Talking Points: Itron’s Malcolm Unsworth

When Itron CEO Malcolm Unsworth was invited to meet with President Obama last spring, it was just another sign of how central the company has become in the global effort by utilities, at an estimated cost of $45 billion over the next five years, to use smart gas, electric and water meters to help save energy and water. Those smart meters are an important part of a new effort, centered in eastern Washington, to develop a smart grid, a two-way communications system that should help cut energy consumption while reducing the cost and increase the reliability of the electricity grid.

Education: I did a tool-making apprenticeship in the United Kingdom for five years while going to school one day a week to get an industrial engineering degree. I went to Canada in 1978 and ended up working for Schlumbergers electric metering business. When the business was sold to Itron in 2004, I joined Itron and was put in charge of electric, gas and water modules for Itrons North American operation. When Itron acquired Actaris, a global metering company, in 2007 [for $1.7 billion], I went to Europe to run that operation.

International: A significant strength of Itron is that we touch so many customers worldwide. Before we bought Actaris, we had only about 5 percent of our business outside of North America. Today more than half of our business is overseas. We do business in 130 countries in 27 languages. We have 32 manufacturing facilities and 60 sales offices with nearly 1,000 salespeople. We have 9,000 employees worldwide. There are standards in each of these countries. If you are not in those countries you cant do business.

Automation: North America is still the most advanced in automated metering, and what we sell in North America, we make in the United States. We developed a mobile technology solution that uses radio communications to allow utilities to read meters by just driving by. That helped utilities reduce their cost structure by eliminating meter readers. It also provided consumers with more accurate bills.

Future growth: The big growth is in smart meters, two-way systems that provide information to utilities and consumers on how much gas or electricity is being consumed at different times of the day. With smart meters in place, utilities can create incentives that discourage energy use during peak load times, avoiding the need to add expensive new capacity. California Edison showed that it could reduce its peak load by 5 percent to 11 percent by offering incentives to change consumption habits. In North America we have contracts for 14 million [smart] meters with six utilities.

Global market: The European Union has mandated that utilities introduce smart meters by 2020. We estimate 145 million meters have to be replaced in Europe. Smart meters also make sense in developing countries where they can prevent people from stealing power. Utilities [in developing countries] lose about 40 percent of their power that way.

The smart grid: Smart meters are part of a broader effort to digitize and improve the efficiency of the grid. We have developed systems that will allow utilities, with the customers permission, to control air conditioners, ice makers and dryers so that they operate when energy demand is low. We also need smart billing systems. If someone adds a solar plant to their house, the utility needs to credit them for the energy it produces. If someone plugs their car into another persons outlet, the utility needs a billing system that charges the right person for that electricity.

Smart payment: The prepayments systems we have developed overseas give us a good foothold in these kinds of smart payment systems. In Azerbaijan, we are deploying a system that allows you to go to an ATM machine to download credits onto your ATM card. That card can then be used to load up your gas meter. As you use gas, your account is debited. When the account runs out, the gas shuts off. We have used some of those systems, like the remote disconnect switch, in Texas where deregulation allows customers to change energy providers every month. Think of all the saved time and energy from having to go to customer sites to shut off the gas.

Water: Water is a valuable resource that people arent paying enough attention to. A water meter system we installed in Bombay is saving 185 million gallons of water a day.

Competition: When this much is spent on infrastructure on a global basis, you are going to get a lot of companies coming in. We have to keep improving functionality and reducing cost so we stay competitive. We spend about $130 million on research and development each year globally for that.

Local: We have 500 people in Spokane, and we recently brought back some manufacturing to Spokane. We are working closely with Avista and Schweitzer [Engineering Laboratories] on a pilot project in Pullman. The industry will change more in the next 10 years than it has changed in the last 50 years.