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Water Meter Replacement with Advanced Metering Infrastructure Presentation to City Council February 13, 2024 2 Agenda 1 2 3 4 5 What is AMI? Current & Desired State Overview Project Costs & Benefits Project Next Steps Consensus 3 Project Goals & Objectives Goal • Modernize metering infrastructure Objectives • Optimize water conversation efforts with improved water usage analytics • Improve customer experience by providing water usage & billing information more quickly • Optimize in-house operations and processes • Improve metering accuracy and reduce non-revenue water • Stay current with industry norms and practices Work Performed To-Date 4 What is AMI? Advanced Metering Infrastructure AMI is an integrated system of communication networks, meters & sensors, data management systems, and people & processes that enables two-way communication between the utility and the customers. 5 AMI Communication Networks Overview • Based on commonly used and FCC approved digital communication methods • Both cellular and fixed-network options are available. • Very short data transmission duration… milliseconds • Encrypted and secured • No personally identifiable information • Built-In network redundancy 6 Overview of Static Meters Advantages of Static Meters • No moving parts • Static meters generally perform better than mechanical meters at low flow rates. • Static meters have the capability to record water flow at “ultra low flow” levels (0 – ¼ GPM), which mechanical meters lack. • Static meters should not lose accuracy over their life 7 AMI Adoption Examples Example AMI Systems in AZ Region • Chandler - Implementing • Flagstaff – Yes • Gilbert – Implementing • Las Vegas – Yes • Mesa – Implementing • Scottsdale - Implementing • Surprise – Implementing • Tempe – Yes 61% of water utilities surveyed are either assessing, updating, or installing a new meter reading system Other Notable Water Utility AMI Systems • New York City DEP • Cleveland, OH • DC Water • San Francisco PUC • Jacksonville Electric Authority • Sacramento, CA 8 Current and Future Water Metering CURRENT 94% 6% Water Analytics Software Visual Read Walk By Meter Reading Radio Read Drive By Meter Reading (AMR) Data Collection Network 100% System Manager and Data Analysts Customer Portal Customer Technicians and Field Reps. Mechanical Meters Mechanical Meters Static Meters Approximately 65,000 total water meters, located outdoors in water meter boxes. FUTURE WITH AMI 9 AMI Benefits – Customer Portal 9 • New web-based Customer Portal provides information and self-service capabilities to utility customers • Detailed water usage information empowers customers to effectively manage water usage • Proactive leak detection tools 10 AMI Benefits - Utility AMI helps utilities become more effective. • More precise water usage measurements from state-of- the-art meters • Reduces bill complaints, rebills, and adjustments • Vehicle cost and carbon footprint reduction • New data analytics capabilities will drive water conservation programs 10 Acquisition Cost Estimate 11 Summary of Project Cost and Benefits Estimate Actual project costs will be confirmed during the procurement process. Business Case Evaluation 15-year Lifecycle Benefits and Costs Scope Item Cost Water Meters Meter Box Lids $15,250,000 AMI Hardware $7,060,000 Meter and AMI Installation Services $5,070,000 Software Integration $1,300,000 AMI SaaS and Network Monitoring (Year 1) $290,000 Subtotal $28,970,000 Meter Salvage -$450,000 Contingency @ 10% $2,850,000 Total Acquisition Cost With Contingency $31,370,000 Benefit Item Benefit Improved Meter Registration (Water and Sewer) $43,870,000 Labor Productivity $4,930,000 Operational Cost Reductions $1,200,000 Total Net Present Value (Lifecycle Benefit) $50,000,000 Total Net Present Value (Lifecycle Cost) $34,470,000 Benefit/Cost Ratio 1.45 Internal Rate of Return 8.8% Simple Payback Period (years) 8.92 Economic Indicators • Approximately $33M will be proposed in the Capital Improvement Plan (CIP) budget • Bureau of Reclamation, WaterSMART Water and Energy Efficiency Grant is available – Awards up to $5M – Grant Applications Are Due February 22, 2024 – Award Notifications by Fall of 2024 12 Project Funding • Project cost approximately $33 million – $5 million potential grant – Approximately $28 million in water bond financing • Cost of debt service to be offset by increased revenue and operational savings • Structured as interest only during the 3-year implementation 13 Rate Impact • Consensus to move forward with AMI project • Consensus to seek grant funding opportunities 14 Requested Action 15 AMI Project Next Steps • Submit WaterSMART Grant Application…February 22, 2024 • Procurement. . . March - November 2024 (target) • Potential Award of Contract. . . December 2024 • Implementation Project Kick-Off. . . January 2025 16 Thank You!