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ANALYTICS The smart way to detect non-technical losses

Analytics: The smart way to detect non-technical losses | www.honeywellsmartenergy.com 2

Introduction

Thieves are smart. Analytics are smarter

As much as 2 percent of all electricity generated in the U.S. is

stolen, according to figures from the U.S. Energy Information

Administration. In 2013 – before implementing an aggressive

theft-detection solution – a Canadian utility in British Columbia

estimated that 3 percent of their electrons went unbilled because

people bypassed or tampered with meters.

Marijuana grow operations are one big contributor to this trend.

Mining for bitcoin also is starting to become a theft inducer.

Honest ratepayers bear the cost of illegal power taps, and

utilities do too. Analytics solutions can help utilities detect

power theft more efficiently, reduce operations costs and

recover lost revenue.


Power theft: Why utilities must increase loss prevention effortsUtilities worldwide lose an estimated

$96 billion each year to non-technical (NTL)

losses. These are not the losses caused by

things like open circuits, line impedance,

contact resistance and load imbalance among

phases. Non-technical losses frequently come

from wrong-doing – illegal acts such as theft

and fraud. On the list of things frequently

stolen in the U.S., electricity ranks high, coming

in third after credit card data and vehicles.

Around the globe, NTL – a euphemism for

theft – can hobble utilities. Brazil’s northern

states see between 10 percent and 22 percent

of electricity generated go unbilled, notes the

Brazilian electricity regulatory agency, ANEEL.

According to World Bank, India has a theft

rate of 26 percent, and Jamaica’s NTL hovers

around at 25 percent mark. Some African

nations lose even more, chalking up NTL in

the range of 28 percent, says researchers from

Northeast Group.

These realities have been with utilities for

decades. Now, power providers are facing

a growing problem: electricity theft due to

marijuana grow operations.

During 2013, British power-sector regulators

estimated that there were approximately

25,000 cases of electricity theft each year,

and one-third of that stolen electricity was

used to grow pot. -In its report titled Utility

AMI Analytics for the Smart Grid 2013-2020:

Applications, Markets and Strategies, GTM

Research calculated that Canadian utilities

were losing more than $500 million annually

from electricity theft, and the study fingered

grow operations as the biggest source of these

non-technical losses.

This is because marijuana grow operations are

huge energy consumers. In Colorado, one of

the first U.S. states to fully legalize recreational

marijuana use, pot-growing operations in

the Denver area consumed approximately 4

percent of the city’s electricity, says the city’s

Department of Public Health and Environment.

In 2012, Evan Millis, a doctorate-level energy

and climate change scientist found that it takes

some 13,000 kWh a year to operate a four-

by-four-by-eight foot grow area. According to

Mills and other researchers, growing cannabis

consumes 2,000 kWh per pound, while

producing aluminum requires approximately

7 kWh per pound.

Even small-time, household growers may be

tempted to tamper with the meter. “From a

power use stand point, even a small operation

of four plants with standard lights is like

hooking up 29 refrigerators that run 24/7,”

said Roger Blank, director of safety for Pacific

Power in a news release issued by the Portland,

Oregon-based utility.

What’s more, legalizing cannabis doesn’t

necessarily stop theft. While some growers will

come out of the shadows and work with their

local utilities on energy efficiency measures,

others will not. In August 2018, for instance,

growers in Murrieta, California – a state where

growing pot is legal – were arrested for stealing

more than $200,000 in electricity to energize

four homes in which 7,000 marijuana plants

were growing.

A month later, police in Rancho Cucamonga,

another California town, busted four grow

houses and collected another 4,600 marijuana

plants. At three of the four houses, meters

had been bypassed and electricity was being

used illegally.


In addition, electricity theft may become

more attractive – and rampant – as prices

for pot plunge due to an abundance of

growers. As of January 2017, the average

price sought by wholesalers in Colorado had

fallen by 48 percent compared to January

2014 prices, when legal sales began in the

state, according to Cannabase, operator of the

state’s largest market. In May 2018, The Motley

Fool investment site reported that in 2017,

the wholesale price of marijuana dropped by

13 percent to an average of $1,562 USD per

pound. “Between late September and the end

of 2017, wholesale cannabis prices ranged well

below $1,500 per pound, signaling that more

declines should be expected in 2018,” the site’s

Sean Williams said.

When the wholesale prices of cannabis fall, an

already expensive item to produce becomes

even less profitable. After all, electricity

accounts for some 40 percent of costs in

a grow operation. The financial model for

cannabis production suffers, and growers may

resort to illegal electricity taps to make up for

shrinking margins.

Worse, cannabis is a growing industry both in

production methods and economic forecasts.

Arcview Market Research and its research

partner, BDS Analytics, expect the North

American cannabis industry to grow

from $9.2 billion in 2017 to $47.3 billion

ten years later. Other analysts forecast that,

worldwide the cannabis business will reach

$75 billion annually and employ nearly half

a million people by 2030. It is likely some of

the participants in this burgeoning industry

will choose energy theft to boost their

bottom lines.

Finally, pot isn’t the only reason people

are starting to steal more energy.

“The Netherlands has experienced a 20 percent

spike in non-cannabis-related electricity fraud

cases – a growing number of which have been

attributed to cryptocurrency mining,” noted

a recent article in bitcoin.com.

Now, more than ever, utilities must look

for ways to address non-technical losses

and curb electricity theft. With cannabis

production, it’s not just a matter of lost

revenues. It’s also imperative to get ahead

of pot-grower theft for reliability issues,

particularly in rural areas where utilities have

less redundancy built into the system to

mitigate outages.


Theft mattersWhy is theft such a problem? Along with lost

revenue, theft brings expense. Loss prevention

efforts aimed at catching the crooks require

labor-intensive inspections of customer

premises and tedious account auditing.

Often, such efforts cost more than the actual

value of the losses and, even if theft is found,

convictions may or may not follow. Still, honest

rate-paying electricity customers wind up

paying for these expenses.

Those rate payers may ante-up for the

destruction pot-growers cause, too.

Distribution systems suffer power surges

and equipment failure due to high loads

when growers plug in their lights and HVAC

equipment without calling the utility first.

Between July 1 and November 4, 2015, Pacific

Power had seven incidents where the added

power consumption from home-based growing

operations overloaded local equipment and

caused outages. In these cases, the utility

conducted investigations and was able to bill

those responsible for the over-sized loads that

damaged local equipment. That’s harder to do

when theft is involved.

How do thieves get juice without bills?

They have many ways to ply their trade.

Detailed below are a few approaches.

• Bypassed phase: With this method, only

part of the energy consumed flows through

the meter. Everything from stainless steel

forks to simple pieces of wire have been

used to bypass a phase.

• Inverse rotation: Thieves can remove the

meter from the socket and reinstall it in an

inverted position, which causes the meter to

move in the reverse direction.

• Disconnected current transformer sensors and magnetic interference: Meters

depend on external sources for measuring

energy use. Thieves can disconnect

Current Transformer (CT) sensors or

use an external magnet to saturate the

core of the CT device, which introduces

measurement errors.

• Addition of resistors: Another method that

is increasingly being used is to add resistors

in the meter circuit to reduce the measured

consumption. In order to do this, you must

break the meter seal and open the meter

body cover to get access to the circuitry.

When you do this, the body cover usually

gets damaged. There are many providers

in the market who sell replicated seals and

new body covers.

• Switching off meters: There are multiple

ways to turn off a meter intermittently.

Thieves can repurpose devices such as car

alarms, timers or photo sensors to stop

the meter from registering the electricity

consumption.

• Moving or swapping the electric meters: Some thieves remove the existing meter

from the socket and insert another meter

that belongs to someone else. This way,

the original meter records lower or no

consumption during the billing period.

Catching theft due to measures such as those

listed above can be an arduous and dangerous

manual process for loss prevention workers.

By arming these workers with analytics

insights, the loss prevention process becomes

safer, quicker and more effective.


The power of data-driven insightAnalytics combines data and powerful

computer models to deliver information

that can guide smarter activities and decisions.

Analytic models look for meaningful patterns in

data and correlations that can lead to accurate

forecasts and predictions.

Each kind of energy theft has its own data

signature. To detect non-technical losses

using analytics, you need a library of analytical

models that pinpoint and flag deviations from

predicted usage. With frequent-interval data

from advanced metering infrastructure (AMI),

utilities now have the granular data that makes

NTL data analytics work well.

For instance, suppose someone places a timer

on the secondary lines of a current transformer.

That timer can be used to intermittently

stop the meter from sensing energy without

the meter being turned off. For this type of

tampering, analytics that leverage frequent-

interval consumption data from AMI will detect

the peaks and drops in registered power use.

What to seek in an analytics solutionTheft reduction and revenue protection

require a multi-faceted approach. Your

revenue protection team will likely employ

line-inspection tools, and your utility may use

behavioral programs, such as pre-pay metering

for high-risk accounts. But NTL data analytics

to predict and identify meter tampering is

going to be the most powerful component

of your theft-detection game plan. To make

your analytics more powerful, make sure your

solution has:

A vendor- and system-agnostic platformYou’ll want your analytics solution to be able

to take data from different kinds of utility

software systems, including AMI and the

meter-data management systems that often

come with it, billing and customer information

systems, geographic information systems and

work order management systems. If you’re

with a combination utility, you’ll want to be

able to access water or gas consumption,

too. Regardless of the system you’re pulling

data from, your analytics platform should be

vendor-agnostic.

Access to a data lakeA data lake is an environment that brings

in third party data, examples of which

include weather data, tax records, property

information such as square footage and age

of a home, number of residents living at the

premises, similar household data and more.

For example, tax data might help the system

determine that a property with intermittent

electric consumption – high usage followed

by no usage – is a vacation rental, not a home

that’s occupied full time.

In the data lake, it’s also helpful to have

consumption data for other utilities, such

as gas and water service. That’s because

a significant difference in usage patterns

on water and electricity – lots of water

consumption versus little electricity use –

could signal theft.

Confidence scoringOnce your analytics flags possible theft,

you also need it to help you prioritize

follow-up investigation to make the most

of your revenue protection team’s time.

A strong analytics package will combine

analysis with looks at historical usage data,

transformer data that can tell how much

electricity flowed through the lines versus

how much was billed, meter events like

tamper alerts as well as other information that

can signal irregularities. Then, the package

should give you an idea of what might have

happened, such as meter removal, unusual

usage, reverse energy or energy loss between

the meters connected to a transformer

and that transformer itself. Finally, the

package should calculate a confidence score

indicating how certain the system is that

something is wrong.


A mobile app and case management functionalityIdeally, the solution should give

investigators a mobile tool to use to record

what is found after they go out to a flagged

site. Case management software will help

your team track the investigation and record

evidence that can support law enforcement

officials with prosecutions. The data loaded

into the case-management tools also enhance

machine learning so that analytics models

become more accurate as time goes by.

Conclusion – Analytics delivers ROIUsing the right theft-detection

analytics can pay off handsomely for

utilities. Analytics software lowers

operational costs because utilities can

more accurately identify theft without

hiring additional personnel. Analytics

software helps loss-prevention

workers more effectively quantify and

track energy diversion. Such solutions

also increase worker safety by giving

staff a better idea of what issues they

may be investigating and when they

should call in law enforcement to help.

For the utility, theft analytics deliver

more recovered revenue. Payback

can be so significant, one Canadian

utility used loss prevention as a

major justifier for implementing

AMI. The business case included

a $732-million line item for theft

detection using analytics.

Honeywell’s Videre Guard solution is

an analytics and case-management

software incorporates the features

noted above in a comprehensive

analytics package. This outcome-

focused solution enables utilities to

learn when, where and how energy

diversion occurs so that power

providers can minimize non-technical

losses. With Videre Guard, utilities see

increased revenue and operational

efficiency, as well as enhanced grid

stability, reliability and resiliency.

© 2019 Honeywell International Inc.

For more [email protected]

www.HoneywellSmartEnergy.com

Honeywell Smart Energy1985 Douglas Drive North

Golden Valley, MN 55422-3992

www.Honeywell.com

analytics - honeywell...in may 2018, the motley fool investment site reported that in 2017, the...

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