Energy Theft: A Growing Problem

Not all of the stolen electricity goes to marijuana grow ops, but according to BC Hydro, most of it does. When the data is reviewed, it often reveals unusually high electricity consumption and usage patterns indicative of energy-intensive grow lights and fans.

This is not a case of masked burglars demanding that you hand over your electricity. Nevertheless, slightly more discrete thieves are stealing power at a high rate.

Industry experts estimate that $6 billion of electricity is stolen in the US each year. It ranks as the third-most stolen item, after credit card data and automobiles. The US Energy Information Administration says that between 1/2 and 2% of electricity is stolen, and a study commissioned by National Rural Electric Cooperative Association’s Cooperative Research Network, Power Theft Detection, discovered that it’s becoming “a more serious and costly problem at electric cooperatives as the perpetrators become increasingly sophisticated in their tactics.”

Electricity theft is a pervasive and increasingly common problem throughout the world. A report from GTM Research, Utility AMI Analytics for the Smart Grid 2013-2020: Applications, Markets and Strategies, cites Canadian estimates indicating that utilities lose more than $500 million from electricity theft. This study points the finger at grow operations as the biggest source of theft.

Reefer Madness
Grow operations—illegal, undercover marijuana cultivation collectives—are prevalent throughout North America and account for a high percentage of stolen power. These indoor marijuana grow operations are credited with stealing 1% of all electric consumption in the US, according to a 2012 study by Evan Mills, a Lawrence Berkeley National Laboratory researcher. That equates to about $5 billion in power stolen for indoor cannabis growing each year.

Illegal indoor marijuana growing operations are the most significant sources of power theft in many states, including Florida, California, and Texas. CenterPoint Energy, a utility with 5 million metered electric and gas customers headquartered in Houston, TX, found 15 houses used for grow operations that bypassed the older meters and were each netting about $30,000 per month.

Canada’s approximately 100,000 known indoor marijuana grow ops are responsible for most of the electricity theft in that country. An estimated $500 million of electricity is stolen in predominantly urban areas of Ontario, while cultivation in British Columbia is moving to rural areas. In 2010, British Columbia utility provider BC Hydro estimated that grow ops cost its customers about $100 million annually.

Even legal marijuana growing warehouses consume massive amounts of electricity. River Rock, a major warehouse and medical marijuana dispensary in Colorado, spends approximately $21,500 each month on electricity. Other legal companies spend up to as much as $100,000 per month.

The reason for the high electricity demand is that marijuana cultivation requires heaters in certain climates, carbon dioxide and ozone generators, carbon filters, dehumidifiers, fans, and high-intensity grow lights. Mills’ study found that the typical indoor marijuana grow op has the same power density as a data center: roughly 200 W per square foot.

Marijuana grow operators try to avoid detection from law enforcement or electrical and fire safety officials because it’s an illegal activity. Stealing power helps them evade detection and, as an added bonus, reduces their cost of operation. However, indoor growing isn’t just to evade the law; it also provides growers with greater control over their crops.

Building a Case
Theft is typically more rampant in the residential and small commercial sectors. “People buy a house and turn it into a growing operation by putting in lights that run 24 hours a day,” explains Matt Spaur, senior marketing manager with Space-Time Insight, who says the practice is particularly ubiquitous in Vancouver and parts of British Columbia (BC). “It’s not a secret. ‘BC Bud’ is a common product.”

However, while local utility provider BC Hydro, one of Canada’s largest utility companies, has known about the problem for a long time, they couldn’t figure out how to catch the illegal growers.

That’s until they got approval to install smart meters.

Advanced meters, Advanced Metering Infrastructure (AMI), and smart grid technology can provide information to help utilities catch thieves, but it’s not as simple as installing the smart meters and calling the cops. For example, to circumvent alarms triggered when smart meters are tampered with, some grow operators divert power before it gets to the meter. More granular data is necessary, and it must be correlated and analyzed in order to build a case.

That’s why BC Hydro partnered with real-time analytics provider Space-Time Insight to build technology that would process the data from smart meters to help them detect and respond to fraud. The software vendor correlates data, analyzes, and visualizes. “There are no silos between data, analytics, or people,” states Spaur.

Not only do they work with companies in many industries, such as water and natural gas utilities, transportation companies, and government to recoup investments through revenue protection, but Space-Time Insight also works with any type of data set and any brand of smart meters. BC Hydro chose Itron meters.

So, how do you steal electricity? Thieves can tamper with meters by attaching magnets to interfere with the internal magnetic field, thereby reducing the rotation of the disk. They can insert a device to slow the mechanical meter from spinning; they can even use dirt or liquid to create rust, which slows a meter. Turning a meter upside down makes it run backwards. Meters can also be bypassed partially or completely by connecting to the line before it’s metered.

All structures have meters, Spaur states. They’re the “cash register” for the utility company. “People tamper with the meters, bypass them, or set up an independent grid connection to tap into the transformer. Some even put their own transformer on a higher voltage line.”

Some elaborate methods of theft include diverting from aboveground and underground services by installing primary underground and pad-mount transformers stolen from other utilities. Some tap into 12-kV or 25-kV lines, reports, vice president of Transmission and Distribution Engineering and Design for BC Hydro. “We’ve seen where they hollowed out the utility poles, tapped into the power line, and then ran underground to their operation,” he adds. “They even put in their own transformers.”

Because mechanical meters are read manually once a month, pinpointing theft is difficult and delayed, but, as Spaur points out, smart technology allows the utility company to request immediate data from specific meters regarding consumption and tampering. “There are even codes for [the meters] being flipped over.”

Smart technology also makes it easy to detect if someone is bypassing the meter, Spaur continues. “We can install smart devices further up on the meter feeding the block to compare what’s distributed and what’s used. We look for discrepancies in power delivered and power consumed, and generate reports of potential theft by looking at more granular data.”

More granular theft detection requires correlation of increasing amounts of data, as well as integration with utility software assets, particularly geographic information systems, according to Zach Pollock, a senior analyst with GTM Research. Advanced meter analytics, including load balancing, can be a useful tool as well.

After looking at and prioritizing the data, Spaur says an analyst provides a list of top 100 suspects to field investigators. “Eyewitness data and numerical data are put together to build a case. To get data to build a case is hard without smart meters to generate it.”

The Importance of Theft Protection
Customers bear the cost of electricity theft through increased rates. BC Hydro estimates a loss of 3% to theft, which has grown from 500 GWh in 2006 to at least 850 GWh today. That’s enough power to supply 77,000 homes for a year.

“In 2010 they lost $100 million in energy costs,” reveals Spaur. In addition to the stolen power due to illegitimate consumption of electricity by marijuana growers, BC Hydro expends additional sums on theft reduction and recovery costs.

Power surges and electrical system failure due to high loads as a result of unreported usage can cause power outages and damage to equipment and infrastructure, including the premature failure of distribution transformers—all of which cost additional money for repairs or replacement.

There are other concerns, as well—most importantly, safety. High loads have sometimes been so large that transformers melted, posing a safety risk to the general public. However, the financial aspect of the theft remains the most significant driver of detection.

Since implementation of the smart meters and its theft deterrence program, BC Hydro has been able to cut energy losses by 80%. “They expect a 10-year return of the $700-million investment,” indicates Spaur, a return on investment that justifies the cost of smart meters.

Cracking Down
Energy theft in North America is relatively low at 1–3%, but reaches 10–40% in other countries (including electricity, natural gas, and water). Although the rate of electricity theft is lower in Canada and the US than in other countries, such as India and Brazil, battling electricity theft is an ongoing challenge because thieves are becoming more sophisticated. Instead of turning off meters completely, some grow ops use partial bypasses or intermittent meter swapouts. There have even been reports of hacking into smart meters.

It’s often difficult to determine the extent of the problem since the “product” being stolen isn’t sitting on a shelf to be inventoried. Over the past five years, BC Hydro identified more than 2,600 electricity thefts. It’s an expensive and time-consuming process, but augmenting the manual process with technology has helped them reduce the costs and the crime.

New distribution system meters installed at key points measure the electricity supplied to specific areas. Using software tools to analyze data, the meters can identify theft more accurately, allowing the utility company to address it right away.

Smart meters have a tamper-detecting feature that notifies the utility company if they have been removed from the wall or manipulated in any way. These real-time alerts let the utility know that the meter is being tampered with as it happens. With the old system of manual meter reading, it could be months before tampering was discovered. This is a money-saving improvement in theft prevention.

Many utility companies have established revenue protection units that work with law enforcement to gather evidence at the scene to prepare for prosecution. Some of them, like BC Hyrdo, have also set up anonymous tip lines.

Combining some of these strategies, CenterPoint Energy shut down 1,500 “electrical diversions” associated with grow ops and was able to recover $5 million in lost revenue. By looking beyond marijuana cultivation, they found theft related to a heat wave in 2010, during which 60–70% of meters at apartment complexes had been tampered with. They estimated that 10,000 customers were stealing power, for a total of $14 million in lost revenue.

Not all of the stolen electricity goes to marijuana grow ops, but according to BC Hydro, most of it does. When the data is reviewed, it often reveals unusually high electricity consumption and usage patterns indicative of energy-intensive grow lights and fans.

What hinders many utility companies (as well as other types of businesses) that have recently installed smart meters, Spaur speculates, is that they have too much data, too fast. “They want to make better decisions, but don’t know how to go about interpreting the data. Smart meters are amazing devices; there’s a ton of things you can do with them, but no one knows all the potential they offer when they first get them. Too much data too fast is a universal problem.”

The situation is going to get more complicated. Spaur says that growth in solar power at the residential level makes the distribution grid a lot more complicated. “It’s hard to manage the system.” Space-Time Insight has developed a Distribution Intelligence product to address this development.

Other products they offer include: Outage Intelligence to help the utility respond to outages, Asset Intelligence to help the utility manage aging infrastructure and assess the health and capacity of transformers, and Safety Intelligence, a new product that predicts problems. “It enables us to see where and when crime happens,” explains Spaur, adding that theft detection is easier with data, and if a utility company detects theft sooner, it can respond more quickly, in order to save money and ensure safety. 

[COURTESY: LORI LOVELY,Forester media ]

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