Council approves bid letting for water meter replacement project
The city of Red Oak is proceeding with plans to replace every water meter within the Red Oak water system.
The Red Oak City Council discussed a proposal for replacing the meters at its regular meeting Monday, Jan. 15. City administrator Brad Wright said according to his research, the majority of meters currently in the system were installed prior to 2000, with many dating back as far as 1977. Wright added meter change outs are recommended by the American Water Works Association every 15-20 years, to maintain efficiency.
“With the increasing age of a meter comes increasing inaccuracy. Industry standards indicate an average loss of efficiency in a meter of 0.3 percent per year. If we are to estimate the average age of meters currently in the system at 20 years old, this would equate to a 6 percent loss in efficiency, meaning we are not getting paid for 6 percent of the water going through the meters,” Wright said.
Wright added a random sampling of 12 water meters were recently removed and sent in for testing. The results of the 12 sent in actually tested at an efficiency rating of 90 percent, creating a loss of 10 percent in water revenue. In addition to age, there were other factors likely contributing to the water meter inefficiency, including installation.
“The method of installation can be a factor. This is especially true with large meters in commercial and industrial applications. Upon recent inspection of several industrial meters it was found that an alarming number are not installed in accordance with current building codes and industrial standards. Improper installation can result in significant loss of efficiency,” commented Wright.
According to Wright, several different types of water meters had been tested as replacements. As a result of the tests, an automated read system was deemed to be in the best interest of the water department.
“If the automated system is selected, water usage is automatically and continuously monitored and downloaded to a centralized hub located at City Hall. This is done with radio collector units strategically located throughout the system. The benefits of this type of system are immense. There are obvious operational savings due to the virtual elimination of meter reading as we know it today.”
In addition to operational savings, the automated system offers a number of benefits that would improve customer service.
“There are alarms built into the system that will notify us any time there is significant increase to water usage through a particular meter, indicating a possible water leak. This will allow us to make contact immediately with the customer, potentially saving the customer significant expense resulting from lost water, which can often go undetected for considerable periods of time. Additionally, when a customer experiences high water usage, the billing clerk will have the ability to pull up the customer’s water usage on an hour-by-hour basis, identifying exactly when water was flowing through the meter and at what rate,” said Wright.
The cost of this project is currently estimated between $800,000 and $1 million, to be determined through a bid process. The cost includes meters as well as installation of those meters. The exception would be to industrial and some commercial applications where the customer will be required to provide and pay for installation. Wright said that was due to several factors, including logistical challenges and workflow disruption, along with varying degrees of work required to make the new meter install adhere to current code and industrial standards.
Wright shared the numbers on the return investment to the city:
Increased Revenue
Water: Using an estimated loss of efficiency of 6 percent based on industry standards, and the water utility’s current annual revenue, an increase in revenue of $60,000 annually would be realized. Wright said some communities replacing outdated and inefficient equipment and installing a similar type of new system have experienced revenue increases of as much as 16 to 22 percent.
Sewer: Sewer revenue is also determined based upon water meter readings. While it is not anticipated the increase will be as significant overall, a conservative estimated increase in revenue would be half the percentage of water or 3 percent. Based upon current sewer revenue, this would result in an annual increase of sewer revenue of $20,280.
Operational Savings
Salaries: The elimination of the need to manually read meters will result in the reduction in staffing of one full time position. This savings (salary & benefits) is estimated at $52,000.
Vehicle: No longer reading meters manually will provide significant savings in the aspect of vehicle fuel and maintenance. This savings is estimated at $7,500 per year.
Meter Expense: Purchase of new meters is currently budgeted at $20,000 per year. With the complete replacement of all existing meters, the need to buy additional meters will be greatly diminished. A future budgeted line item of $5,000 would seemingly be adequate to keep pace with any new or replacement meters needed for the next several years. This results in a savings of $15,000 per year.
Combined value of increased revenue and operational savings = $154,780.
Wright said financing of the project is intended to be in the form of revenue bonds. Annual payment obligations, based upon what they believe to be a conservatively high estimate of $1,000,000, are 15 years at 2.75 percent, for a payment of $82,259, or 10 years at 2.75 percent, at a payment of $115,739. Wright felt either payment obligation could be easily covered by the increased revenue and decreased operational costs.
The council agreed to allow Wright to seek bids for the project.