Automated Meter Reading February 26, 2011

1. Automated Meter ReadingFebruary 26, 2011

2. What is Automatic Meter Reading? • Automatic Meter Reading, or AMR is the technology of automatically collecting consumption, diagnostic, and status data from a water meter and transferring that data to a central database for billing, troubleshooting, and analyzing.

3. Historical Information • Automated Meter Reading was first tested approximately 48 years ago by AT&T in cooperation with a group of utilities and Westinghouse. • At that time, the $2.00 per meter cost was four times the monthly cost of a person to read a meter at $0.50 cents per meter. As such, the program was considered economically unfeasible.

4. Historical Information • In 1977, Metretek, Inc. developed and produced the first fully automated, commercially available remote meter reading and load management systems. • In 1985, Hackensack Water Company and Equitable Gas Company were the first to commit to full-scale implementation of AMR on water and gas meters.

5. Historical Information • Today, many communities throughout the United States and the State of North Carolina have already proceeded with the acquisition and implementation of the AMR Technology for their water system. • AMR Technology has a proven and well established track record.

6. Background Information • The discussion concerning the purchase and utilization of the AMR Technology here in Eden was first raised by city staff on February 23, 2008. • On May 21, 2008, city staff traveled to North Wilkesboro, N.C. to see the AMR Technology in action.

7. Background Information • In early 2009 staff investigated funding opportunities through the American Recovery and Reinvestment Act. • In February 2009, a funding application was submitted to the North Carolina Department of Environment and Natural Resources through its Public Water Supply Section of the Drinking Water Supply Revolving Fund.

8. Background Information • A second funding application was submitted to the Clean Water State Revolving Fund. • Unfortunately, neither of these funding applications were approved. • In February 2010, a power point presentation on the AMR Technology was presented by Ms. Tammie McMichael, Director of Finance and Personnel.

9. Background Information • As a result of Council’s continued interest in the AMR system a total of $207,800 was included in the approved FY 2010-11 budget to begin the implementation of this project if formally approved by the City Council. • In June 2010, city staff and Councilman Jim Burnette attended an AMR Technology seminar sponsored by Carolina Meter in Greensboro.

10. Background Information • From June 2010, through September 2010, city staff worked with representatives from Brady Energy Services to evaluate a number of different initiatives – one of which was the AMR Technology. • On September 9, 2010, representatives from Brady Energy Services submit a formal Energy and Infrastructure Optimization Proposal which included the implementation and installation of the AMR system.

11. Background Information • The AMR Technology proposal from Brady Energy Services was $1,899,358 +/- 10% depending upon the final findings of an investment grade audit. • On September 17, 2010, I informed each of you that staff was not recommending the acceptance of the Brady proposal because we felt the cost estimate was very excessive.

12. Background Information • At this same point in time, staff received a preliminary price quote of $1,789,475.82 from Mr. Brad Bersch of Carolina Meter. • Mr. Bersch noted that this price was a very rough estimate and he thought the actual cost would be much lower if we actually decided to proceed with Carolina Meter.

13. Background Information • While investigating the procurement procedures Ms. Erin Gilley, City Attorney determined the City could proceed with the purchase and installation of the system without the formal development and receipt of bids under the guidelines of NC General Statutes 143-129(e)(6) which states an exemption from competitive bidding is allowed when the purpose of “standardization or compatibility is the overriding consideration.”

14. Background Information • Nearly every meter currently in use within the City of Eden is a Badger meter and the ability to stay with this brand and the intended retrofit in lieu of replacement of approximately 9.37% (656) of our existing active meters (6,998 as of December 2010) qualifies us for this exemption according to Ms. Gilley. • We discovered this is the same process that has been used by many of the other communities who have already converted to the AMR Technology with Carolina Meter.

15. Background Information • On September 27, 2010, Ms. McMichael and I met with Mr. Bersch and Mr. Mark McMillen, Co-Owner of Carolina Meter and Vice-President of Sales. During that meeting they gave us a formal price of $1,552,956.74. • In addition, they stated the cost would be good through September 2011, so staff could complete its internal analysis and remaining due diligence work.

16. Background Information • From October – December 2010, additional due diligence work was completed and an in-depth analysis was conducted on each of our inactive meters – i.e. meters that are in the ground, are read on a monthly basis but are not active and producing revenue. • We discovered that 741 meters had been inactive for at least two years.

17. Background Information • In an effort to reduce our costs even further we decided to reduce the number of meters we would be replacing from the original plan of 7,083 meters to just 6,442 meters. • Active meters as of December 2010: 6998 Minus meters to be retrofitted: 656 6,342 Plus 100 of the 741 inactive meters: 100 6,442 Plus 641 inactive meters not being bought: 641 7,083

18. Background Information • As you will see, this reduction in the number of meters being purchased and installed translates into an additional savings of $100,396.69. • Due to length of time associated with many of the inactive accounts and the minimal cost difference associated with purchasing the meters now or later (estimated at $13.50 per meter) we did not feel like it made sense to replace every single meter at this time.

19. Background Information • In January 2011, we received an updated quote from Mr. Bersch for the AMR system that is $1,452,560.05. • This translates into a substantial savings of $446,797.95 when compared to the price quoted from Brady Energy Services which was $1,899,358 and even a savings of $336,915.77 when compared to the initial preliminary quote we received from Carolina Meter at the beginning of September 2010.

20. Automated Meter Reading • Solving Tomorrow’s Problems With Today’s Technology • Utilities today are being challenged with maintaining and managing an efficient water system in the face of • Declining revenues • Increased operating costs • Infrastructure improvement needs

21. Current Problems • Prolonged leak detection. • Tamper detection. • Recurring personnel and operational costs for 3 FTE employees to read meters. • Possibility of inaccurate meter readings. • Resolving billing issues. • Revenue loss due to inaccurate meters

22. Current Meter Reading Schedule • Two Monthly Billing Cycles (15th & 30th) • 3 Meter Readers • Reading approximately 161 meters each day • 6 hours per day eight days straight per billing cycle • 2 billing cycles = reading 16 days out of 21.75 work days each month • Handle an average of 406 work orders per month • Processed every day from 3:00-5:00 • Rereads an average of 50 per month • Leave an average of 30 door hangers per month • Check stop meters an average of 50 per month

23. Current Meter Reading Schedule • Two Monthly Billing Cycles (15th & 30th) • 3 Meter Readers • Cutoffs/Reconnects for non payment an average of 150 per month • Pull meters for non payment (lock or pull) an average of 50 per month • Replace old meters an average of 5 per month • Allow for weekends, holidays, weather, and personal time off

24. Current Meter Reading Schedule • Two Monthly Billing Cycles (15th & 30th) • 2 Billing Clerks • After readings submitted- • Run reports for no reads, rereads • Bills Processed for approximately 7,000 accounts per month • Approximately 3,500 bills each cycle • Reviewed • Continuous bill forms folded/burst • Stamped and mailed

25. Current Meter Reading Schedule • Two Monthly Billing Cycles (15th & 30th) • 2 Billing Clerks • Reminder notices processed for 800-1,000 accounts per month • 400-500 reminder notices each cycle • Reviewed • Continuous forms folded/burst • Stamped and mailed • Cut off list • Pull meters list • Stop meters list

26. Current Meter Reading Schedule • Two Monthly Billing Cycles (15th & 30th) • 2 Billing Clerks • Handling customer service telephone calls-everyday • Collecting & Posting payments-everyday • Approximately 50% of our customers come in the office to pay • Issue and update work orders-everyday

27. Current Meter Reading Schedule • Two Monthly Billing Cycles (15th & 30th) • 2 Billing Clerks • Balancing cash drawers and making deposits-everyday • Other responsibilities • Large Customer W&S Billings • Billing for Waste Management Services approximately 297 (commercial) bills per month • As you can see, we can’t afford to let one day pass us by…..there is a great deal involved in our monthly billing and collection process

28. Comprehensive Technology Solution • Automated Meter Reading System • Orion meter reading technology from Badger Meter • 656 of our existing meters will be retrofitted with data transmitters for integration into the new AMR system. • 6,442 meters will be replaced entirely with new meters fitted with data transmitters. • The New Technology Will Meet Our Needs • Meter reading • Data analysis • Business operation

29. The Depth of Our Meter Reading Technology • There has to be a better way……

30. Features/Benefits of AMR • Low-cost, fast and efficient data collection. • More accurate and precise measurement of water consumption. Consumers will be billed for what they are actually consuming. • Elimination of two full-time equivalent positions and reduced operational costs which translates into a reduction in actual spending equal to approximately $97,575 on a recurring basis each year.

31. Features/Benefits of AMR • Promotes efficient operations and conservation. • Ability to be retrofitted on 656 existing meters that are less than seven years old. • Increased revenues over time. Water meters whether manual or automated, are mechanical devices that decrease in accuracy over time. Because many of our meters are older and less accurate, the City is losing revenue from both water service charges as well as sewer service charges.

32. Features/Benefits of AMR • Leak detection capabilities – Meters will sample water consumption 24 hours a day and notify the City if water has been running continuously when the meter is read. • This will assist the citizens in identifying leaks in a more timely manner thereby reducing the amount of money they are ultimately charged on their bills as a result of a leak.

33. ORION In-Home Display • Optional customer service tool available to all users • Promotes efficiency and conservation. • Displays consumption reads hourly, daily or monthly or in seven-day graphic intervals.

34. Features/Benefits of AMR • With the In-Home Display unit customers can monitor their at-home water use on an easy-to-read, remote display. • A built-in magnet allows for its location on a refrigerator or other appliance. • Monitors can be purchased for $135 each and we will have some on hand for trial testing on a rotating check-out basis.

35. Features/Benefits of AMR • Short payback period per Opportunity Analysis. • Improved call resolution with in-depth data profiling capabilities for each account. • Minimized needs to access customer’s property to read meters. • ORION transmitters, batteries and Badger Meter Encoder Register are covered by a twenty year prorated warranty.

36. Features/Benefits of AMR • The new system will be comprised of an ORION transmitter located at the meter that will measure the water flow then transmit a signal containing the current meter reading to an ORION mobile reading receiver. • The meter reader simply drives down the street with a laptop computer device that receives the signals and records the reads. This information is then downloaded into the billing system in the Finance Department office.

37. ORION Transmitter Features • Unparalleled protection against water intrusion • Factory pre-wired, assembled and tested • No field programming required • Ready to install!

38. Date Profile Viewer - Bar Graph

39. ORION Drive-by Reading System • Low-cost, fast, accurate and efficient data collection and data auditing. • Touch screen operation • Utilizes an FCC non-licensed radio frequency band • Transmits latest meter reading every 4-5 seconds. • Receiver passes readings directly to PC during download process.

40. ORION Reading Software (ORS)Premium Kit

41. Project Cost, Warranty/Maintenance Agreements • Carolina Meter has submitted a price quote for this system that equals $1,452,560.05. • The ORION Transmitters, batteries and Badger Meter Encoder Register are covered by a twenty year prorated warranty. • The ORION Mobile Reading System, Trimble Ranger Handheld and Charging Cradle and the READCENTER Reading Data Management Software and Route Management Module are covered by a one year warranty but will then be covered by a series of annual maintenance agreements.

42. Project Cost, Warranty/Maintenance Agreements • There will be some one time programming costs with Logics for the AMR interface and change-out at a cost of $7,000. • Annual maintenance agreements will be as follows: Badger READCENTER Annual Maintenance Agreement $ 1,050 Logics Programming Annual Maintenance Costs $ 675 Trimble Ranger Handheld Annual Maintenance Agreement $ 450 ORION Reading Software Annual Maintenance Agreement $ 2,875 Total $ 5,050 • Reductions in funds allocated for the annual replacement of meters will be used to offset the costs associated with the recurring maintenance agreements.

43. Projected Payback • The opportunity analysis information has been prepared by Mr. Bersch. He will be happy to address any questions concerning the opportunity analysis or the AMR system at the conclusion of this power point presentation. • Two opportunity analysis were included in the information you received prior to today’s meeting.

44. Projected Payback • The first analysis assumes existing rates remain unchanged from their current level for the next ten years (most conservative scenario possible). • Based on these assumptions, Mr. Bersch has estimated a project payback period of only 3.3 years assuming a six month change out period.

45. Projected Payback • The second analysis assumes existing rates are increased by an annual average of 3% per year for the next ten years. • Based on these assumptions, Mr. Bersch has estimated a project payback period of only 3.1 years assuming a six month change out period.

46. Projected Payback • The opportunity analysis preapred by Mr. Bersch reveal that he is using a 92% water meter accuracy figure in the projection of his revenue numbers for all meter sizes of 2 inches and lower. • In addition, he did not include any gains that may be realized on meters that are larger than 4 inches.

47. Projected Payback • Past modeling in both North Wilkesboro, N.C. and Pulaski, VA. indicated the opportunity analysis prepared by Carolina Meter was very effective. • Mr. Bersch’s approach is very conservative when compared to the 95% - 99% accuracy guarantees that were actually offered by Brady Energy Services.

48. Projected Payback • Based on our discussions with other communities who have installed the AMR system and the guarantees offered by Brady Energy Services we feel that a 92% water meter accuracy figure is probably low. This means the potential payback has a good possibility of being even less than the estimates provided by Carolina Meter.

49. Primary Reasons Other Utility Providers Implement AMR • Inaccurate meters • Transition from a bi-monthly to monthly reads • To reduce personnel and operational costs. • Elimination of manual reads • Features and benefits • Leak detection • Data profiling • In-Home Monitoring Display

50. Others’ Experience with AMR • North Wilkesboro, North Carolina • Increase in revenue and cash flow. Reading time decreased by 90% • Very satisfied with ORION system and Carolina Meter. • Mr. David Webb, Utilities Maintenance Supervisor stated it paid for itself in a short period of time.