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HomeMy WebLinkAbout6 Water Metering Plan Agenda Item # 6 Public Utility District ACTION To: Board of Directors From: Neil Kaufman Date: July 23, 2008 Subject: Approval of Water Metering Implementation Plan 1. WHY THIS MATTER IS BEFORE THE BOARD AB 2572 requires the District to begin reading all water meters and billing on a volumetric basis. Implementation of residential meter reading will require a number of Board actions and will have a financial impact on the District. 2. HISTORY In 1991, the Water Measurement Law (SB 229) was enacted. This law required that water meters be installed on all new commercial and residential water connections as of January 1, 1992. SB 229 did not require the retrofit of meters onto previously existing customers. SB 229 does not require that the water meters be read and does not require billing of customers on a volumetric basis. The District has been installing water meters on all new connections since 1992 and is in compliance with this law. On September 29, 2004, AB 2572 was signed into law. AB 2572 requires that the District begin reading the water meters installed since 1992 and commence billing on a volumetric basis by January 1, 2010. AB 2572 also requires that all connections be equipped with water meters and billed on a volumetric basis by January 1, 2025. On April 16, June 18, July 2, and July 16, 2008, workshops were held to discuss the metering of water services. A three phase approach has been identified to cover the implementation of metering and volumetric billing: • Phase 1 is a pilot program to be completed by November 2008 • Phase 2 will achieve compliance with the 2010 deadline of AB 2572 • Phase 3 will achieve compliance with the 2025 deadline of AB 2572 There is no flexibility in the scheduling of Phase 1 and Phase 2 since the deadline to begin meter reading is January 1, 2010. Three options have been identified regarding the implementation of Phase 3. They are: • Delayed Start - Begin installing meters in 2020. Anticipated completion by 2023 • Gradual - Begin installing meters in 2010. Install approximately 500 meters per year for 12 years. Anticipated completion by 2021 Expedited - Begin installing meters in 2010. Install approximately 2,000 meters per year for three years. Anticipated completion by 2012 3. NEW INFORMATION Based upon direction from the Board at the July 16 workshop, a Water Metering Implementation Plan has been prepared. This plan is based upon the Expedited approach with all customers to be metered by January 1, 2013. A copy of the plan is attached for review. 4. FISCAL IMPACT The fiscal impact of fully implementing residential water metering is significant and may approach $10,000,000. 5. RECOMMENDATION Ap v the Water Metering Implementation Plan. Ed Taylor Michae D. Holley Water Utility Manager General Manager WATER METERING IMPLEMENTATION PLAN Final Draft Adopted July 23, 2008 Truckee Donner Public Utility District P.O. Box 309, 11570 Donner Pass Road, Truckee, CA 96160 PURPOSE The District intends to begin billing all water customers on a volumetric basis as of January 1, 2013. BACKGROUND In 1991, the Water Measurement Law (SB 229) was enacted. This law required that water meters be installed on all new commercial and residential water connections as of January 1, 1992. SB 229 did not require the retrofit of meters onto previously existing customers. SB 229 does not require that the water meters be read and does not require billing of customers on a volumetric basis. The District has been installing water meters on all new connections since 1992 and is in compliance with this law. On September 29, 2004, AB 2572 was signed into law. A copy of this legislation is attached for your review. AB 2572 requires that the District begin reading the water meters installed since 1992 and commence billing on a volumetric basis by January 1, 2010. AB 2572 also requires that all connections be equipped with water meters and billed on a volumetric basis by January 1, 2025. The Board of Directors conducted a number of workshops to discuss compliance with the AB 2572 requirements and the financial impacts thereof. A three phase approach was identified: • Phase 1 is a pilot program to be initiated by November 2008 • Phase 2 would achieve compliance with the 2010 deadline of AB 2572 • Phase 3 would achieve compliance with the 2025 deadline of AB 2572 There is no flexibility in the scheduling of Phase 1 and Phase 2 since the deadline to begin meter reading is January 1, 2010. Three options were been identified regarding the implementation of Phase 3. They are: • Delayed Start— Begin installing meters in 2020 with anticipated completion by 2023 • Gradual — Begin installing meters in 2010. Install approximately 500 meters per year for 12 years with anticipated completion by 2021 • Expedited — Begin installing meters in 2010. Install approximately 2,000 meters per year for three years with anticipated completion by 2012 The Board of Directors determined that the Expedited Implementation with all customers metered by 2013 is in the best interests of the District. EXISTING CUSTOMER BASE & EXISTING METER INVENTORY As of January 1, 2008 the Water Department had 11,726 residential accounts and 654 commercial accounts. A summary of the residential accounts is given in Table 1 and a summery of the commercial accounts is given in Table 2. It should be noted that the information shown in Tables 1 and 2 is based upon the data given in the District's customer service database. This information has not been field verified and it is expected that some of the data is incorrect. As part of the implementation program, every service location will be inspected. At locations where meters currently exist, those meters will be utilized to the maximum extent practicable. At those locations where a meter does not currently exist, a new meter will be installed. Page 1 of 6 Table 1. Summary of Residential Meters Meter Manufacturer Amount Badger 3,290 No Meter 6,726 No Meter- MHP 120 Sensus 1,582 Unknown 8 Total 11,726 Table 2. Summary of Commercial Meters Meter Manufacturer Amount Badger 387 Hersey 1 No Meter 40 Sensus 189 Unknown 37 Total 654 As shown in Table 1, there are 4,880 residential accounts with meters and 6,846 residential accounts without a meter. In accordance with AB 2572, the District must begin reading these 4,880 meters by January 1, 2010. The District began purchasing and installing Badger meters in August of 1995. Prior to that time, the District utilized Sensus meters. In 1992, the Glenshire Mutual Water Company (GMWC) began installing Sensus meters. The GMWC continued to install Sensus meters until its acquisition by the District in 2002. Since 2002, Badger meters have been installed in the Glenshire area. In 2001, the District acquired the Donner Lake Water System (DLWS), To the District's knowledge, residential meters were not installed prior to that time. Any meters that existed as of 2001 were scrapped as part of the reconstruction of the DLWS. Since 2001, Badger meters have been installed in the Donner Lake area. 120 of the residential accounts are located in the Village Green and Sierra Mobile Home Parks. At these two mobile home parks, the District does not own the piping within the mobile home park. It is currently the District's intent to convert both of these locations to a master meter with the account registered to the mobile home park owner. However, there are a number of State laws regarding the provision of water service to mobile home parks that must be complied with. Further review of the relevant statutes and discussions with the mobile home park owners is required before a final determination can be made. As shown in Table 2, there are 614 commercial accounts with meters and 40 commercial accounts without a meter. Most of the commercial accounts without a meter are older properties that were converted from residential to commercial usage a number of years ago. There are also some commercial properties where special billing arrangements have been made such as the Truckee Donner Senior Apartments included in that category. EXISTING METER READING SYSTEM The District does not currently read water meters installed on residential properties. The District currently reads 394 of its commercial meters utilizing a drive-by radio read system Page 2 of 6 manufactured by Itron. The remaining commercial meters are read visually. The same Itron system is also used to read the District's electric meters. The Itron system was implemented in the mid-1990s. For water meters, maintenance of this Itron system is problematic and it does not function well given the local climate and construction practices. The Water Department plans to discontinue use of the existing Itron system for reading water meters and implement a new radio reading system. The Itron system performance is satisfactory for reading the District's electric meters its use for that purpose will continue for the foreseeable future. PROJECT SCHEDULE Based upon the Expedited approach, the following implementation time line has been developed: • Develop RFP/Bid Package for AMR (Automatic Meter Reading) system—July 2008 • Bidding & purchase of AMR system —August/September 2008 • Install pilot program meters— September/October 2008 • Bring AMR on-line—October/November 2008 • Conduct Pilot Program Testing — November 2008 to July 2009 • Installation of AMR system on existing meters for AB 2572 Compliance - Summer 2009 • Develop alternative rate structures - Summer 2009 • Finalize rate structure in conjunction with development of FY 2010 budget— Fall 2009 • Begin sample billing based on meter reads -January 2010 • Full implementation of metered billing -January 2011 • Install meters on remaining customers—2009 to 2012 PHASE 1 - PILOT PROGRAM The project schedule calls for a pilot program to commence no later than November 2008. The purpose of the pilot program is threefold. 1) Gather Data Regarding Actual Customer Usage -Actual customer usage from about 400 residential meters will be gathered using the new AMR system. These customers would be selected to develop representative water consumption data based on different parameters such as: • Permanent vs. part time residents • Different geographic areas • Lot size • Age of residence The consumption data gathered would be used to develop rate structure alternatives for consideration by the Board in conjunction with development of FY 2010 budget. 2) Provide Refined Costs For Meter Installation - The Water Department has developed a cost estimate for the implementation of metering. The installation of 400 meters in a range of meter box configurations will allow for more precise cost estimating to cover the installation of the remaining meters. 3) Validate AMR Technology Selection — Implementation of a new AMR system is planned as part of the metering program. The pilot program will convert a portion of the Page 3 of 6 existing commercial meters to the new AMR system along with the installation of the 400 residential meters. The District will evaluate the capabilities of the new AMR system during the Winter of 2008-09 to ensure that the performance complies with the District's requirements. PHASE 2—AMR INSTALLATION ON EXISTING METERS As noted above, the District had installed 5,494 meters as of January 1, 2008. In accordance with AB 2572, the District must read these meters and bill these customers volumetrically by January 1, 2010. Phase 2 of the implementation will involve the retrofit of the new AMR system onto 5,094 of these existing meters (400 will be covered in the Pilot Program). In some cases, the District may choose to replace an existing meter with a new meter if the existing meter is old and in poor condition, or it cannot be retrofit with the new AMR system. Phase 2 will also involve the installation of meters on a number of not currently equipped with a meter. Over the years, the District has conducted a number of pipeline replacement projects. These projects normally involve the replacement and upgrade of service laterals and meter boxes along with the new mains. However, the pipeline replacement projects do not involve the installation of meters for customers without meters. There are approximately 2,000 accounts where the meter box has been upgraded but a meter has not been installed. Installation of a new meter within an upgraded meter box is relatively simple and requires a minimal effort beyond the retrofit of an AMR radio onto an existing meter. Installation of these new meters will also be included in Phase 2. PHASE 3 — REMAINING CUSTOMERS Upon completion of Phase 2, there should be 4,886 customers without a meter. In some cases, a meter box does not exist and needs to be installed. In other cases, the meter box will need to be upgraded before a meter can be installed. The Water Department will make use of the existing meter boxes to the maximum extent practicable. There will be two components to Phase 3: 1) Installation of new meter boxes and upgrade of existing meter boxes as required. 2) Installation of meters Installation of the meter boxes will be performed by appropriately licensed contractors selected through the District's normal procedures for bidding of construction contracts. It is expected that installation of the meter boxes will be spread over three years (2010, 2011 & 2012) with about 1,630 accounts covered each year. The meter box installation contracts will be grouped geographically and will be sized under $1,000,000 to allow bidding by locally based contractors. The determination of which neighborhoods will be constructed in which year has not yet occurred. Installation of the meters and AMR radios will be performed by the AMR system vendor and will be included in the scope of work described in the RFP. Page 4 of 6 NEW CUSTOMERS A new AMR-equipped meter will be installed for all new construction. Upon selection of the new AMR system the Water Department will need to review the Connection Fee schedule to ensure that sufficient money is collected to cover the purchase of the appropriate AMR radio. NEW AMR SYSTEM PROCUREMENT The timeline for procurement of the new AMR system is given below: • Issue RFP -July 28, 2008 • Pre-proposal Conference -August 7, 2008, 2:00 PM • Deadline for Submission of Questions -August 13, 2008 • Deadline for Proposals -August 20, 2008, 2:00 PM • Board Presentations (if required)- September 3, 2008 • District Initiates Negotiations with Preferred Vendor- September 2008 • Tentative Date for Awarding Contract- September 2008 The AMR system vendor will be required to engineer, configure, install and proof-test the AMR system. The AMR system vendor will be required to install and configure meters and AMR radios for all three phases of the project. METERED RATE STRUCTURES The Water Department currently maintains metered rate schedules for its commercial customers. Residential customers are billed a flat rate for service. The Pilot Program will gather data regarding residential usage. Once this data has been analyzed, the Water Department will make recommendations to the Board of Directors regarding potential metered rate structures. Future metered rate structures may be significantly different from the rate structures currently in place. COST ESTIMATES The cost estimates given below are based upon the best available information currently. Phase 1 Phase 1 involves the equipping of about 400 meters with the new AMR system. This cost is estimated at $250 per meter. An additional $150,000 is assumed to cover the cost of AMR system hardware along with computer hardware and software for a cost of$250,000. Phase 2 Phase 1 involves the equipping of 5,094 existing meters with the new AMR system. This cost is also estimated at $210 per meter for a total of $1.1 million. Phase 2 also includes the purchase of 2,000 new meters with the new AMR system. This cost is estimated at $250 per meter for a total of$500,000. An additional $100,000 is assumed for additional AMR system hardware for a total of $1.7 million. Phase 2 is assumed to cost $2.0 million to provide some contingency funds. Phase 3 Phase 3 involves the purchase and equipping of 4,886 meters with the new AMR system. This cost is estimated at $250 per meter for a total of $1.2 million. These locations will also require the installation of new meter boxes at a cost of $1,200 per meter for a total of $5.8 million. Phase 3 is assumed to cost $7.7 million to provide some contingency funds. Page 5 of 6 Project Total The estimated costs for the total project are summarized in Table 3. Table 3. Estimated Costs Phase Number of Number of Cost Meters Meter Boxes Phase 1 400 0 $250,000 Phase 2 7,094 0 $2,000,000 Phase 3 4,886 4,886 $7,700,000 Total 12,380 4,886 $9,950-000 FUNDING SOURCES The District currently holds about $1.27 million in an account entitled the Reserve for Future Meters Fund. All of this money will be expended as part of the metering program. In addition, a $9.6 million 15-year loan will be secured to cover the remaining costs. Repayment of the loan will be funded by a surcharge imposed on all water system customers. The surcharge will be imposed in January of 2009 and will remain in effect until the loan has been repaid. The surcharge will be listed as a separate line item on monthly bills and is currently estimated at $5.88 per month for a residential customer with a 5/8" x 3/491, or 3/4" meter. Further review is required to determine if a larger surcharge is appropriate for customers with a larger meter. The $5.88 monthly surcharge is based upon an interest rate of 5.29%. The surcharge will need to be adjusted if the District's costs or if interest rates differ significantly from the estimates given herein. Page 6 of 6 ................ .