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April 21 Agenda Questions and Responses w attachment
April 21 Agenda Questions and Responses Date Submitted By Type Item ID Number Department Question/Comment Staff Response 4/20/2026 Suzi Rumohr Work Session C 26-0030 Fire Why does Denton FD have so many more calls than DFW cities with much larger populations than us? What are the top call types contributing to this difference? Fire is working with both Frisco and Irving to dive deeper into calls for service to compare. Although the population in Denton is approximately 166,000, this figure does not include the student bodies of two 4-year universities and one community college. Denton has approximately the same number of skilled nursing centers and assisted living centers as Irving, and significantly more than Frisco, which creates emergency responses. Another factor is the daily traffic volume in a congested area. Data show daily traffic volume at I-35 and University is approximately 100,000 to 110,000 vehicles, which creates congestion and a more concentrated population, increasing the need for emergency responses. All these factors can increase the workload for the fire department. 4/20/2026 Suzi Rumohr Consent AH 26-0530 Capital Projects / Procurement Approximately when the Bonnie Brae mill and overlay would occur?Capital Projects anticipates issuing a notice to proceed in May. The project allows for 5 months of construction. Phasing will be submitted to Capital Projects after contract award by the contractor. The approved sequence and segment durations will be added to the projects Discuss Denton page. 4/20/2026 Suzi Rumohr Consent AH 26-0530 Capital Projects / Procurement How long does it typically take to mill and overlay a segment like Bonnie Brae between Scripture and University? From the time crews begin removing the top layer of asphalt to the time they finish laying the new asphalt. Dependent on contractor phasing, we would anticipate 4-8 weeks. 4/20/2026 Suzi Rumohr Individual Consideration B 26-0521 Water Please send a copy of the 2021 Jacob’s Engineering feasibility study.The 2021 study is attached. 4/20/2026 Suzi Rumohr Individual Consideration B 26-0521 Water The 2021 feasibility study indicated that we’d make up the cost within 11-13 years. Inflation has been substantial since 2021. Do we have an updated estimate on the time it will take to recoup costs based on today’s dollars? While the 2021 feasibility study initially projected a cost recovery period of 11 to 13 years based on a 2.5% inflation rate, current data shows an average inflation rate of 3.3% since the study’s conclusion. Despite this increase, the project’s ROI is also influenced by growth rates, which are higher than anticipated. To ensure Council has the most accurate financial outlook, Water Utilities plans to do a one time update. This update will provide a refined estimate on the exact timeframe required to recoup the City's investment. 4/20/2026 Suzi Rumohr Individual Consideration C 26-0525 Water / Procurement What are the anticipating ongoing annual costs for this product beyond the five year contract?Beyond the initial five-year term, the anticipated annual cost for software is estimated at $210,000. Additionally, the City will assume responsibility for system maintenance, which will be achieved within the existing budget. 4/20/2026 Suzi Rumohr Individual Consideration D 26-0509 Economic Development How many of the jobs will be in-person only? How many of the jobs will be (or can be) fully remote?The 258 jobs included in the incentive application are all onsite positions. These roles are intended to be in person due to the hands-on nature of the work, such as assembly, testing, and related activities. While the company does have some remote positions, none of those are part of the 258 jobs included in the agreement. 1 AMI/AMR Feasibility Study Technical Memo December 8, 2021 City of Denton, Texas Chris Campbell Jacobs Engineering Group Inc. 1999 Bryan Street Suite 1200 Dallas, TX 75201 United States Phone: +1 214 638 0145 Fax: +1 214 638 0447 www.jacobs.com © Copyright 2021 Jacobs Engineering Group Inc. The concepts and information contained in this document are the property of Jacobs. Use or copying of this document in whole or in part without the written permission of Jacobs constitutes an infringement of copyright. Limitation: This document has been prepared on behalf of, and for the exclusive use of Jacobs’ client, and is subject to, and issued in accordance with, the provisions of the contract between Jacobs and the client. Jacobs accepts no liability or responsibility whatsoever for, or in respect of, any use of, or reliance upon, this document by any third party. Contents Executive Summary .................................................................................................................................................. 1 Task 1 – Project Management .............................................................................................................................................. 4 Task 2A – Assessment of Current Metering Equipment ............................................................................................. 4 Existing Meter Reading System and Meters ......................................................................................................... 4 Network Devices ............................................................................................................................................................... 5 Meter Boxes and Lids ..................................................................................................................................................... 5 Discussion ........................................................................................................................................................................... 6 Task 2B: Compatibility Assessment of Existing Billing System ............................................................................... 6 Architecture Diagrams ................................................................................................................................................... 7 Options ................................................................................................................................................................................ 7 Discussion ........................................................................................................................................................................... 8 Task 3 - Evaluation of Advanced Metering Infrastructure System Technologies ............................................ 8 Functional Objectives ..................................................................................................................................................... 9 Network Alternatives ................................................................................................................................................... 10 City-Owned Networks ................................................................................................................................................. 10 Network as a Service (NaaS)..................................................................................................................................... 10 List of Impacted Processes ....................................................................................................................................... 11 Discussion ........................................................................................................................................................................ 12 Task 4 Financial Analysis ..................................................................................................................................................... 12 Objectives of the Model ............................................................................................................................................. 12 Assumptions ................................................................................................................................................................... 13 Cost-Benefit Categories ............................................................................................................................................. 13 Base Case ......................................................................................................................................................................... 14 Capital Costs ................................................................................................................................................................... 17 Network Costs ................................................................................................................................................................ 17 Operating Costs ............................................................................................................................................................. 17 Economic Evaluation ................................................................................................................................................... 18 Other Benefits and Opportunities .......................................................................................................................... 19 Improved Customer Service ..................................................................................................................................... 19 Environmental Benefits .............................................................................................................................................. 20 Operational Benefits .................................................................................................................................................... 20 Conclusion ....................................................................................................................................................................... 21 Task 5: Business Case Recommendations .................................................................................................................... 22 Considerations ............................................................................................................................................................... 23 Task 6 AMR/AMI Implementation Plan ......................................................................................................................... 23 Road Map to AMI .......................................................................................................................................................... 23 Development of the RFP............................................................................................................................................ 23 Vendor Responses and Evaluation ........................................................................................................................ 24 Negotiations and Statement of Work ................................................................................................................... 24 Implementation ............................................................................................................................................................ 24 Internal Communication ............................................................................................................................................ 25 External Communication ........................................................................................................................................... 25 Field Inspections and Performance Management ........................................................................................... 27 Post-Implementation Management ..................................................................................................................... 28 Page 1 of 26 Executive Summary The City of Denton, referred to herein as ‘the City’, contracted with Jacobs to develop an Advanced Metering Infrastructure (AMI)/Automated Meter Reading (AMR) Feasibility study to assess the benefits of a full AMI/AMR implementation for the City and its water customers. The objectives of this study are to identify the most appropriate technologies, determine reasonable costs, and calculate the benefits of implementing an AMI/AMR Program as compared to the City’s existing operations and maintenance (O&M), and replacement processes. After setting priorities for the City through workshops and discussions with City staff, it was determined that AMR would not meet the needs of the City and thus the report that follows only focuses on the difference between current City operations and an AMI program. This study also identifies opportunities that could benefit customers and their overall experience. These were developed through interviews and discussions with City staff as well as areas of improvement Jacobs has found at other utilities during and after AMI implementation. The report is organized into six sections, each corresponding to one of the six major tasks of the study: • Task 1: Project Management • Task 2A: Assessment of Existing Metering System • Task 2B: Combability Assessment of Existing Billing System • Task 3: Evaluation of AMI Technologies • Task 4: Financial Analysis • Task 5: Business Case Recommendations • Task 6: AMI Implementation Plan Key Findings Key findings of this study include the following. • The existing 39,890 water meters are direct read and cost the City $1.05/ per meter per month • The average age of the City’s existing meters is approximately 5.9 years, which is relatively young • It was concluded that AMR does not provide the City with required functionality • Both Network as a Service (NaaS) and City-owned fixed network solutions are viable options • Static meters in the water system would provide significant increased revenues over 20 years for the City • A City-owned network, providing connectivity for both Water and Electric AMI meters, would provide the most value to customers. • The existing AMI network utilized by Denton Municipal Electric (DME) is not compatible with AMI water solutions. • Next steps include procurement, which is expected to take 9 months and implementation, which will take an additional 24 months Business Case Results Jacobs performed a full benefit-cost analysis as part of the feasibility study and the results provide a strong financial justification for implementing AMI. Some of the key outcomes of the analysis are as follows. • The cost to maintain and replace the existing water meters over the next 20 years using is approximately $2.4 million (NPV). This represents the base case cost that will need to be incurred without moving to AMI. A full AMI upgrade would replace the need to incur these costs because AMI would replace the existing meters. Page 2 of 26 • The cost to implement AMI for water is expected to be approximately $14 million, requiring additional benefits to justify the project. Combined labor savings and improved registration amount to approximately $17 million, which indeed covers the cost of AMI. o Combined labor savings are achieved through the elimination of the meter reading contract as well as the elimination of some service orders, equating to approximately $11.4 million in savings over the next 20 years. o Improved registration is realized using static meters that do not “slow down” over time like mechanical meters, which equates to $5.5 million in additional revenue over the next 20 years. The overall results (expected value) of stand-alone water AMI compared against the Base Case are shown in Figure 1 and indicate that AMI would provide the City with an average annual benefit of $1.4 million, a payback of 12 years (expected system life of 20 years), a net present value (NPV) of $3.7 million, and a return on investment of 10%. These results are indicative of a strong business case for implementing AMI. Given the high density of the City’s customer base a standard utility-owned fixed network combined with DME’s electric AMI network would offer the City even greater savings. In addition to quantified financial benefits of the project, there are several other benefits the City will realize through the implementation of AMI, which the study did not quantify due to uncertainty or a lack of realistic mechanism to do so, such as the “value” of the customer experience. City of Denton staff has expressed that these non-quantified benefits are equally strong justifications for the project as customer service is a top priority for the City. These additional benefits for the City include: • Enhanced Customer Service – AMI will help the City improve customer service efficiency, further improving the City’s relationship with its customers. AMI will also improve the efficacy of customer service representatives by providing them with the tools and data to do their job more effectively and answer customer questions. • Environmental Benefits – AMI will also improve the City’s environmental impact through several soft benefits including reduced greenhouse gases because of avoided meter reads and re-checks, water conservation and water efficiency through customer awareness and proactive leak notification, and reduced energy use for pumping through improved understanding of peak day and peak hour demands throughout the system. • Operational Benefits – AMI can also provide significant value to the City through standardization of systems and software, smart city support, distribution leak detection, right sizing of meters, the improvement of drought management, route management, health and safety, hydraulic model calibration, and cost of service analysis for ratemaking. A joint AMI program with water and DME would provide additional operational benefits specifically around network performance, and software platforms. Figure 1: Overall Results AMI Business Case Outputs:Worst Case Expected Best Case Initial Capital Cost 15,550,000$ 14,140,000$ 12,720,000$ Average Annualized Benefit 1,130,000$ 1,420,000$ 1,710,000$ Simple Payback (years)13 12 11 Net Present Value 1,550,000$ 3,699,000$ 6,040,000$ Return on Investment (ROI)8.9%10.0%11.0% Page 3 of 26 Page 4 of 26 Task 1 – Project Management Included for completeness; this task has no technical deliverables. Task 2A – Assessment of Current Metering Equipment Existing Meter Reading System and Meters The City has approximately 39,890 water meters that are read monthly through a contract with Texas Meter and Device Company, LLC. The cost per read is $1.05 per meter per month. The entire meter population is manually read (direct read). The City provided water meter data for each individual meter including size, meter number, installation date, and register type. The City’s meter population consists primarily of two meter-manufactures: Neptune (89%) and Badger (8%). The initial findings from the data are summarized in Figure 2. The City has a relatively young average meter population of approximately 6 years. Figure 2: Total Meter Quantities by Age for 2” and Smaller Meters The American Water Works Association (AWWA) acknowledges that mechanical meters’ accuracy deteriorates over time (i.e., up to 6% reduction at 20 years). The City’s current meter replacement practice is to replace meters every ten years, which is considered faster than the industry standard approach of twenty years to achieve a balance between cost and accuracy. Based upon AWWA standards and the 6- year average age of the City’s current meter population, Jacobs estimates minimal loss in registration of less than 2%. Page 5 of 26 Jacobs’ analysis of meter counts by size, age, and type found that 39,407 meters (99%) are 2-inch or smaller and would be targeted for replacement in the AMI scenarios as none of the current meters can be upgraded to AMI without a register replacement. Based on AWWA standards and Jacobs’ experience, the meters larger than 2” should be calibrated to ensure accuracy but can be retained and upgraded during the AMI Program. These large meters are commonly associated with commercial and industrial (C&I) accounts and taking the meter out of service for a full replacement could be difficult. The City has 477 meters that are larger than 2”. Over half of the large meter population is over 10 years and 30% are over 20 years old. The replacement of these large meters would typically be handled separately from an AMI program. Network Devices The City’s electrical utility, Denton Municipal Electric (DME), has an existing AMI system for its electrical meters. The DME AMI system manufacturer, Trilliant, provides mainly electrical meters, but does not currently have a commercially available water solution. They have offered to test their water solution with the City, however City staff and Jacob’s does not recommend this approach as there are usually complications and issues with Beta projects than can ultimately impact the quality of service and billing for customers. Potential AMI vendors will each design their own proposed solution(s) based on the network capabilities of their devices. Their proprietary software will produce a detailed propagation study to determine the number of fixed-network devices, or collectors that will be needed to provide necessary coverage and to meet the City’s performance criteria. Badger’s Orion Cellular system and other Network as a Service (NaaS) solutions leverage 3rd party owned networks (existing like AT&T or built-for-purpose like Senet) and do not require construction or ownership by the City. The City’s service area is about 100 square miles overall with some gaps and lakes in the service area, which could be difficult for the bordering areas. However, there do not appear to be any real issues for coverage in the service area. The City’s service area is generally flat and has a dense population for its size which is ideal for a utility-owned fixed network. To support development of the business case, Jacobs has estimated quantities of network devices using industry standard coverage ratios for various network types. Jacobs has assumed a fixed network collector range of 1.5-miles (radius) or approximately 7 square miles per device. However, Jacobs also uses a 100% redundancy factor to account for other unknowns like elevation, trees, and other line of sight issues. Therefore, an average coverage area of 3.5 square miles per collector is used. Based on this coverage, the estimated number of collectors needed would be 30. These network device quantities will be used in Task 4 for budgetary cost purposes only. Meter Boxes and Lids In general, every AMI project requires the use of radio frequency (RF) friendly composite lids. This process is straight forward and manageable if the quantities are known and the lids are standard sizes. However, when meter boxes need to be replaced because of condition or if lids are not available due to unique sizes, it can cause significant extra work and cost. Some projects perform a survey of the meters, boxes, lids, etc. prior to procurement to better inform the quantities and potential cost, if this is a concern. Page 6 of 26 Depending on the AMI technology (vendor) concrete or metal meter box lids may be drilled instead of being replaced. A remote antenna (where the portion protruding through the lid relays the signal to an endpoint below the lid), or mounting bracket will be used to hold the radio to the underside of the lid. All composite lids must have enough weight or a locking mechanism that prevents them from being dislodged or from floating. Composite lids could also have a ferrous element (e.g., section of rebar) that enables them to be discovered by a metal detector when buried. Discussion Jacobs has developed the following scenarios to examine various AMI technologies and develop bookends for the cost-benefit analysis, which help provide confidence and inform the long-term metering strategy for the City. 1. Base-Case: Develop an asset management plan for existing water meters that replaces existing meters at end-of-life with current technology (manual read). 2. Scenario A: Fixed Network AMI system that is owned by the City 3. Scenario B: Network as a Service (NaaS) that has no City-owned network infrastructure. Task 2B: Compatibility Assessment of Existing Billing System This task evaluated the capability of the NorthStar Utility Customer Information System to understand its compatibility with AMI systems. NorthStar is a recognized solution in the industry and has been integrated at various utilities across the country with a variety of AMI systems. Therefore, initial thoughts are that any selected AMI system will reasonably interface with NorthStar through proper architecture. To assure the best interface feasibility assessment, Jacobs conducted due diligence by interviewing DME, Denton Water, the existing MDMS vendor, and select Water AMI providers. The discussion with DME included Sandra Allsup, Electric Applications Manager and Alan Eady, DME-TS Application Architect who are responsible for the management of the electric applications, that includes software and hardware. Also present were Rita Herrera –Systems & Operations Administrator, Harris NorthStar Administrator and Christa Foster – Customer Service Manager. DME provided a report from the current MDMS provider, Itron that provides the context for Denton Water’s possible technical architecture and discusses the As-Is and future state environments that may be available for Denton Water. The main takeaway from the discussion and the report is that there are custom built interfaces that move the data from Trilliant to NorthStar. These in-house solutions tend to break during software upgrades. The high-level recommendation coming out of the report was for DME to upgrade its MDMS and build API interfaces that link Trilliant to the MDM and the MDM to NorthStar. No timeline on this happening was discussed. Water’s current reading system (Itron FCS) integrates through flat file transfer with NorthStar CIS. In an environment where AMI data is available, having a flat file transfer of available data to NorthStar will work, but might be tedious. Storage concerns could limit the amount of data available in NorthStar’s production environment which in turn might limit Denton Water’s ability to realize the benefits of AMI. As for client references that have NorthStar as their CIS with AMI systems integrated, we found through query of the AMI Vendors that the following utilities have AMI integrated into NorthStar: New Braunfels Utilities, TX; Bartlesville, OK; Kannapolis, NC; Sammamish, WA; Sandy, UT; and Santa Clarita Water Company, CA. Page 7 of 26 Architecture Diagrams The existing architecture for Denton Water is straightforward with the data from water being transferred to the customer information and billing system (NorthStar) via a flat file that is manually processed daily. The manual activity is what is proposed to go away. If a data file transfer remains, at a minimum it would need to be automated. With the City’s preference being a holistic solution, it is recommended that the proposed architecture leverage DME platforms where plausible. Figure 3 depicts the proposed architecture presented by DME’s current MDM provider. What is important for water is that a water AMI system could integrate into this proposed architecture through two entry points: 1) direct through an API or automated data file transfer and 2) through DME’s MDMS via API. The key assumption is that both interfaces occur automatically through an API or another form of automation to reduce the manual handling of files. The option selected and how the final architecture is developed would be designed in conjunction with the selected AMI vendor. Conversations with the City suggests a holistic approach or option 2 being the preferred direction. Figure 3: Proposed Architecture Options There are three viable options for a Denton Water AMI solution to interface with NorthStar: 1) Automate data file transfer, 2) create an API from the new AMI solution to NorthStar, or 3) integrate to Itron’s IEE MDMS. The Table below describes Pros and Cons of each of these three options. Page 8 of 26 Option 1) Automated Flat File Transfer 2) New AMI API 3) Integrate to IEE Pros Familiar process to all the vendors; manual processes are eliminated. Manual processes are eliminated; mature in the market with client references; cloud services If the read processors can be removed from the architecture, integrating to IEE gives the City a holistic solution for meter read data storage and analysis. Cons The amount of data available from AMI may limit the amount of data available for analysis unless a separate data storage is created. Storage issues may arise if all data is stored in NorthStar; most likely, access to historical data will require accessing a separate system Existing architecture without the upgrade could break the read processor integrations. Discussion The maturity of the NorthStar product coupled with water AMI solutions becoming more saturated in the market, it is not unreasonable to state that an interface with a new fully integrated AMI Head End (HE) application can be completed without significant difficulty. Understanding that the City would like a holistic solution for water that accounts for functionality already present with DME, it is recommended to integrate any new water AMI system HE with an upgraded DME AMI system and Meter Data Management System (MDMS). The caveat is that if the existing architecture remains, it may be that option 2, integrate directly to NorthStar may be the default. The key in this design will be that historical or archived data storage will need to be kept outside the NorthStar production environment. Task 3 - Evaluation of Advanced Metering Infrastructure System Technologies Jacobs met with each of the City’s functional departments to discuss the current needs and future expectations for meter reading processes. These meetings began with a general overview of Advanced Metering Infrastructure (AMI) technology and relevant functional improvements available from AMI, followed by department specific discussions about processes that are both working well, and ones that could benefit from having access to hourly or 15-minute consumption (interval) data and new ways of working. The focus of this task was to develop the functional objectives for a system that will support the goals of the City. Jacobs also performed an operational and an organizational assessment to explore the opportunity to transform its current ways of working to take advantage of AMI technology. This Section summarizes the following items: • Key functional objectives of the City • Network alternatives of AMI • List of impacted processes Page 9 of 26 Functional Objectives Functional objectives are typically the main drivers for utilities acquiring and implementing AMI systems, whether they be internally focused on improving operations or externally focused on customers. Many objectives for AMI are simple benefits which may not provide a differentiation between technologies. An example is the collection of interval data, which can assist in addressing customer questions but is provided by all AMI systems. Therefore, during this task, Jacobs has tried to distill some of the key objectives identified during the department interviews with City staff that provide a basis for technology differentiation. The objectives below were used to help define the type of system(s) to consider, the associated costs and benefits, and the procurement requirements for the next phase of the project. During our business case workshops with the City, we met with Customer Service, DME Meter Reading, and Utility Operations to review and score the various functional capabilities of AMR and AMI systems. We reviewed 27 different AMR/AMI capabilities across four key benefit areas including Revenue Protection, Operational Efficiency, Distribution Management, and Customer Service. Each of these capabilities were scored for importance from 0: not important, 1: nice to have, 2: important, or 3: Critical. And Jacobs identified the ability for both AMR and AMI to provide this functional capability from 0 to 4. By tabulating the ability scores for each capability for all the “important” or “critical” capabilities, it was determined that AMR only provides 29% of the City’s desired functionality, whereas AMI provides 92%. Therefore, it was decided to exclude AMR from the ongoing assessment and to focus on AMI as the City’s preferred technology. The results from this workshop are provided in the table below. Benefit Area Reference Cability Importance Score AMR Ability AMI Ability Total Possible AMR Score AMI Score Revenue Protection RP 1 Zero Consumption - Tampering 2.8 2 4 4.00 2.00 4.00 RP 2 Zero Consumption - Stopped Meter 2.0 2 4 4.00 2.00 4.00 RP 3 Zero Consumption - Detector Check Meter Monitoring 1.0 2 4 - - - RP 4 Zero Consumption - Turned off for Non-Payment 2.0 2 4 4.00 2.00 4.00 RP 5 Zero Consumption - Empty Pipe Alert 1.0 0 2 - - - RP 6 Support for Leak forgiveness Program 2.8 2 4 4.00 2.00 4.00 Operational Efficiency OE 1 Improve Meter Reading Safety 2.0 2 4 4.00 2.00 4.00 OE 2 Meter Reading Reliability - Reduce Re-reads 2.0 2 4 4.00 2.00 4.00 OE 3 Meter Reading Reliability - Reduce Estimated Readings 3.0 4 4 4.00 4.00 4.00 OE 4 Detect Register and Cut wiring problems 3.0 2 4 4.00 2.00 4.00 OE 5 Reduce Regular Meter Reading Costs 3.0 2 4 4.00 2.00 4.00 OE 6 Same Day Final Reads 3.0 0 4 4.00 - 4.00 OE 7 Remote Turn-off / Turn-on 3.0 0 4 4.00 - 4.00 Distribution Management DM 1 Detect Misapplied meters 1.0 2 4 - - - DM 2 District Metered Areas 2.0 0 4 4.00 - 4.00 DM 3 Water Balance Calculation Frequency 3.0 0 4 4.00 - 4.00 DM 4 Acoustics Leak Detection (ALD) – Temporary 2.0 0 2 4.00 - 2.00 DM 5 Acoustics Leak Detection (ALD) - Permanent 1.0 0 2 - - - DM 6 Acoustics Leak Detection (ALD) - Hydrants 1.0 0 2 - - - DM 7 Detect Backflow Events 1.0 0 4 - - - DM 8 Bylaw Enforcement 1.0 0 4 - - - DM 9 Pressure Monitoring 3.0 0 2 4.00 - 2.00 DM 10 Temperature Monitoring - Frozen Services 3.0 0 2 4.00 - 2.00 Customer Service CS 1 Customer Engagement 2.8 0 4 4.00 - 4.00 CS 2 Leak Detection - Small 2.0 2 4 4.00 2.00 4.00 CS 3 Leak Detection - Broken pipe 2.0 0 4 4.00 - 4.00 CS 4 Vacation Monitoring 0.0 0 4 - - - Total Points:76.00 22.00 70.00 Percent of Total:100%29%92% Page 10 of 26 Network Alternatives There are several proven network options available in the market. These options include proprietary and standards-based network protocols that use licensed and unlicensed radio frequencies (RF) to enable wireless network communications for water AMI solutions. A few AMI vendors are even working with large public cellular providers like AT&T and Verizon to offer AMI products that leverage the existing cellular networks. Each of these wireless communication technologies are used by different vendors to achieve the same goal. The City should not focus on the different network protocols, but rather on the ownership model. The City will need to decide on its preference between a City-owned AMI network or Network as a Service (NaaS). City-Owned Networks City-owned networks are designed by the AMI vendor based upon a custom propagation study that relies on meter locations as well as City owned facilities. The propagation study determines the number and placement of collector devices to successfully “hear” the population of endpoints. The vendor uses either a standards-based or proprietary “language” to communicate between endpoints and collectors. These can either be licensed or unlicensed frequencies, and low-power or high-power signals, depending on how the vendor has designed their system. The total lifecycle cost of these systems is similar, and Jacobs generally recommends avoiding the technical debate about how reads are transmitted unless non-water utility devices are going to be used in conjunction with the network. The vendor should be asked to respond to performance specifications (read rates, coverage, etc.) rather than the technical underlying factors of the system. The primary point of consideration is that these networks are owned by the City, providing complete autonomy related to the management and leveragability of the network to suit its needs for water metering and possibly other IoT devices. Network as a Service (NaaS) The alternative to a City-owned network is a third-party owned network, which is provided as NaaS. This category would include cellular networks (such as Verizon or AT&T), aggregator networks (such as Comcast or Senet), and joint use networks (partnering with another agency). The City’s endpoints communicate over the third-party network, eliminating the need for the City to create a stand-alone network, however the City typically pays for every device connected to the network, so it loses the ability to leverage the network and reduce the total cost of ownership. The cost-benefit of these systems needs to be evaluated closely as the network cost is relatively small compared to the rest of the project (typically representing less than 5% of the total cost) and the ongoing network connection fees may quickly exceed the initial savings. In addition, there are contractual arrangements that will need to be considered, including the City’s need to have access to the same network technology for 20 years to ensure radio compatibility. However, NaaS solutions do come with a certain degree of system reliability and leaves the responsibility on the third-party owner to restore coverage quickly after an emergency event such as a hurricane, lightning strike, or power outage. In the case of a City-owned network, City staff would be responsible for restoration of the infrastructure in these events. As there may be varying degrees of delays in communication between collectors and endpoints in such emergency events, auto-backfill of missing reads will allow the City to recapture the missed data once the system is restored. More discussion of the cost-benefit of each type of network ownership is provided in Task 4: Financial Analysis. Page 11 of 26 List of Impacted Processes Based on discussions with the City’s departments, combined with the functional objectives documented above, Jacobs has prepared an initial list of internal processes that may be impacted with AMI. The list includes the following: • Current water meter reading process – The current process of obtaining meter reads is manual reads. After completion of the AMI project there will be one source of meter reads from the headend system. The process to collect those reads will be highly automated, however a certain number (less than 1.5%) of “missed reads” may need to be collected via a drive-by or visual method. • Re-reads – The current process of sending meter reading staff into the field to respond to high/low exceptions, missed reads, and other billing inquiries, will no longer be needed. After completion of the AMI project, staff would be trained on how to review and validate the consumption data in the AMI system, and understand how to diagnose irregular consumption from the office. This will result in fewer customer contacts, truck rolls, and billing adjustments that are potentially needed with the current process. • Move-in/Move-out – With AMI, a move-in/move-out, or final read, can be collected without rolling a truck, by using the utility portal. This will result in the elimination of a truck roll for this type of job, by obtaining the final read through the AMI system. Furthermore, customer accounts can be flagged as closed in the utility portal and the system will alert City staff if there is any unauthorized usage on closed accounts, giving the opportunity to quickly shut off these meters to avoid prolonged water theft. • Continuous-use leaks – The City expressed an interest in providing notifications for customers with continuous-use leaks. Notifications could be sent automatically to the customer or managed through the utility dashboard. This would be a new service for customers and could also be combined with a letter or automated phone call for those customers not already enrolled in the City’s web portal. • High-use leaks – The City indicated that a significant amount of time and effort are spent to support the leak forgiveness policy. AMI will reduce processing time for addressing and issuing these credits, but the City could also decide to reduce or eliminate the leak forgiveness policy going forward, if customers are proactively notified of high-use consumption (indicative of a potential leak). • Inventory – The current process for managing inventory would likely be updated to include endpoints as an asset in the City’s system of record, specifically to keep track of endpoint install date and its corresponding meter ID. The age of the endpoint (battery life) will likely be used going forward, to determine replacement cycle rather than the age of the meter. • Meter maintenance – The AMI system will provide system status alerts within 24 hours of issues being identified (cut wire, tamper, stuck meter, etc.). These alarms will enable the City to proactively manage and maintain the system before the billing cycle. Instead of reacting to all missed reads and meter issues within the billing window, the City will be able to prioritize, schedule and better manage the meter/radio maintenance effort throughout the month. • Installing new AMI equipment – As part of an AMI project, meter box and meter standards are often updated to address AMI requirements by specifying meter types for new construction, and Page 12 of 26 field crews are trained to install AMI equipment coinciding with the new planning and permitting processes. • Billing – AMI will shorten the duration of time between read date and bill date, which will also strengthen the price signal on customer consumption. Currently, the reading schedule is developed around workdays, and must avoid weekends and holidays while remaining within the expected service period. With AMI, the billing schedule can be easily developed to obtain reads any day of the week on a standard interval. Discussion The impacted processes identified above will need to be reviewed during AMI implementation to ensure that the City is using the AMI system effectively. Additional change management and digital transformation efforts may also help ensure that the City is taking full advantage of the AMI interval data. These could include non-revenue water, hydraulic modeling, energy management, irrigation enforcement, tariff structures, pressure monitoring, leak detection, and meter rightsizing, among others. Task 4 Financial Analysis Jacobs has developed an Excel-based business case model to support the cost-benefit analysis, calculate the Net Present Value (NPV), and perform sensitivity analysis on AMI alternatives. The model is intended to determine the economic feasibility of advanced metering options and provides the capability to perform sensitivity analyses on different options and scenarios, while providing real-time results. Jacobs met with City management to demonstrate Jacobs’ methodology in developing the model used for this business case evaluation. Calculations and assumptions utilized in the model were discussed and preliminary results of the model were provided to the City at that time. Jacobs has incorporated the feedback from and discussions with the City during the workshop in both the model and this report. Objectives of the Model The primary objective of the model’s development was to provide meaningful results that will assist in the decision-making process regarding the implementation of AMI. Various scenarios and a range of assumptions, listed below, were used to provide further confidence in the potential value of AMI for the City and its customers. Methods used to meet the primary objective: • Identify and assess each potential positive and negative impact of AMI • Estimate the cost and benefit of each quantifiable impact along with an appropriate phasing plan • Calculate the NPV of the lifecycle cost of each scenario for comparison in today’s dollars • Identify and document other non-quantifiable benefits to further support the City’s decision Since many of the exact values for inputs and assumptions will naturally remain unknown until procurement is complete, the inputs are defined by minimum, maximum, and expected values and the outputs of the model are presented as a confidence range. Minimum and maximum bounds are determined through a combination of reported information from the City and the industry knowledge and experience from the Jacobs team. This approach provides an understanding of relative sensitivities for each of the business case drivers and during implementation, these outputs can be used to improve risk management and ensure benefits realization. Page 13 of 26 The ultimate objective of the model is to provide the City with a decision-making tool. The model does not provide a singular path forward, instead it provides confidence in answering whether there is a broad business justification for water AMI within the City. The inputs to the model were developed in a bottom-up manner, using the actual meter inventory by size and age, revenues, and water volumes, as well as work order counts and other specific activities related to the water utility and DME. Finally, the network deployment and maintenance cost and other City-wide shared services, such as ongoing software license fees and field services, were calculated at the City level. Assumptions Assumptions have been incorporated into the model based upon input received from City staff, industry standards, Jacobs’ experience, and conclusions drawn from a review of available City data. These assumptions and their respective descriptions are presented below in Figure 4. Definitions of assumption terms: • Discount Rate – As provided by Jacobs, typically calculated as the weighted average cost of capital (WACC) and used in the NPV calculations. • General Escalation Rate – As provided by Jacobs, typically calculated as the inflation rate, and used to increase future years’ non-labor costs. • Labor Escalation Percent – As provided by the Jacobs, typically calculated as the inflation rate, and used to increase future years’ labor related costs. • % Annual Rate Increase – As estimated by Jacobs, annual increases in the volumetric water and sewer rates. • Field Productive Hours/Year/FTE – Assumed productive hours (active in-field working time) per full time equivalent field resource per year. Figure 4: Business Case Model Assumptions Other financial inputs were developed in close collaboration with City staff to establish appropriate cost estimates, time frames and labor rates; these can be easily modified and updated in the Excel model if new information is made available. The model also allows for adjustments to be made over time to reflect financial performance, as well as other programmatic or strategic changes at the City. Cost-Benefit Categories Each of the quantified business case drivers are considered either a positive benefit or a negative impact. Positive benefits include additional revenue, cost savings, and avoided costs while negative impacts 4.50% 2.50% 3.00% 3.00% 3.50% 0.00% 1380Field Productive Hours/yr/FTE Annual Customer Growth GENERAL ASSUMPTIONS REVENUE COSTS Discount Rate General Escalation Rate Labor Escalation % % Annual Rate Increase Annual Demand Growth Page 14 of 26 include capital costs, additional operating costs, and reduced revenue. These categories are further divided into individual business case elements which are discussed in more detail below. The model was built to be transparent so that it is auditable and defensible, while also providing inputs and controls to enable decision making support and sensitivity analysis. For example, City staff can input 1 to 10 years for implementation duration. There are toggles for the two network options as well as a toggle for static meters, and a sliding scale to share network infrastructure with DME. In the model results discussed below Jacobs has assumed a 2-year deployment, and the replacement of all meters with static meters. These assumptions along with the Fixed Network option represent one of the strongest and most feasible AMI deployment scenarios. It is important to reiterate that the business case model is a high-level decision support tool and highlights whether AMI is financially beneficial. Secondly, the model can also help guide the deployment timeline, and network options to implement, but these factors must be re-evaluated during the procurement phase based on actual vendor proposals. Base Case The Base Case scenario is the hypothetical scenario the City would employ for meter replacements if an AMI program were not pursued. The Base Case is developed as part of this study to serve as the status quo alternative and as a point of comparison against the implementation of AMI. This scenario includes a best- practice asset management plan that is projected for 20 years into the future to maintain and replace the current meter population. To develop the Base Case, Jacobs assumed that the City would replace meters whenever the oldest component fails, using an expected useful life of 20 years. The 20-year approach is an industry standard that balances reliable operation of the meter population without excessive degradation. The asset management plan, detailed in Figure 5, is what Jacobs has identified as the expected meter replacement Figure 5: Base Case 20-year Asset Management Plan Page 15 of 26 quantities over the next 20 years. Based on this analysis, the City, would not have to start replacing existing meters based on end-of-life until 2026. Jacobs developed a budgetary cost estimate for the Base Case using an asset management approach, which assumes that the City will replace aging meters in-kind. The Base Case further assumes that the execution of year-over-year meter and radio replacements will not materially change and will represent a similar cost to recent replacement efforts. The total NPV cost of replacing the system this way is approximately $2.4 million over 20 years, which represents the avoided cost (Figure 6). Jacobs has used the current contracted meter pricing from the City for these calculations. Proceeding with a competitive procurement process will likely have the added benefit of securing further reductions in unit costs. The expected pricing from other major AMI vendors in an open market RFP are used to calculate the budgetary cost in the AMI Scenarios discussed further below. Improved Registration from Static Meters Mechanical water meters have sensitive moving parts that wear out and start to “slow down” over time. This slowing results in lost revenue because some water is flowing through the meter un-registered. Because an AMI program provides an opportunity to install new water meters as part of the program, there is an opportunity to mitigate this slowing affect / lost revenue. The benefit to the City is calculated by measuring the improved accuracy of the new meter(s) against the assumed degradation of the existing meters, as well as the planned replacement schedule of existing meters in the base case. The replacement of existing mechanical meters with new mechanical meters, will only provide a one-time improvement in degradation since the new mechanical meters will also begin to degrade after they’re installed. However, if the City moves to adopt static meters, which don’t have any moving parts and don’t degrade over time, a significant improvement in registration can be realized over 20 years. Figure 7: Improved revenue due to improved registration of new meters The Base Case is the baseline assumption, so no improved registration is attributed to this scenario. However, each of the AMI scenarios, which include the replacement of meters prior to their planned replacement in the base case, do realize additional revenue based on improved accuracy. Calculated volumetric loss, based on the scheduling of individual meters being replaced early, was multiplied by the average residential price of water in each year to produce a dollar-value impact of under-registration. The volumetric loss was also multiplied by the average residential price of sewer for those accounts that also include sewer. For the mechanical meter option, this resulted in a minor benefit of $430,000. However, for the static meter option, there is a significant benefit of $5.5 million over the 20-year life, as shown above in Figure 7. Minimum Expected Value Maximum AMI vs Base Case (20 year) $2,220,000 $2,470,000 $2,720,000 Figure 6: Avoided cost of Base Case replacement Minimum Expected Value Maximum Base Case $ - $ - $ - AMI (Mechanical) $290,000 $430,000 $610,000 AMI (Static) $3,960,000 $5,550,000 $7,320,000 Page 16 of 26 Field Service Order Response & Meter Reader Labor (CS1) AMI will result in a reduction in work orders and truck rolls for certain field activities including billing re- reads, meter change-outs, and final reads. Jacobs reviewed the last three years of service and work order history and has identified specific categories of activities that could be reduced or eliminated through the effective use of an AMI system. Multiplying the quantity of service orders that will be eliminated by the average duration of each activity results in approximately 4 full time equivalents (FTEs). The potential cost savings of reducing or repurposing these resources would be approximately $3.6 million over 20 years, on a net present value. In addition to the field service savings, there is a further reduction in meter reading costs directly related to the meter reading contract. The current rate is $1.05 per read or $41,000 per month, which equates to approximately $500,000 per year. Over 20 years, this savings totals $7.8 million on a net present value. Combined with the field service savings, the total benefit is approximately $11.4 million (Figure 8). Reduced Vehicle Costs (CS2) AMI will reduce the need to “roll” vehicles to collect final reads, re-reads for high/low exceptions, and other field service activities. In the expected value scenario, we reduce by 4 meter-maintenance vehicles plus 1 DME vehicle, so the expected value is equal to a savings of 5 vehicles, which results in approximately $1 million in savings over 20 years (Figure 9). In the minimum scenario we only reduce 3 meter-maintenance vehicles (none from DME) and in the maximum scenario we include 5 meter- maintenance and 2 DME vehicles. Improved Efficiency of Leak-Related Bill Adjustments The financial benefit associated with leak-related billing adjustments is minimal. The savings available is through a reduction in effort to process the billing adjustments. Through Jacobs’ investigation it was identified that an expected reduction of 38 minutes per adjustment could be achieved, the average leaks adjusted over the last three years was 70. This would result in approximately $90,000 in avoided cost over 20 years (Figure 10). Minimum Expected Value Maximum Base Case $ - $ - $ - AMI $9,750,000 $11,430,000 $13,120,000 Figure 8: Avoided cost of field service and meter reading Minimum Expected Value Maximum Base Case $ - $ - $ - AMI $690,000 $980,000 $1,2600,000 Figure 9: Cost savings from reduced vehicles Minimum Expected Value Maximum Base Case $ - $ - $ - AMI $70,000 $90,000 $130,000 Figure 10: Avoided cost of processing leak-related bill adjustments Page 17 of 26 Capital Costs The initial capital cost includes the cost to replace meters, radios, and lids as well as the cost for implementation services (including system integration and other soft costs like contingency). Network costs and O&M are handled separately since they are unique to the two different AMI scenarios: City owned fixed network vs Network as a Service. Jacobs has assumed that all meters will be replaced. Based on our past project delivery and extensive pricing database, Jacobs has developed pricing references for the meters, radios, and installation labor. In both scenarios, Jacobs has also developed a budgetary cost estimate for program management ($750,000), system integration ($150,000), and contingency ($400,000). This results in a cost of approximately $1.3 million of soft costs across each of the scenarios, listed as Implementation Services in Figure 11. Combined with the network costs below, the budgetary cost for the City owned alternative is $14,140,000 and the NaaS alternative is $13,390,000. Note: The initial capital cost, although spread over two years, has not been discounted, because the contract will typically be awarded in today’s dollars. Network Costs Network costs are the only material difference in the capital costs between the two AMI scenarios. In the NaaS scenario, the City will not be required to buy or install any fixed-network infrastructure. NaaS utilizes a third-party or cellular network to collect meter reads, and the costs associated with this scenario do not include up-front capital cost but rather a series of annual subscription fees. These ongoing fees for NaaS are discussed in the Operating Costs section below. In Task 2A – Assessment of Current Metering Equipment, under network devices, Jacobs estimated that a fixed network would require approximately 30 standard range collectors to achieve full coverage of the City. At an expected unit cost of $25,000 per collector (installed), this results in a budgetary cost of $750,000 for the City Owned fixed network (Figure 12). Operating Costs Jacobs has also developed a budgetary cost estimate for the operating costs of each scenario for the expected 20-year life of the system. While the NaaS alternative may appear cheaper from an initial capital cost standpoint, it is important to compare the total lifecycle cost, as the NaaS O&M charges can be considerably higher than the City owned option. Minimum Expected Value Maximum Meters & Radios $10,190,000 $11,320,000 $12,450,000 Lids $670,000 $750,000 $820,000 Implementation Services $1,190,000 $1,320,000 $1,460,000 Figure 11: Meter, Radio, Lids, & Implementation Services Capital Costs City Owned NaaS AMI Collectors $750,000 - Figure 12: Network Costs Page 18 of 26 These costs include the hosting fee, software licensing fees, collector/radio backhaul, the collector extended warranties, and collector maintenance services. We include the collector maintenance to create an apples-to-apples comparison against the NaaS alternative. But the City may elect to perform its own maintenance. The annual O&M cost for each of the above items is totaled over 20 years and discounted back to today’s dollars for comparison. A breakdown of the expected values for each vendor is provided below (Figure 13). Figure 13: Ongoing operating costs for AMI scenarios As seen in this analysis, the NaaS options is $600,000 more expensive over the 20-year life, due to the per month connection fees. However, since the expected cost of the fixed network is $750,000, the is a reasonable additional fee. Carefully examining Capital and O&M costs during the procurement evaluation is important to guide the decision-making process. Economic Evaluation Each benefit and cost of AMI is calculated separately and added together over the 20-year lifecycle. A summary of the above discussion is presented below (for the City owned fixed network alternatives) with the Min, Max, and Expected Values (EV) identified (Figure 14). Figure 14: Costs and Benefits Summary – City Owned Fixed Network POSITIVE BENEFITS Business Case Elements Min EV Max AC1: Basecase Meter Replacement 2,220,000$ 2,470,000$ 2,720,000$ AR1: New Meters, Improved Registration 3,960,000$ 5,550,000$ 7,320,000$ CS1: Field & Meter Reading Labor 9,750,000$ 11,430,000$ 13,120,000$ CS2: Vehicle Savings 690,000$ 980,000$ 1,260,000$ CS3: Leak Adjustments - Cost Savings 70,000$ 90,000$ 130,000$ NEGATIVE IMPACTS Business Case Elements Max EV Min Meters & Radios 10,190,000$ 11,320,000$ 12,450,000$ Lids 670,000$ 750,000$ 820,000$ Network 680,000$ 750,000$ 830,000$ Implementation Services 1,190,000$ 1,320,000$ 1,460,000$ Ongoing O&M 3,220,000$ 3,570,000$ 3,930,000$ City Owned NaaS Naas / SaaS $90,000 $250,000 Backhaul $15,000 Incl Collector Warranty $60,000 n/a Collector Labor $60,000 n/a 20-Year NPV $3,570,000 $4,200,000 Average Yearly Cost $285,000 $335,000 Page 19 of 26 Also presented below in Figure 15, is a graph of the annual cash flows including the Annual Cost in Orange (negative values), the Annual Benefits in Green (positive values), and the Cumulative Net result in Blue. As you can see, the Cumulative Net result turns positive in year 12, which is indicative of a 12-year simple payback period. These results provide a strong financial justification for implementing AMI, since the payback is less than 15 years, and the technology is expected to last 20 years. Figure 15: Annual Cashflow – City Owned Fixed Network Other Benefits and Opportunities Several additional benefits, which may be available to the City through the implementation of AMI, have not been quantified or included in the business case model. The two main reasons for not including these benefits are: 1) the benefit is not easily determined, or 2) the benefit is somewhat obscure and not directly linked to the installation of an AMI system. However, for some utilities, these non-quantified benefits are just as important for project justification as the financial drivers. Non-quantified benefits are listed below and grouped into three sections: Improved Customer Service, Environmental Benefits, and Operational Benefits. Improved Customer Service AMI will improve the customer experience, which is difficult to quantify, but it is a key benefit of AMI. Not only can it empower the City to enhance its relationship with customers, but AMI will also improve the efficacy of customer service representatives by providing them with the tools and data to do their job more effectively when addressing customers’ questions or requests. Some of the benefits relating to improved customer service are described below. These benefits have not been quantified in the business case calculations and simply exist as qualitative support for AMI. • Web/Mobile Platforms – The daily consumption data gathered from AMI can be presented to customers on their bill or via web/mobile platforms. Customers will be able to monitor their water usage patterns over time. To have this data available on-demand may not actually result in a financial benefit for the City but it is appreciated by customers. It will also reduce the total volume of calls to the call center, as customers may start to answer simple billing related questions without Page 20 of 26 the direct involvement of a City representative. Customer self-service via the web portal will allow for custom settings for leak detection and alarm notifications and make downloadable consumption data available. • Choice of Bill Payment Date to Customer – With traditional manual meter reading, there is a cost savings if all meters in a neighborhood can be read on the same day. However, with AMI there is no cost advantage to reading meters in the same neighborhood on the same day. Meters can be read on any day in any location at no marginal cost. Therefore, the City could allow customers to choose the dates and customize their billing period, if it doesn’t interfere with how amenity fees are charged. • Consolidated Billing for Customers with Multiple Meters – In some utilities, customers have multiple meters in different locations throughout the service area. With AMI, billing can be consolidated for these customers by syncing billing periods across all accounts belonging to a customer. The advantage is the customer will have just one bill to pay and all accounts will be billed for the same specific days and duration for easy comparison. • Improved Billing Service – Interval data will create customer service gains from reduced or eliminated meter read estimates, faster turnaround time related to off cycle and final readings for move-in/move-outs, reduced billing adjustments due to enhanced visibility on leaks or high usage, improved consistency of billing cycle duration due to reduction of verification readings and reduced delays between read date and bill date, which will strengthen the price signal on customer consumption. • Improved Customer Service for Leak Adjustment Processing – The availability of interval data will allow customer service representatives to better assist customers in understanding how and when a leak may have occurred. While a reduction in leak adjustment processing time is included in the model, this will also improve customer satisfaction because usage questions can be answered by customer service representatives with new insight and confidence as soon as the customer makes their first call. Environmental Benefits AMI will also improve the City’s environmental impact through several potential benefits, which are difficult to quantify, but nonetheless real. Many of these will exist even without additional effort on the part of City staff. • Improved System Planning – Availability of peak day/peak hour water flow data may enable the City to reduce energy use for pumping. • Water Conservation and Water Efficiency – Water is a limited resource that should be protected and managed carefully. AMI is a one of the few ways that utilities can provide actual usage feedback to customers and enable them to become informed stewards of this critical resource. • Reduced Greenhouse Gases – Reduced carbon emissions and greenhouse gases will be possible because of fewer miles driven by meter reading vehicles. In addition, there will be fewer fossil fuels purchased because of less vehicle usage. Operational Benefits Many operational aspects of utilities can also benefit from the utilization of AMI data. While these benefits are difficult to quantify, they are included below as potential soft or non-quantified benefits. Some of these benefits are somewhat obscure and indirect, but there have been case studies of other utilities realizing benefits associated with AMI across these categories. Page 21 of 26 • Improved Maintenance Scheduling – Currently, maintenance activities (such as verifying high or zero usage or change outs due to stuck meters or failed touch-read devices) take place during the billing window, when meter reads are obtained and there is a short period of time to verify reads and exceptions before bills are sent to customers. With AMI, these alerts can be addressed as they occur throughout the month, sometimes weeks before the billing read needs to be obtained. This will allow maintenance across the system to be prioritized based on the types of alerts as well as the upcoming billing cycles. • Improved Route Management – Currently, the reading schedule is developed around workdays and must avoid weekends and holidays while remaining within a consistent service period. With AMI, the reading schedule can be easily developed to obtain readings any day of the week on a standard interval. • Improved Health and Safety – Meter reading is one of the highest risk jobs at a water utility, but by reducing field activity, AMI will result in less risk of injury for meter readers and field service staff. • Elimination of Meter Reader Access Issues – This is an important aspect for the safety of meter readers who may need to address access issues such as automobiles parked on meter boxes and commercial and industrial customers with meters that are located behind locked compounds or are in secured areas. • Hydraulic Model Calibration – Interval data could be used to help the City improve the calibration of their hydraulic modelling. • Improved Drought Management – AMI can be very beneficial during extreme droughts, when residential customers may be restricted to specific allotments and hefty penalties for going over them. AMI could alert customers approaching their allotment limit and help all parties avoid the headaches that come with addressing all the penalties. • Improve Cost of Service Analysis for Ratemaking – Interval data could help the City better understand the impacts that different customer groups have on the system, improving the cost-of- service analysis and enabling rate features such as peak use charges. • Right Sizing Large Meters – Interval data will allow the City to monitor flow rates for each large meter to determine if the meter is correctly sized for the maximum and average flow. This analysis could be incorporated as a standard meter flow rate analysis report that would flag or identify “over- sized” meters. Conclusion Jacobs performed several sets of analyses, with the results presented below. The assumptions and methodologies are described further throughout this document as well as in the accompanying model and PowerPoint presentations. The terms are defined as follows: • Initial capital cost is the budgetary cost to acquire and install the system • Average annualized benefit is the quantified benefits each year minus cost each year – this should be a positive number • Simple payback is how long it takes for sum of benefits to exceed the sum of costs. Jacobs has identified payback as a key financial metric with clients around the world. The following ranges are used for a 20-year useful life: Excellent is 0 - 10 years, Strong is 11 - 15 years, Good is 16 - 20 years, and Poor is anything over 20 years. • Net Present Value is the total sum of costs and benefits, discounted back to today’s dollars – this should be a positive number Page 22 of 26 • Return on Investment (ROI) is the average annualized benefit represented as a percentage of the initial capital cost – this should be greater than the weighted average cost of capital, which is 4.5% The overall results are shown in Figure 16 and indicate that AMI would provide the City with an average annual benefit of $1.4 million, a payback of 12 years, a net present value (NPV) of $3.7 million, and a return on investment of 10%. Both AMI scenarios share a similar order of magnitude for total lifecycle costs, so Jacobs strongly suggests that the City explore ways that a City Owned network could be leveraged to provide additional value. One good option is to leverage the network to provide both Water and Electric AMI metering. Other opportunities include adding additional smart utilities or smart cities devices under the network. Task 5: Business Case Recommendations In Task 3, Evaluation of Advanced Metering Infrastructure, Jacobs interviewed various City departments to identify goals and priorities for meter reading. The results of these interviews concluded that AMR would not provide the City with the required functionality. Therefore, Jacobs and the City’s AMI team focused the cost-benefit assessment on AMI. Looking at the simple payback results from Task 4, Financial Analysis, and using the Jacobs scale for financial justification, that there is a strong business case for implementing AMI for water meters at the City. With the type of meters the City is using right now there would not be an opportunity to retrofit existing meters, however based on the financial analysis the cost saving potential of using static meters as opposed to positive displacement meters would provide significant benefits to the City through improved registration. For the next phase, it is likely to take approximately 9 months to complete the procurement effort and select a vendor. With approximately 40,000 water meters and 58,000 electric meters to replace and area of 100 square miles it would then take another 24 months to complete the AMI implementation for both water and electric. Figure 17 details the level-one activities that would be required to support the project. It is split into two phases. Phase 1 of the project is procurement and would include preparing the bid documents, integration, and coordination between DME and the water utility, RFP advertisement, vendor selection, negotiations and ultimately, contract award. AMI Business Case Outputs:Worst Case Expected Best Case Initial Capital Cost 15,550,000$ 14,140,000$ 12,720,000$ Average Annualized Benefit 1,130,000$ 1,420,000$ 1,710,000$ Simple Payback (years)13 12 11 Net Present Value 1,550,000$ 3,699,000$ 6,040,000$ Return on Investment (ROI)8.9%10.0%11.0% Figure 16: Overall Cost Benefit Results – City Owned Fixed Network Page 23 of 26 Figure 17: High Level AMI Project Plan Considerations The Trilliant AMI solution that is currently being used by DME is 11 years old but not a viable option for water as Trilliant doesn’t have an existing track record of successful projects using their Water module. As identified in Task 4, Jacobs recommends that the City look at ways to leverage the AMI network and would suggest acquiring a joint Water & Electric AMI solution. Jacobs typically recommends that additional upgrades or changes to major ERP systems like the billing system be delayed until significant completion of the AMI deployment or that the upgrades are made before the implementation phase is scheduled to begin. And with the City looking at both a new billing system and the need to upgrade its existing MDMS, Jacobs recommends careful coordination between these three projects. The City has also indicated an interest in Distribution leak sensors (district metered areas, acoustics, pressure) and these detailed requirements would be further developed during the preparation of the RFP in the procurement phase. Additionally, support for other smart utilities or smart cities sensors can be incorporated into the AMI RFP. Task 6 AMR/AMI Implementation Plan Road Map to AMI There are several strategies that the City can employ to provide for a smooth transformation of systems, software, and operations. As shown in Figure 17, the high-level AMI project plan would take approximately 33 months to complete including procurement and implementation. Below is a summary of the activities that would be recommended in an AMI project for the City. Development of the RFP Develop an RFP with performance-based specifications and evaluation criteria to support competitive pricing while meeting specific functional objectives like on-demand reads, remote valve operation, or specific read success rates. The City procurement department will work alongside the RFP consultant to insert standard contract language, clauses, and legal wording. The existing meter population (quantity and sizes), and customer addresses will be provided, and specific locations/height of city facilities will be required by the proposers and will be the responsibility of the City. Once a draft is written, the Procurement Department will finalize and approve the solicitation prior to posting and publicizing it in accordance with the City’s standard contracting process. Page 24 of 26 Vendor Responses and Evaluation When proposals are received, the submissions will be reviewed in detail (including verifying propagation study results) and develop highlights, questions based on industry expertise, and knowledge of each vendors’ specific technology. We will then facilitate a scoring workshop with staff where individual technical scores are compared and a consensus is reached (to introduce differentiation) per the evaluation criteria and weighing factors. Based on the results of a scoring workshops and a review of initial costs, a shortlist of vendors will be invited to present their project team, proposed technology, and give a demonstration of their software. Negotiations and Statement of Work The highest ranked vendor’s proposal will be invited to work with the City in developing a statement of work and develop topics for negotiations, including wish list and other concerns. Upon completion of outstanding items, we will review and cross reference the vendor’s statement of work against the technical proposal and help finalize the master services agreement. Implementation At the start of the implementation phase, a kickoff meeting with the selected vendor will be held to review and finalize their proposed solution architecture, design, and configuration. This will also include a review of the proposed meter locations and network deployment plan. The meter and network deployment plans need to be planned together to ensure the network adequately covers the areas of planned meter upgrades prior to meter installations beginning. In planning the meter and network rollout there are factors to keep in mind, but the most critical is the billing schedule. The utility needs to continue to read meters and bill customers with as little disruption to that meter to cash process as possible. To that effect, a blackout schedule should be created that defines the period for each cycle and route when installations are not permitted to occur, so that meter to cash functions can continue as normal. Factoring this requirement into the deployment process means the ideal time to begin a meter upgrade route is just after it was read and billed (blackout ends), which allows for the maximum amount of time to complete that route before the blackout period reoccurs. After defining the blackout schedule, the first routes for upgrades can be identified to serve a strategic purpose, such as stress testing the system and its capabilities (harder to for endpoints to be heard) as well as to achieve some operational or customer-focused benefits, such as reducing tough to read or unsafe meter reading conditions. After the initial routes have been identified to start deployment and the network plan has been developed, the ongoing release of routes is a controlled and well-defined process to prevent the installers from only doing the easy jobs to prevent the work from being spread out too much (making it harder to respond to issues), and to ensure routes are fully upgraded which frees up resources to do other things beyond supporting meter reading. This explicitly includes completing an entire vertical riser containing multiple meters before the next area of available upgrades is released to the vendor. Before beginning full-scale installation, Jacobs recommends the contractors perform a “slow-start” installation on several hundred meters (as well as the data collection units needed to cover them, in the case of a fixed network system) so that all parties can verify system performance as well as all installation and quality-based project control procedures. These procedures include appointment scheduling, logistics, inspection, data audit, installation acceptance, the handling of anomalies (such as inaccurate data or shutoff valves that need replacing), and the data interface to the CIS. In our experience, this type of demonstration period usually traps procedural errors associated with installation. After a short evaluation period, and completing any immediate corrective actions or, at the City’s direction, the contractor can proceed to full deployment. Page 25 of 26 Internal Communication Internal communications are critical to supporting a successful external rollout. All staff need to be equipped with accurate information and a sense of ownership to confirm their interactions with the public are positive and based on fact rather than rumor. The plan should be tailored to different types of staff, with attention to staff who regularly interact with the public. The plan should include tools, such as an intranet site, fact sheets, and FAQs, that will help educate staff, as well as methods for reaching out to them. These methods should include briefings at staff meetings, drop-in open houses, and field visits for staff to learn hands-on about advanced meters. It is crucial that communications to internal staff be conducted prior to implementation of the external plan so that staff can have informed interaction with customers. Leveraging operational knowledge and processes to make the new technology work is key to AMI implementation success. The organization must be adequately staffed and work to ensure collaboration across functions to deal with emerging billing or other issues at the source of the problem. Taking on an AMI program requires attention to organizational issues and opportunities including work process improvement, staffing levels, policy changes, performance expectations, training, and more. External Communication The external communication plan should be developed alongside the internal plan to confirm that key messages are consistent. Recent research suggests, however, that widespread awareness about smart meters—especially within certain customer groups—is low and opinions about their intent and usefulness vary widely. Customers can be skeptical about who ultimately benefits from the meters: the consumer or the utility. Figure 18 highlights our approach to involving and informing key stakeholders. Page 26 of 26 Figure 18: Approach for Stakeholder Engagement Based on our extensive experience deploying AMI on behalf of local governments, the top consumer concerns that tend to arise during the deployment of an AMI program include: • Data Privacy Issues | People can be suspicious of technologies that track their activities; they do not wish outside agencies to know when they are home or not home or going about their daily tasks. They may feel that the information can be sold to questionable parties or for marketing purposes. They question the true nature or intent of the technology and resist deployment of AMI because they believe that smart meters violate their right to privacy. • Data Security | Similarly, people can question the accuracy of the new technology, not understanding how the meter can assure that it is their home’s water use being tracked and not a nearby neighbor or facility. These people require assurance that their data is both accurate and secure. • Billing Issues (accuracy/inaccuracy; increases) | As meters age, they tend to become less accurate; when the new smart meters are installed, their improved accuracy can render a bill that is higher than that to which the customer has become accustomed. This can drive customers to disbelieve the meter, question the intent of the program, and increase resistance. • Concerns About Installation | Problems during installation, such as property damage, water issues after the installation, and uninformed or unprofessional installers can cause backlash to the program. • Health or Safety Concerns | There are a significant number of people who voice concerns about the safety of smart meters because of electromagnetic field (EMF) exposure. There is no evidence to suggest smart meters are a health hazard, but the fear remains and often stretches beyond the Page 27 of 26 technology itself to include the institutional programs that promote the technology, such as a meter replacement program. If these concerns are not addressed proactively, low, or inaccurate awareness combined with higher bills (from the increase in meter accuracy), changes in billing frequency, and sensitivity to privacy issues can result in customer resistance to the installation of smart meter technology, significantly undermining the goals of community acceptance and improved customer service experience. Field Inspections and Performance Management The AMI project management will involve regular performance reporting by the contractor, formal and informal meetings, and special meetings to handle problems. This should involve identifying and carrying out performance and project quality control measures to ensure project deliverables are successfully met, including achieving business objectives and optimizing quality delivery through effective management of the project’s schedule, cost, and scope. This includes monitoring contractor deliverables, communications, solution development, configuration, work, activities, and overall performance. The AMI contractor performance should be measured by tracking: • Percentage of route completion • Meter accuracy and meter testing • Component failure rates and root causes (e.g., battery failures, damage during installation) • Initial defect rate • Read success rate and data transfer success • Network redundancy A project manager and up to two full-time inspectors should be hired during the AMI implementation phase. The field services managers will focus attention on field activities, such as inspection, investigations, supply logistics, and AMI installation coordination. These aspects of intensive AMI deployment are often the most difficult for utility employees with other responsibilities to devote adequate attention. The responsibilities should include: • Coordinate installation contractor work • Supervise follow-up on all anomalies • Prepare project field reports • Attend weekly project meetings • Coordinate receipt of supplies and materials • Supervise safety procedures Quality control of field installation work involves an on-site real-time spot inspection to ensure the work meets specifications. Physical inspection will identify installation problems not indicated by the AMI system (e.g., a leaky coupling or debris left at the site). The Jacobs team recommends that 20% of small meters and 100% large meters undergo post- installation quality inspection to ensure that the field installation objectives are met any performance issues and potential for outliers is thoroughly identified and mitigated as appropriate. In our experience, this is the right balance between cost and risk management, however, this is a variable, and we can certainly adjust the level of inspections at the request of the City. Page 28 of 26 Post-Implementation Management The close-out services will aid during AMI vendor contract close-out as well as training for any tools or processes developed for use by the program team. A transition plan that identifies procedures and open issues to be transitioned to city staff prior to closing out the AMI program will be developed. In our experience, this plan can include new positions that need to be created, handling of post-installation issues, and remaining field installations that were not completed for specific reasons. The transition plan will be reviewed with the project team in a matrix form during which process owners will be asked to provide updates leading up to the transition date.