Smart Metering IS Metering Smart First

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2 Smart Metering IS Metering Smart First Presentation Objectives: Importance of Accurate Metering Water Research Foundation Project Results Metering Asset Management Tools, Techniques & Results 2

3 Metering Management Experience & Approach Focus on long-term equipment performance not vendor loyalty Methodology is ROI based must meet return criteria Metering Accuracy Sustainability Stewardship includes: 20+ million meters managed in 66 countries Measure over $11+ billion per year 10 accredited meter labs test all metering products 70 metering professionals dedicated to metering knowledge & performance New Testing Facility Houston, TX 3

4 Metering Management Approach Continuous sample testing program to aid decision making Test at multiple points along the accuracy curve Validate vendors claims; find anomalies Test below AWWA/ISO low flow accuracy standards Learn how various brands and types of meters behave 4

5 Metering Management Approach Life & stress tests What meters work best & under various conditions Determine meters we will purchase Sample test deliveries before field deployment Validate accuracy claims Visit manufacturing plants to observe QA/QC processes Work with vendors to improve product quality 5

6 Typical Meter Management Issues Large meters not proper size or type for application; improper settings No systematic testing program meter replaced when failed Limited QA/QC on meter installations Meters installed backwards; improper wiring for AMR/remote installations Test bench is a glorified paper weight Not maintained or calibrated/improper testing procedures Vendors not held accountable for warranties or performance 6

7 Smart Metering IS Metering Smart First 1 Importance of Meter Accuracy Sustainability AMI Less Effective if Meters are Inaccurate

8 Utility Challenges Budgetary Meter is Where the Money Is! Keeping rates low will be a significant challenge Near double digit rate increases might be the norm 70% (99-08) 85+% of revenues come from sale of water Meter is the cash register Detroit (W/WW) 98.9% Pittsburgh (W/WW) 98.6% Philadelphia (W/WW) 97.5% Chicago Water (W/WW) 97.4% Dallas (W/WW) 96.9% New York City (W/WW) 94.9% Boston (W/WW) 94.1% San Francisco (W/WW) 92.5% Niagara Falls (W/WW) 86.6% Seattle (W/WW) 84.9% Miami (W/WW) 82.2% Phoenix (W/WW) 75.1% DCWASA (W/WW/SW) 75.1% Los Angeles DWP (W) 95.7% Cleveland (W) 93.0% Cincinnati (W) 92.0% Source: Booz Allen Rate Structure Analysis 8

9 Utility Challenges - Accuracy Affects Utility Revenue Double loss Revenues & Value of Money Meter Accuracy Degrades Over Time Dollar today worth less tomorrow Revenues From Meters Decrease Ave residential water/sewer bill $835/yr (80,000 gals) Ave commercial water/sewer bill-$10,342/yr (1 million gals) Average industrial account - $913,300/yr (100 million gals) Source: NYC Water Board, Public Information Regarding Water and Wastewater Rates, April 2011, 30 largest utilities

10 Why Meter Accuracy Sustainability Program? Maintain customer fairness & equity No free water due to meter inaccuracy Fairness Avoid rate increases to balance inaccurate meters and leaks Equity Accurate information Customer for usage decisions Manage scarce resources

11 Why Meter Accuracy Sustainability Program Maintenance Saves Money When to test & repair? Do I have the right meter for the application? When is the optimum time to replace? Which meters to replace or retrofit for AMR/AMI program? How do I maximize accuracy warranties? Water loss control programs, which includes maintaining meter accuracy are 3 times and higher more cost effective than all water other conservation techniques Water Efficiency Potential Study, WI PSC Dec 2011

12 Smart Metering IS Metering Smart First 2 What are those pesky meters really doing? Accuracy of New & In-Service Meters Utah State Research Laboratory

13 New Meter Low Flow Test Results at 1/32 GPM

14 New Meter Low Flow Test Results at 1/16 GPM

15 New Meter Low Flow Test Results at 1/8 GPM

16 Leaks Are Not Being Measured 1999 AWWARF study indicated that All homes leak at 152 drips/min; about 1/64 gpm; 22 gpd 5.5% of homes leaked 100 gpd; leak at a rate of about 1/16 gpm Continuous toilet leak is around 1/8 gpm

17 Study Findings New Meter Tests Larger-than-expected % failed one or more of the three AWWA new meter flow accuracy standards One manufacturer met standard at all three flow rates (for all sizes and types offered) more than 95% of the time None of the other 14 manufacturers were able to exceed a success percentage greater than 85% If tests not conducted on delivery no validation of accuracy. When is your next test to validate meter accuracy? Customer Complaint Internal Investigation Out Test Never

18 Study Findings Pulled Meters No Correlation between registry and service time No Correlation between registry and throughput Some measurement technologies worked better than others when New or after full life cycle of throughput Subjected to particulates

19 Smart Metering IS Metering Smart First 3 Metering Asset Management Techniques & Results Our Results can be Your Results

20 Meter Maintenance Approach Historical approach to meter replacement Run to failure stopped meters are replaced Preventative based on set age &/or consumption Opportunistic coordinate with AMR/AMI project These approaches have limitations to make a parallel with a tire it is like: Waiting for a burst to replace it unsafe Changing the tire after 3 years without any consideration of key parameters like Brand quality of the tire Mileage Usage/application Buying a new car to get new tires

21 Method Highlights for Large Meters 1 Year ROI Target Accuracy is the Main Driver. Meter performance not price. Case-by-case analysis to maximize ROI Meter Sizing/Selection Right meter for right application Resize meter to focus on lower flows - captures more revenue Reduce long-term cost of ownership & maintenance Upgrade settings to maximize meter accuracy & minimize wear Sustaining Meter Accuracy Predictive vs. preventative maintenance Fixed schedules by meter size not reliable indicator AMR/AMI for Large Meter Application is a Must 21

22 Method Highlights for Small Meters 3 Year ROI Target We Define Demographic Parameters Set statistical sample size We Bench Test the Accuracy of the Samplessome up to 13 different flow rates Very low flow where 10% to 15% of usage may occur & meters typically under-register We Validate Customer Usage Patterns How much customers consume water at the various tested flows rates AWWA M6-15%, 70%, 15% Indy Project 3%, 81%, 16% 22

23 Method Highlights for Small Meters 3 Year ROI Target 23

24 Indianapolis Large Meter Results Managed over 322,000 accounts Focused on top & larger meters.05% of total meter base & 24% of large meters 15% of system revenues and usage Average age of 21.3 years Average accuracy of 85.3% CAPEX Cost $1.44 million Replace meters & upgrade settings to current standards AMR compatible Revenue Gain $1.98 million/roi < 9 months Investing in maintenance to sustain revenue of $8 million over 4 year period 24

25 Indianapolis Small Meter Accuracy Test Results Small meter testing program 42,000 meters installed ,500 meters installed Problems with just age focus If older meter replaced = $17,000/year in annual revenues If younger meters replaced = $200,000/year in annual revenues % 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% % pass High flow % pass Mid flow % pass Low flow % Fail High Range % Fail Mid Range 30.00% 20.00% 10.00% 0.00%

26 SEDIF Meter Management Results Managing over 550,000 accounts The baseline 2002 Compound Accuracy Factor was 95.4% With similar meter replacement budget as preventative approach, we have improved accuracy by 3% Currently recovering $30 million/yr more in revenues Average age of meter base is 10 years old; about same as when program started

27 Meter vs. AMR/AMI Transmitter Replacement AMR/AMI device replacement policy When is optimum time to replace? Current industry advice - replace meter when transmitter is replaced Transmitter may last 20 years, but meter may lose accuracy sooner. What about retrofitted meters? What is more cost effective strategy? Meter inaccuracy results in a loss of a stream of income Early replacement of AMI device strands an asset 27

28 Meter vs. AMR/AMI Transmitter Replacement AMI device replacement policy example 2% inaccuracy results in loss of $16.70/year (average W & WW rates for 2010) If transmitter costs $80 and lasts 20 years, straight line depreciation is $4.00/yr If meter reaches 2% inaccuracy after 15 years, loss of income for next 5 years is $83.50 (no adjustment for rate increases) If AMI device is replaced after 15 years, stranded asset value is $20.00 Difficult to make cost effective choice without meter accuracy data 28

29 Smart Metering IS Metering Smart First The meter is the utility s cash register High level of accuracy is required to maximize revenues, minimize rate increases and treat customers fairly & equitably Revenue sustainability strategies can recover lost revenue in the 5% to 10% range, depending on meter asset management practices Focus on large meters for best return on investment Replace selective meters Invest in maintenance Right size and type of meter for right application Right meter setting Systematic, statistical based multi-year project to determine optimal replacement policy for small meters & AMI transmitters 29

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