Itron Inc. President and CEO Malcolm Unsworth said at the United Nations Climate Conference in Copenhagen, Denmark, last week that expansion of the company's advanced utility meter technology into smart-grid applications has the potential to help reduce carbon emissions and improve power-system efficiency.

Still, clear direction on carbon mitigation policy is necessary to take advantage of such benefits, Unsworth said. "The benefits are clear and documented, but strong motivation from national regulators is required for utilities to invest in the technology globally," he said.

Yet, Itron has had a poor 2009, and Unsworth says the company was happy to have the U.S. government announce energy-efficiency stimulus grant awards in October and clear up uncertainty that has slowed sales of advanced utility metering systems.

Unsworth is a British-born executive whose long and varied experience in manufacturing causes him to quip, "I'm what you would call a corporate gypsy." He became president and CEO when LeRoy Nosbaum relinquished the positions March 31. Nosbaum will retire as Itron's executive chairman at the end of this month and be succeeded by longtime Itron board member Jon Eliassen.

Unsworth, who moved back to Spokane from Brussels, Belgium, where he had been running Itron's European subsidiary, is guarded in his projections for 2010, saying little beyond, "Itron North America is well-positioned for next year when it comes to our technology." He says Itron doesn't issue so-called "guidance," or estimates of future earnings, but Itron's 12-month order backlog, at $746 million, and total backlog, of $1.6 billion, both had reached all-time highs as of Sept. 30.

As for the recently announced U.S. government grants, three utilities with which Itron has big contracts for advanced metering infrastructure will receive a total of $304 million, which they must match, Unsworth says.

That will accelerate their orders, which will be good for Itron because "the more (systems) we get in the field, the more opportunities we will have," he says. Some 400 utilities had sought the government funds, but just 100 got them, and Unsworth says the other 300 "have got to be thinking about what they're going to do."

In August, Itron said it would open an additional automated production line at its facility in West Union, S.C., where it makes smart meters, and it has hired some workers back there after saying in its third-quarter conference call with securities analysts that it had reduced its worldwide work force by 4 percent. The company says on its Web site that it has more than 8,500 employees, serves nearly 8,000 utilities in more than 130 countries, and had $1.21 billion in revenue, which was down by 18 percent, through the first nine months of 2009.

Itron has 50 percent of the installed base of automated utility meters in North America and is the world's leading supplier of such technology, which is expected to remain in great demand for years to come. Still, reality has tempered predictions of how well Itron will do in the era of the smart grid.

Deloris Duquette, Itron's vice president of investor relations and corporate communications, says the company's longstanding efforts are starting to pay off, but 2009 was "a crummy year."

"We're looking forward to the end of 2009," adds Unsworth.

The company lost $7.4 million, or 19 cents a share, in the first nine months of 2009, compared with net income of $17.6 million, or 50 cents a share, in the year-earlier period.

Itron is a participant in a regional smart-grid project that was approved by the U.S. government and includes development of a $38 million so-called "smart community" in Pullman, Wash. Avista Corp., which also is involved in the project, announced Nov. 24 that the effort in Pullman "involves automation of many parts of the electric distribution system using advanced metering, enhanced utility communication, and other elements of smart-grid technologies."

The smart grid will provide two-way communication between utilities and their customers, enabling utilities, when demand for electricity peaks, to shed load and avoid brownouts by shutting off clothes dryers and air conditioners in homes, motors in factories, and lighting in stores. Such capabilities will enable utilities to match energy demand with supply much more closely, curbing unneeded generation, reducing fossil fuel consumption, and cutting emissions of greenhouse gases.

It's believed that such goals—along with a trend toward allowing customers to buy energy from competitive vendors—will create tremendous demand for smart-grid technology. The European Union, for example, has called for its members by 2020 to reduce carbon emissions by 20 percent, improve energy efficiency by 20 percent, and meet 20 percent of demand with renewable energy.

Unsworth says that in May, a spokeswoman for San Jose, Calif.-based Cisco Systems Inc. said that the smart grid eventually will be "100 to 1,000 times bigger" than the Internet.

Yet, Unsworth says, "We've got more competition now than we've ever had. When there's this much money that's going to be spent, you're going to get a lot of competition."

Further, the competition now is beginning to come from such behemoths as Google Inc., the Mountain View, Calif.-based maker of the world's most prominent Internet search engine, and Redmond, Wash., software giant Microsoft Corp., Unsworth says. San Diego Gas & Electric now allows Google to give its customers information about their electricity usage—and Google obtains that information from Itron's meter-data management system, Unsworth says.

Meanwhile, he says that in Texas, one of two states in the union where utility customers can buy electricity from competitive vendors, the Public Utility Commission is requiring utilities to make available billing information on every customer every hour. In Europe, where utilities long have settled up their billings with customers annually and accepted payment of estimated amounts the rest of the time, there's a strong movement to provide customers with more choice, which will mean much more frequent metering.

"There's a complete business transformation of these companies," Unsworth says. "The dynamics are massive. They're going to increase their workloads."

The foregoing has to do with the developed world, but Unsworth says the smart grid also can provide answers to little-known utility-management problems in developing countries. For example, in some townships in South Africa, utility customers have no street addresses and no bank accounts, so utilities employ "prepayment metering" to sell power.

To do business across such a wide swath of the globe, Itron operates 32 manufacturing sites and 60 sales offices, Unsworth says.

In Unsworth, Itron has a leader who has seen, and worked in, many places. Originally from Manchester, England, Unsworth earned a bachelor's degree in mechanical and production engineering at Salford University there. In 1974, he moved to Toronto, where he earned the grade of professional engineer. In 1978, he joined Schlumberger, a company for which Nosbaum also worked in his career.

In 1982, Unsworth transferred to the U.S., and he has held a number of positions in several U.S. states in his career. In 2004, he joined Itron when it acquired Schlumberger Electricity Metering. In April 2007, when Itron acquired Actaris Metering Systems, of Brussels, he was promoted to head the European operation. He has dual citizenship in the U.K. and the U.S. and says, "I speak three languages: Canadian, American, and British." He and his wife have built a home here.

While it's true that the smart grid holds much potential for the future, "it's not going to take 5 minutes to build it; it's going to take years," Unsworth says.

Itron's pre-eminence as a player in the smart grid's development is no mere coincidence, he says, "Look at some of the things we've been doing. We're not just in the right place at the right time. We've reduced utilities' expenses. We've given them information they need. We've invested millions of dollars in research and development. It's a revolution for them. It's more of an evolution for us."

Duquette says Itron spends in the neighborhood of $120 million to $130 million a year on R&D, but the opportunity posed by development of the smart grid also is seen as vast. Europe is believed to have 145 million meters that will need to be modernized, and only Italy and Sweden have done that so far, Unsworth says. China is believed to have more than 400 million meters. Globally, there are 2.6 billion meters—and only 8 percent of them have been automated, Unsworth says.

"It's huge," he says. "The opportunities are very, very big."

New competition isn't coming just from big companies, but also from private companies, Unsworth says. "You don't know what they're doing" because unlike publicly traded companies, such as Itron, private concerns aren't required to report what they're doing, he says.

Meanwhile, the technical demands of the market—which mostly is made up of regulated utilities—are stringent, because utility meters, unlike most products, have to sit on the side of a house in extreme heat and extreme cold for 20 years without a single malfunction, Unsworth says.

With a cell phone, Duquette says, "If you drop a call, you drop a call. You can't do that" with a utility meter, she says. She and Unsworth point out that the market for utility meters is regulated, the meters can't deviate in their performance, and increasingly they also must be secure, so neither hackers nor terrorists can use them as pathways into giant utility-company computers that control large areas of infrastructure.