues by affixing tags to its assets in the field.

Tagging assets like telephone poles and generators at substations is just beginning to take off in the utility sector. The market is a large one, with 135 million poles in use in the U.S., not to mention millions of high-value assets at substations and storage yards.

RFID can help utilities to deploy faster reporting and recovery of joint use revenues related to third party agreements with cable providers and cell phone companies.

Utilities are turning to RFID to recover additional revenues from cable companies and from the government after storm-related restorations.

In many cases, utilities are unaware that cable firms or cell providers have placed equipment on their poles, and even when they are aware the billing process can often be slow. The RFID-generated data from each pole can help to automate billing processes, resulting in better cash flow, and can greatly speed up the ROI for installing an RFID system.

In addition, the increased visibility gained from RFID can help utilities to generate more accurate claims from storm losses, often leading to greater cash flow. In many cases, utilities recover some of their labor and parts costs from the federal government after a major storm or disaster.

However, utilities currently have very little visibility into the unmanned storage yards where poles and other assets are located, and usually only can provide an estimate to the government when it comes to recovering losses for assets used during a power restoration project. RFID can provide highly detailed information about those assets, allowing the utility to recover a greater amount of capital.

“A lot of times inventory goes in and out without anyone knowing who took it or when it left the door,” says Barry Brede, of Sustainable Management Systems (SMS), which provided Orangeburg with its RFID system. “That becomes very evident during a response scenario when they need to respond very quickly but don’t have great visibility into their supply chain. If they don’t have a system to track it, it’s guesswork when it comes to recovering what they deserve to.”

The other major benefit of tagging utility poles is for asset management and tracking maintenance programs. Utilities spend $177 billion annually in operation and maintenance costs to maintain the 135 million poles operating in the utility distribution network. So even a 10 percent reduction in maintenance costs would equate to a savings of more than $17 billion annually for the utility sector.

In order to keep its costs down, Orangeburg DPU has hired college interns to place RFID tags on up to 5,000 poles this summer. The utility hopes to have all 33,000 poles in its network tagged within three years. Eventually, poles will arrive at utilities pre-tagged. Cox Industries, one of the biggest providers of utility poles, has deployed SMS’ RFID-based yard management system to keep track of its  finished goods inventory and work-in-progress across multiple plants.

The yard management solution provides Cox with a comprehensive means to track all inventory in a real-time environment, while also providing its customers with critical data concerning order delivery status, available inventory and other key business metrics.

Cox anticipates the ability to extend the value of RFID tracking to its utility customers by providing those utilities equipped with RFID-based technology the ability to automate the receipt and/or release of tagged inventory at both manned and unmanned yard facilities.

Like the retail industry, which is pushing apparel tagging all the way to the source of manufacture, the utility sector is following a similar path. Greg Campbell, chief operating officer at Cox Industries, says he has already had conversations with sawmills about tagging.

“What we hope to do in future is to push this up stream and have our sawmill vendors apply the RFID tags,” says Campbell. “They already apply the bar codes on the poles.”

For now, Campbell says that Cox applies an RFID tag to the butt end of the utility pole to provide inventory visibility at its yards. However, that tag is useless to the utility, as that end of the pole is buried in the ground during installation. Cox is paying about 25 cents per tag, although it is experimenting with tags that can withstand its pressure treating process. Those tags cost about $5 apiece.

 

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