HomeMy WebLinkAbout04/18/2006, BUS 2 - THIRD AND FINAL REPORT: UTILITY BILLING SYSTEM REVIEW J
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"'"°°'Di` April 18,2006
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C ITY O F SAN L U I S OBISPO
FROM: John Moss, Utilities Director
Prepared By: Sue Baasch, Administrative Analyst
SUBJECT: THIRD AND FINAL REPORT: UTILITY BILLING SYSTEM REVIEW
CAO RECOMMENDATION
(1) Review the findings and conclusions in Volumes 1 and 2 of the City of San Luis
Obispo's Utility Billing System Enhancements, prepared by HDR Engineering, Inc., in
association with Langham Consulting Services, Inc.; and
(2) Approve the addition of third tier pricing to the residential water rate structure for
customers using more than 25 units of water per month, effective July 1, 2006, the
modified water rate structure to be adopted as part of the 2006-07 Budget and June 2006
water fund rate review; and
(3) Approve in concept moving to a small fixed charge plus variable sewer rate structure for
all customers, directing staff to continue to work with HDR Engineering, Inc., on the
final rate structure modeling and testing; and
(4) Direct staff to return to Council with the final recommended sewer rate structure and
implementation schedule to allow adequate time for community information and outreach
program prior to a proposed July 2007 implementation;and .
(5) Approve in concept moving to monthly utility billing in the fall of 2006, final approval
pending the review and approval of the 2006-07 Budget and June 2006 water and sewer
fund rate reviews.
REPORT IN BRIEF
This is the third and final report to Council on the findings from the year-long, multi-objective
study of the City's utility billing system and water and sewer rate structures. The goal of this
study was to develop a master plan for long term improvements to water and sewer customer
services, based on a review of current industry trends, Council rate structure design objectives,
and community feedback.
Community Outreach
As directed by Council, at the second meeting held on October 4, 2005, the Utilities department
sought community input on these recommendations through a variety of means. The recent city-
wide mailing of the Utilities Department newsletter contained information and a printed survey.
For those in the community who preferred to use the internet for business, an on-line version was
available at www.slocustomerfirst.org. As of the writing of this report, about 430 surveys have
been received or submitted via the internet site. A summary of the comments received in the
survey are attached to this report as Attachment 1. An overview of the results of the survey is
contained in the following background section of this report. Each section of the report
2-�
Third and Final Report—Utilities Billing System Review Page 2
discussing individual components of the project and the related recommendation also includes
specific community feedback for that recommendation.
A targeted mailing to key community groups offered briefings to anyone with questions or
concerns. No requests for such a briefing were received. A community meeting was held on
March 22, 2006 at the Ludwick center, and one person attended.
The final recommendations include the following:
(1) Making only a minor change to the current variable water rate structure by adding a
third tier pricing for high residential water use, to be effective July 1, 2006;
(2) Moving forward with the revenue modeling and data collection necessary to support a
sewer rate structure with a small fixed charge and variable charges assessed
according to a calculation or metering of indoor water use ("calculation" would use
average winter use information for customers not having an irrigation meter), with a
target implementation of July 2007; and
(3) Developing a strategy to implement, monthly utility reading and billing for a
recommended fall 2006 implementation.
Staff is not recommending new utility billing software or moving forward with automated meter
reading at this time. Each of these recommendations, the proposed implementation, and the
associated community feedback is discussed in more detail later in this report.
BACKGROUND
On May 17, 2005, the Council approved an agreement with HDR Engineering, Inc., in
association with Langham Consulting Services, Inc„ for financial and engineering services to
evaluate the City's water and sewer rate structures, evaluation of remote meter reading systems
for the City of San Luis Obispo, and ability of the current utility billing software to support any
recommended changes. This investigation was prompted by the ten year forecast of fairly
significant multi-year water and sewer rate increases and a concern for how the community
would be able to pay for these increased charges. Also, while the City's water rate structure had
been reviewed very thoroughly in the early 1990's, the same could not be said of the sewer rate
structure. A number of City utility customers had expressed dissatisfaction with the fixed rate
assessed all residential customers, regardless of household size or water use.
The first report to Council, on July 26, 2005, was a study session with a discussion of commonly
accepted rate design goals and objectives in the utility industry, and their meanings and
implications in setting a rate structure. The study session concluded with a survey of the
Council's priorities for water and sewer rate structures for the City. This prioritization was used
to assist in the evaluation of the current water and sewer rate structures as well as determine if
other rate designs might better support the City Council's objectives. The results were as
follows:
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Third and Final Report—Utilities Billing System Review Page 3
Table 1. City Council Priority Ranking for
Water and Sewer Rate D- Objectives
Rate Design Goal/Objective Rank
Yields Total Revenue Requirements 1
Conservation Oriented-Discourage 2
Wasteful Use
Easy to Understand and Administer 3
Stability and Predictability 4
Fair Allocation of Costs to Attain Equity 5
On October 4, 2005, the second Utilities Billing System Review Report was presented to
Council. The report described a number of industry-accepted water and sewer rate structures, as
well as the City's existing rate structures, and discussed how they supported, or did not, the
newly identified Council list of priority objectives. As a result of that discussion, Council
directed staff to further analyze water and sewer rate structures based primarily on individual
water use or as an equal alternative, ones with a small fixed charge and variable charges based
on individual water use. Council supported the idea of looking at third tier pricing for sending a
high water use message to water residential customers using more than 25 units per month.
Finally, Council directed staff to develop and conduct a community-wide information and
outreach program to discern customer attitudes and sentiments toward the proposed changes.
To date, of the 430 surveys received (about 2% of the number mailed), we have found that the
typical respondent is a single family resident living in household of one to two persons. About
half of the respondents have lived in San Luis Obispo for more than 16 years (43% - more than
20 years). The respondents were fairly evenly divided between men and women. About 58% of
the respondents indicated they had read the whole Resource newsletter, and about 28% had read
most of the newsletter.
The survey questions and average answers are provided below:
Question
1. The current water billing systems is based on the idea that customers are charged for On a scale of l to 10,
the water they actually use as compared to everyone paying the same fixed rate. with I being"not at all
fair"and 10 being
"extremely fair".
9.1
-3
Third and Final Report—Utilities Billing System Review Page 4
2. The Utilities Department is proposing a new billing system for sewer usage which On a scale of 1 to 10,
will be more similar to the current water billing system. The current sewer billing with 1 being"not at all
system charges a fixed rate to all residential customers without regard to actual usage: fair"and 10 being
The proposed system will charge by estimated sewer usage. Estimated usage will be "extremely fair".
based on an average of an individual customer's water usage as measured during the
winter months (Dec/Jan/Feb) when water usage for landscape purposes is at a 8.0
minimum. How fair is this proposed sewer billing system?
3. The newsletter also described the introduction of a new fixed fee (estimated at On a scale of I to 10,
about $5/month for water and $5/month for sewer) to cover meter reading and billing with l.being"not at all
costs. This fee will be the same every month because even when there is no use, the reasonable"and 10
meters must still be read and a bill generated. How reasonable is this fee? being"extremely
reasonable".
4.3
4. The current billing system is a two-tier system. Customers are charged one fee for On a scale of I to 10,
I to 10 units(every two months)and a second higher fee for units of 11 or more. The with 1 being"not at all
Utilities Department is considering the addition of a third tier for residential customers reasonable"and 10
only that would charge a higher rate for water usage above 50 units, which is being extremely
significantly higher than what a typical family residential customer requires for basic reasonable".
indoor and outdoor needs. In your opinion,how reasonable is the addition of this third
tier to the water billing system? 7.0
5. The Utilities Department is considering a number of other changes to the billing On a scale of 1 to 4,with
system. Please tell us whether you like or dislike each of the proposed changes: 1 being"dislike a lot"to
4 being"like a lot".
Being billed every month rather than every two months 2.2
Being able to access your account information on-line 3.1
Being able to access your water usage history on-line 3.2
Being able to pay your water and sewer bill on-line 2,9
6. How would you rate the overall performance of the SLO Utilities Department? On a scale of 1 to 10,
with I being"Poor"and
10 being"Excellent".
8.1
7. How would you rate the customer service provided by the SLO Utilities On a scale of 1 to 10,
Department? with I being"Poor"and
10 being"Excellent".
8.4
DISCUSSION
The body of this report is organized into the following sections:
Section 1. Water Rate Structure—Recommendation, Analysis, Community Feedback
Section 2. Sewer Rate Structure—Recommendation, Analysis, Community Feedback
Section 3. Billing Frequency—Recommendation, Analysis, Community Feedback �f��
Third and Final Report—Utilities Billing System Review Page 5
Section 4. Automated Meter Reading—Recommendation, Analysis, Community Feedback
Section 5. Utility Billing Software—Recommendation, Analysis
As previously mentioned, Attachment 1 to this report is a compilation of the community
comments from the survey instrument. Attachment 2 is the Volume 2 Report on automated
meter reading, utility billing system review, billing frequency and water reuse pricing, prepared
by HDR Engineering in association with Langham Consulting Services, Inc.
Volume 1 of the Report prepared by HDR Engineering in association with Langham Consulting
Services, Inc., was previously received by Council and is provided under separate cover to
Council and available to the public through the City Clerk's office or the Utilities office at 879
Morro Street.
SECTION]. WATER RATE STRUCTURE
A. Recommendation
Approve the addition of third tier pricing to the residential water rate structure for customers
using more than 25 units of water per month, effective July 1, 2006, the modified water rate
structure to be adopted as part of the 2006-07 Budget and-June 2006 water fund rate review.
City d San • 7/01/06
ii% VARIABLE CHARGES ASSESSED ACCORDING •
Residential—Single Family
Tier one(0—5 ccf per month)Z set at average residential customer indoor water use,
Tier two (5—25 ccf per month)Z set to cover average customer summertime outdoor water use; and
Tier three more than 25 ccfper month set to encourage the efficient use of water.
Multi-Family and Non-residential
Two tiers, 0 -5 ccf and greater than 5 ccf per month)2 as in current structure.
Notes
I This is the same as the City's current water rate structure, with the addition of a third tier
for residential customers
2 1 billing unit= 100 cubic feet(ccO of water(748 gallons of water).
B. Analysis
Under this recommendation, the City's current rate structure would be unchanged, other than to
include a third tier pricing for single family residential customers to strongly encourage the
efficient use of water. Staff estimates that there are currently about 400 (out of about 10,000
city-wide) single family residential customers that would be affected by the third tier. The
Utilities Conservation Office has contacted these customers numerous times offering assistance
in reducing their water use. Many have either failed to respond or continue to use water in
excess of reasonable indoor use and irrigation water demands. A third tier could draw these
customers into the City conservation efforts. There is a very small percentage of these customers
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Third and Final Report—Utilities Billing System Review Page 6
who will likely not be able to reduce below the third tier due to their lot size and the type of
landscape they have chosen.
Other considerations in recommending this water rate structure:
1. The current water rate structure has been successful at encouraging conservation and can
be strengthened by adding a third tier to residential accounts to represent what is beyond
a wise use of water.
2. The current water rate structure is easy to understand and administer.
3. The City has over ten years of water rate history with the current structure and has found
it to be stable and predictable (under the current system of annual reviews and
adjustments).
4. A variable- based structure where everyone pays the same per unit is perceived to be fair
and equitable.
C. Community Feedback
The survey showed that the community has a high level of satisfaction with the current water
rate structure (9.1 on a scale of 1 to 10, with 10 being extremely fair). Having a small fixed
component to the water rate structure (to ensure that customers pay for the cost to read their
meter and prepare their bills even when they are not at home) did not fare well. The comments
were almost all negative and the rating was 4.3 on a scale of 1 to 10, with 10 being extremely
reasonable.
Based on the comments staff received, some of the survey respondents appeared to think this
was a new fee (in hindsight, staff should have been clearer that this would not be an added cost,
but simply a shift in some of the costs that were currently being paid through the variable portion
of the rate to a fixed part of the rate).
In any case, based on community feedback as well as the Council's rate design goals and our
past success with the current rate structure, staff does not recommend adding a fixed charge to
the water rate structure.
Comments regarding adding a third tier to the residential water rate structure were more positive.
Scoring this idea as a "T' on the 1 to 10 scale with 10 being extremely reasonable, customers
seemed to generally support the idea of setting a higher tier for a residential customer using more
than 50 billing units of water in a bi-monthly billing cycle.
SECTION 2. SEWER RATE STRUCTURE
A. Recommendations
1. Approve in concept moving to a small fixed charge plus variable sewer rate structure,
directing staff to continue to work with HDR Engineering, Inc., in the modeling of a
sewer rate structure that accounts for indoor use by metering (if available) or an
average of winter water use for customers without irrigation meters; and 2 . 4
Third and Final Report—Utilities Billing System Review Page 7
2. Direct staff to return to Council with the final recommended sewer rate structure and
an implementation schedule to allow adequate time for a community information and
outreach program prior to a proposed July 2007 implementation.
ObispoCity of San Luis
SMALL FIXED CHARGE - VARIABLE CHARGES ASSESSED ACCORDING
TO METERED WATER USE
Residential and ftfulti-Fand v without an irrivation nictcr use char-es to bi-,capped by an average of their
most recent winter water I(Se.
Residential—Single Family and Multi-Family(no irrigation meter)
Estimate of$5.00 per month fixed charge,plus
100% variable charges, assessed according to metered water use, with an individual cap based on
an average ofprior winter water user to account for indoor use only.
Non-residential and Multi-Family(with irrigation meter)
Estimate of$5.00 per month fried charge,plus
100%variable charges, assessed according to metered water use.
Primary,Secondary and Private Schools
No change to the current system o a per student daily assessment.
B. Analysis
Currently, single family residential and multi-family customers are billed based on a fixed sewer
charge that does not vary according to use; non-residential customers are billed according to a
combination of a fixed plus variable charge. The variable component is based on metered water
use.
A fixed charge for residential customers is a traditional way of billing for sewer services, as it is
considered very stable in meeting revenue requirements. It also recognizes the difficulty in
accurately measuring wastewater generation in single family residential situations. That said,
HDR explains in their report, utilities across the country are increasingly using some form of
variable rate structure based on metered water use to charge for residential sewer services.
At the second meeting in October 2005, Council supported moving to a small fixed charge plus
primarily variable rate structure for all customers, with the alternative of a totally variable sewer
rate structure as an equal option. In continuing to evaluate these two options, staff noticed that
the broad band of average customers would receive rate increases if the structure was totally
variable. However, if a fixed charge of about $5.00 per month is assessed to all customers,
average customers' charges are more consistent with their current charges. This is an
important goal of any new rate structure: average customers should remain relatively unaffected.
Only those customers who are "low" or "high" users should see change. Staff is, therefore,
recommending further consideration of the alternative with a small fixed charge plus primarily
variable structure, with the final amounts to be determined once the final modeling of the most
recent customer base is completed.
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Third and Final Report—Utilities Billing System Review Page 8
One of the primarily difficulties in implementing a variable rate structure for residential
customers is to decide on a methodology to accurately measure wastewater generation. In San
Luis Obispo, single family residential customers are allowed only one meter, and it measures the
amount of water coming into the dwelling. Other customer classes are allowed more than one
type of meter. For example, some multi-family and non-residential customers have landscape
irrigation meters to account for outdoor use as well as water meters to measure indoor use. Not
all multi-family and non-residential customers have chosen landscape irrigation meters,
however.
To account for these differences in the customer base and to strive to account for only indoor
use, staff recommends:
• Residential and Multi family Customers without an irrigation meter
Residential and multi-family customers would be charged according to their
measured water use, with an individual cap according to the average of that
customer's three winter monthly billing periods in the prior year.
• Multi family and Non-residential Customers with a landscape irrigation meter
Multi-family and non-residential customers with an irrigation meter would be
charged according to their measured indoor water use.
The concept of winter water use (when irrigation is either very, low or non-existent) to estimate
wastewater generation and set sewer rates is a widely-accepted industry practice. However,
implementing an individualized customer cap using an average of three winter monthly billing
periods of use would begin with accurate data collection and utility software adjustments. If
Council approves the recommended rate structure in concept, staff will begin working with the
utility billing software to implement this feature. As well, as described later in the report, staff
recommends moving to monthly utility billing prior to the winter season to more accurately
collect the required data. Under the bi-monthly meter reading system currently in place, it will
be difficult to collect data for the winter months only.
Moving to billing based on a cap of winter water use will have other issues. The transient nature
of the student population in San Luis Obispo leads to a large number of accounts changing each
year. To address this issue, staff will determine a baseline for winter wastewater generation by
customer type and household size for new customers. Also, describing a "winter period" for use
may be complicated by our mild climate. San Luis Obispo often has years where significant
outdoor water use is required in January and February due to a lack of rainfall. Some cities have
elected to average more than one winter's data to offer a solution to anomaly winters.
Staff recommends a variable sewer rate structure for the following reasons:
1. Our most frequent customer concern or complaint is that there is no consideration of
variable use on the residential sewer bill. Customers who do an excellent job of
conserving water or who are a single person household pay the same amount for
sewer as all other residential customers.
2. The State of California Urban Water Council recommends utilities consider a
variable sewer rate structure to support conservation efforts.
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Third and Final Report–Utilities Billing System Review Page 9
3. In a time of increasing sewer rates nation-wide, an important factor to consider in
our own sewer rate structure is offering residential customers control or choice in use
and costs. A flat or fixed rate does not do this.
4. Revenue stability and predictability have historically been a key factor in
maintaining a fixed sewer charge for residential customers, combined with the
difficulty Of distinguishing between water use.versus wastewater discharge. The
City of San Luis Obispo's water rate structure has been 100% variable for more than
ten years and has been stable in revenue generation. Accordingly, staff concludes
that sewer revenues would be just as stable as water revenues, if based on the water
meter reads.
5. Commercial sewer accounts have had a significant variable component in their rate
structure for years and there is no indication of revenue instability.
6. Questions about equity between customer classes (residential vs. non-residential)
would be eliminated with a variable sewer rate structure as everyone, regardless of
customer class, would pay the same per unit cost for the service.
7. Residential outdoor water use varies significantly enough to justify attempting to
account for outdoor use by collecting data to set an average winter use cap for sewer
charges for residential (and some multi-family) customers.
Moving to a primarily variable sewer rate structure means that some high water using residential
customers could see increases in their bills. On the other hand, very low water using customers
will see a decrease in their bill. "Average" customers will see little or no change to their bills.
When considering these impacts to the residential customers, we should be careful to not only.
consider the percent change but more appropriately consider the actual amount to be billed for
the level of service and determine if it is indeed appropriate - or out of line with other utilities
such as electricity, cable TV, gas, and telephone. A key value of a variable-based structure is
that customers have the ability to ,
exercise some control of their bill Current and Proposed (sub ect to final modeling) Rate Structures
through their water use. For those
customers seeing an increase in Example 1. Current Proposed
their bill, they will have the Average residential customer Water $33.00 Water $33.00
10 ccf/per mo in summer and Sewer 32.33 Sewer 32_20
opportunity to reduce that bill. 7 ccf/per mo in winter Total 6 .M Total 65.20
Under our current flat or fixed
rate system, residential customers Example 2. Current Proposed
do not have a choice or Low water using customer Water $14.65 Water $14.65
opportunity for control. A 5 ccf/per mo in summer and Sewer 32_33 Sewer 24_50
common thread to customer 5 ccf/per mo in winter Total $46.98 Total $39.15
satisfaction is the ability to Example 3. Current Proposed
exercise choice and control. This Higher water using customer Water $51.35 Water $51.35
also may eliminate any cross 15 ccf/per mo in summer and Sewer 32.33 Sewer 40.10
subsidies between customer 9 ccf/per mo in winter Total $83.68 Total $91.45
classes that may be occurring in
the current rate structure.
Based on the initial modeling, multi-family customers could have increases. However, given
that the charges will be largely based on use, this might be "equitable". Customers using more
of the service should pay more for the services. Non-residential customers will be far less
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Third and Final Report—Utilities Billing System Review Page 10
affected by a move to a largely variable sewer rate as our non-residential sewer rate structure
currently is primarily a variable rate structure.
C. Community Feedback
Customers gave high marks to moving to a variable sewer rate structure with a cap based on an
individual customer's water usage as measured during the winter months. The average score
was 8 on the scale of 1 to 10, with 10 being extremely fair. A sample of the comments: `Billing
for sewer service according to usage would be welcomed..., as my household is small"; "I love
the idea of charging sewer for actual usage "I live alone and my water/sewer bill is always over
S90/month. No matter how I conserve. Not fair— fixed sewer for single people"; "The local
service charge is too high! I'm a single person household and pay the same for service as a large
household".
Community support for a variable residential sewer rate structure seems high, based on the
survey scoring and the survey comments. It addresses the concerns of many customers who
have written letters to the City regarding their small household receiving the same size bill as
much larger households who are using more water and generating more wastewater.
SECTION 3. BILLING FREQUENCY
A. Recommendation
Approve in concept moving to monthly utility billing in the fall of 2006, final approval pending
the review and approval of the 2006-07 Budget and June 2006 water and sewer fund rate
reviews.
B. Analysis
Billing bi-monthly for water and sewer was once an industry standard; now, according to a
survey by the national AWWA ("American Water Works Association"), only about 20% of the
water and sewer agencies bill bi-monthly. AWWA estimates that about 60% bill monthly and
20% quarterly. According to HDR, bi-monthly billing was traditional in former times when
conservation or demand management was of little concern because supplies seemed plentiful and
utility costs were generally pretty low. It was the norm to keep metering and billing costs as low
as possible because that was a higher priority than providing frequent updates on use information
to assist in demand(and cost)management.
In the Volume 2 Executive Summary (page ES-8), HDR concludes that monthly billing is a
valuable component of a well-executed conservation program:
"An important element to customer communication and the City's conservation
efforts is predicated on the frequency of customer billing. The customer bill is the
primary communication between the utility and the customer concerning their
consumption and the amount of their bill. From this information, the customer may
make a conscious decision to modify or change their consumptive behavior. "
C. -/O
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Third and Final Report—Utilities Billing System Review Page 11
The question is whether this is the appropriate time for San Luis Obispo to consider moving to
monthly billing.
Monthly billing will provide more timely consumption information to customers wishing to
conserve and control costs. Individual control of use and costs is important to San Luis Obispo
customers, considering the high scores customers gave to the variable water rate structure and
the proposed variable sewer rate structure. Are we meeting this value in providing use
information and bills every 60 days (sometimes as long as 70 days) between the current bi-
monthly bills? Should the City move to a monthly billing system, which would provide
information every 30 to 35 days? Under the current system, a customer must wait up to two
months to find out about possible leaks in their water system, or the summer could almost be
over before receiving any use information.
The state conservation board has recognized that customer knowledge and action concerning
their individual use is one of the best tools to encourage ongoing conservation. Recently, the
California Urban Water Conservation Council ("CUWCC"), recommended:
"Utilities should consider establishing a monthly billing system that clearly
communicates the Utility's rate structure and the customer's current and
historical consumption of water, if it is cost effective for the utility to do so. "
Our consultant, HDR, also strongly recommends moving to monthly utility billing.
Costs Versus Benefits
As discussed above, there are a number of benefits to moving to monthly utility billing. On the
other hand, monthly billing will increase some of the utilities customer service costs. The total
cost for customer service (Finance and Utilities) is now $572,500 per year. The estimate of the
total cost for customer service if monthly billing were to be implemented is $846,600, an
increase of$274,100 as needed for added postage, billing supplies, data processing and staffing.
Stated simply, because of economies of scale, we can double our billing frequency for only half
of the current cost.
Per customer per month, the cost would go from $3.31 to $4.90, an increase of only $1.60 for
both water and sewer services.
If Council approves moving to monthly billing, staff will continue to analyze opportunities to
reduce the monthly cost through technological efficiencies or other strategies. It should be noted
that in context with the overall operating budgets for the water and sewer fund, this increase
would represent about a two percent increase. Staff feels that the benefits received by the
customers from monthly utility billing are significant given the small ($1.60 per month) increase
in costs to the customers.
In addition, monthly billing would enhance the equity and ease the administrative burden of
successfully implementing a residential variable sewer billing rate structure. If the Council
approves the proposed sewer rate structure without approving monthly billing, the winter use cap
will be based on more limited data, increasing the opportunity for skewed and possibly
Third and Final Report—Utilities Billing System Review Page 12
inequitable results. For example, if a customer experienced a leak or other atypical water use
problem requiring a billing adjustment during this billing cycle, City staff must determine the
appropriate water use level. This, in turn, might become part of the data establishing the cap for
the sewer rate paid by the customer for the entire year. It is easier to explain caps based strictly
on the customer's own consumption data rather than projected data..
To summarize staff's reasons for recommending monthly billing:
1. Providing consumption information monthly is an important tool in a well-executed
conservation program and is recommended by the State of California's Urban Water Council.
2. Billing monthly will reduce the perceived amount of the water and sewer bills. (Often
customers do not remember that the billing occurs only every other month.) In surveying
other utilities, most have moved to a monthly billing practice, primarily because of the
increasing size of the bill.
3. Billing monthly will be more consistent with the billing practices of all other utilities,
resulting in water and sewer bills that are more consistent with other utilities in terms of time
periods measured, cost and magnitude.
4. Collecting data monthly will be important to setting appropriate and explainable winter
average caps if the residential variable sewer rate structure is implemented.
Staff is recommending that Council approve moving to monthly utility billing in concept at this
time. If Council approves this recommendation, staff will prepare the financial requests
necessary to be included in the 2006-07 Budget and annual fund reviews coming to Council in
June 2006. At that time, Council would have final approval of moving forward or not..
C. Community Feedback
The community comments regarding monthly utility billing were not overly enthusiastic (but this
appears to been due, in part, to a linkage with what was perceived as a new fee, as explained
below). On a scale of 1 to 5 with 4 being "Like a lot" and 5 being "Don't Know", monthly
billing received a 2.2 (between"Dislike a little" and"Like a Little").
In the comments, many customers noted that they did not want to pay for monthly billing and did
not like the idea. One said, "Monthly billing will expand `operating costs' to a much higher
level far outweighing the advantage to customers `knowing their usage"'. Several people
suggested quarterly or annual meter reading and billing as a possibility.
On the other hand, several noted: "Please go to a monthly billing system — it's much easier to
budget for a$75 payment than a$150 payment"; "Monthly billing would be preferred but only if
it will NOT increase fees"; "I recently had a leak in the box where the meter is located. My
water and sewer bill for two months is around $80 for this time of the year. I received a bill for
$584.42. If the meter was read every month, my bill would have been %2 of the $584.42."
Many customers associated the $5/month fixed charge (total of$10/month) being considered for
water and sewer to be related to monthly utility billing. Since they did not like the fixed charge
and perceived that it was driven by new metering reading and billing costs, it may have affected
their ranking of monthly utility billing. The proposed flat charges were not related to recovering
Third and Final Report—Utilities Billing System Review Page 13
costs for monthly utility billing, but as explained earlier, staff recognizes that rationale for the
proposed fixed charges could have been explained more clearly.
Also, the community might have rated monthly utility billing higher if staff had done a better job
of drawing the connection between collecting the necessary monthly use data and the popular
proposed residential variable sewer rate structure.
SECTION 4. AUTOMATED METER READING
A. Recommendation
Retain the current "manual read" water meter reading system as the currently most cost effective
approach for the City. Continue to monitor automated meter reading (AMR) system technology
for opportunities and improved efficiency.
B. Analysis
There are three enhanced meter reading systems discussed in the HDR report: touch pad, mobile
radio and fixed radio. The touch pad system installs a device on the lid of the meter box, which
is connected to the meter register, which is "touched" with a metal wand that records the meter
reading without opening the meter box. The touch pad system may increase staff efficiency but
is not truly an AMR system. The mobile radio and fixed radio systems require transponders
attached to the meter register that send the meter read by radio signal. The mobile system
requires staff to drive by the location with a computer which picks up the radio signal with the
meter reading. This is the type of system that the City currently has for about 70 locations. The
fixed system uses "collectors" to receive data from the individual meter transponders and then
transmits the information to a central location (Finance Department). This type of system
provides "true"automated meter reading.
The report analyzed the costs and benefits associated with implementation of ail AMR system
for the City of San Luis Obispo. The analysis provided by HDR concluded that "installation of
an AMR system does not appear to be cost effective at this time." The study did note that the
City should continue to monitor improvements in the AMR technology and reevaluate in the
future when implementation costs are reduced and system reliability is improved.
C. Community Feedback
No community feedback was solicited on the option of AMR since staff's intent was for this
evaluation to be simply a technical/fiscal analysis.
SECTION 5. UTILITY BILLING SOFTWARE
A. Recommendation
o
Third and Final Report—Utilities Billing System Review Page 14
The consultant who evaluated the City's current utility billing software (vendor ACS) found that
the software could support all of the recommended actions. At this time, there are no
recommendations regarding changes to the utility billing software.
B. Analysis
Langham Consulting concluded that the current ACS utility billing system:
1. supports all business requirements;
2. will support the implementation of the alternative rate structures proposed within this
study at no additional cost(other than internal labor costs);
3. will support the implementation of monthly billing at little additional cost, depending on
the method employed to identify and move the accounts from a.bi-monthly to monthly
billing cycle (could involve one-time programming and scripting changes);
4. capable of supporting the implementation of AMR(not recommended at this time);
5. supports the calculation of bills based on rates pertinent to different customer classes;
6. finally, where the City has unique needs (such as the implementation of emergency rates
under severe drought conditions), ACS offers professional services to modify the
baseline product to meet these requirements.
Therefore, Langham recommends the City continue using the ACS utility billing software. They
estimate that going to an alternative solution would cost in the range of$288,000 to $720,000
and not offer significant benefit to the City.
FISCAL IMPACT
There are minor fiscal impacts related to the rate structure recommendations. A third tier in the
residential water structure could yield some minor additional revenue for the water fund.
Overall, however, the recommended changes to the rate structures are intentionally designed to
be revenue neutral. Under the proposed sewer rate structure some residential and multi-family
customers will pay more and some will pay less, depending on their level of water use.
The section on monthly utility billing in this report described the current estimate of the cost to
transition from bi-monthly to monthly meter reading and billing. The recommendation in this
report is to approve monthly utility billing in concept, with final approval to come upon
consideration of the 2006-07 Utilities budgets and annual water and sewer fund reviews in June
2006.
ATTACHMENTS
1. Customer Comments from the Utilities March RESOURCE Survey
Third and Final Report—Utilities Billing System Review Page 15
2. Volume 2, March 2006, UTILITY BILLING SYSTEM ENHANCEMENTS, AMR
and Utility Billing System Review, Prepared by HDR Engineering, Inc.,
in association with Langham Consulting Services, Inc.
Provided to Council under separate cover and available at the Office of the City Clerk or
Utilities Office at 879 Morro for Public Review
Volume 1 March 2006,
UTILITY BILLING SYSTEM ENHANCEMENTS,
Utility Rate Structure Evaluation, prepared for the City of San Luis Obispo by HDR
Engineering, Inc., in association with Langham Consulting Services, Inc.
Attachment 1
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
You should definitely not go to monthly meter readings--this increases your overheads and causes you
to have to go to new software that will be more expensive. Current system works just fine. Don't add
additional costs.
I appreciated being alerted to a possible water leak due to a meter reading anomaly--that's great
service!
I would encourage consideration of an additional billing break-off points,where the first 7 units are
very reasonable,followed by a price change at 15 units, one at 30 units, and one at 50 units and
finally one at 80 units. Utilities should become one more reason to promote smaller yards, less.grass,
and less over-irrigation.
Suggestions/Comments: 1. Move billing on line and reduce billing costs. 2. Have homeowners read
their own meter and submit monthly with a yearly verification reading, or pay billing fee. Probably
wouldn't work for rentals but you can place a lien on property for unpaid balances in the case of a
homeowner. 3. Give customers options to pay on line,•estimate payments, etc. to cut costs.4.The
sewer should be a fixed rate. You can't estimate sewage output based on water usage, even if you
use the winter months. People have varying behaviors that you just can't forecast:They wash a lot of
clothes, wash their cars, entertain, vacation, use low flow, bricks in the tank, etc.All different. Don't try
to change what is working, you'll have a mutiny.
Paying $10/mo for the privilege of having a monthly water and sewer bill seems excessive. How
expensive can new software be?To pay$120/year more for the rest of my life seems out.of line. This
so called convenience is way too expensive. It also seems that the possibility of cheating is greater
with the use of computers as readers, rather than a person coming by to really check the hook up and
meter. It looks like the old time residence once again pay for additional fancy stuff we don't need.
A variable sewer fee may punish people who garden, since the water does not enter the sewer. Since
the furthest a meter reader must walk to read a meter is 100 feet, and usually much less, and it takes
about 15 seconds to read a meter,what does the$5 include? and since the sewer is tied to water
usage, isn't that one meter? For$10? And why a charge if it's going to be automatically read? Our
PG&E meter reader says they will be phased out.
A change to the sewer charges is needed. I am a single person and pay so much in sewer. You
should charge me for my use,just like with water. The system that you have now is very unfair and
very expensive for single people.
The$5 charge for water is fair but I do not think that charging a flat fee of$5 for sewer usage is fair as
it is included in the water bill &no meter has to be read for sewer usage.
I actually have no problem with the existing conditions. Seems to be just fine.
This newsletter is like everything you've ever sent me-cryptic and vague!What's it going to cost on a
monthly or bi-monthly basis?That's what people care about-get a clue!
Cost too high. Need MUCH BETTER quality(better, automatic system to monitor)control of Laguna
Lake area well (Los Osos Valley). Too much chlorine some days. Sewage treatment plant needs to
handle metals, petroleum products, pesticides, round-up weed killer, etc., biological germs, and good
H2O pressure. No MORE"SPILLS"into stream -Avila Beach!!!
To charge$5/month for meter reading and billing even if no water is used (plus an additional $5 for
sewer even if not used) is UNBELIEVABLY unfair!
1
Attachment 1
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
Inflated prices as water usage increases penalizes large families.Although the water usage/pressure
is below average,the cost can be above average. One person may use 10/units/2 months,while 4
people may use 20 units/month. It is not fair that the 4 people pay a higher price/unit.
Computerized meter reading makes sense but what about the constant advances in technology?Will
the system be for ever'outdated'?At what coast?
As far as I'm concerned, I don't check on line for those things or pay any bills online.
Why is there a proposal for a $5 meter reading fee for both water and sewer if the sewer charge is
based on the water use?seems a double charge fora single service.Also, is there an additional cost
that will be passed on to the customers if account information is available online?that should be
divulged before you ask if it is desired by customer so the value can be determined
It would cost more to read meters each month.
Just tell us in plain language what percent increase we will be paying for water and sewer service and
what precisely will be the benefit to the present customers and how much is for City growth.
The new$5 x 2 (H20&Sewer)seems excessive-per household that is a lot of$5's. I might support a
lower($1 per household)fee.
Fees of$10/month =$20% increase unless there is an ofsetting,decrease in usage fees.
This sounds as if costs are going to go up. This does not make me happy, as I'm on a fixed income. Is
it possible to lower costs?
Because I have a small house with one resident, I feel that the current sewer charge is unfair. Your
proposed billing system (based on usage) is a big improvement!
There is too much wasted money on a street sweeper system that does not work!Therefore we
cannot support your suggestions for change.
I have a large lot and pay higher tax already- I should have to pay more to water it.And I think you
should employ a person to read the meter rather than go high tech, take away a job&raise fees!!
Billing for sewer service according to usage would be welcomed by me, personally, as my household
is small.
Keeping costs down is most important-unless a computer can remotely read meters-it makes NO
sense to bill monthly and increase the sewer rate-additional calculation. Our H2O use is 90%
landscaping so basing sewer charge on H2O use does not make sense to me. I also live in Marin Co.
Where H2O is scarce and the tiered rate works well for conservation. New construction should bear
large fees to cover additional usage on infrastructure.
I resist the idea of a monthly billing because it will double your work- postage, meter reading, etc.Why
do it?have other cities retrofitted electronic meter readers on water meters? Is it cost efficient? It
makes sense on in new installations, but the sensors are delicate, and require service periodically, I
believe.
4oX-17
Lowest water tier should be increased to 0-6 units/mo. Fixed fees should beat most$5/mo.TOTAL.
$10 is excessive for this.
2
Attachment 1
D
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
We can afford to pay more and on any time scale you wish. Please make sure less fortunate are not
disadvantaged.
Push City staff to fix Madonna Road at Higuera. The paving is wore out, it has been needing fixed for
five years.Thank you have a good day. :) I am.
I don'tsee the advantage to us,the customer, having an additional $120. in yearly fees-just so you
can change how you read the water meter. How do it benefit from this? I DONT!!!
Today most businesses require you to have a computer to function properly. I find this extremely
unfair.
live alone and my water/sewer bill is always over$90/month. NO matter how I conserve. Not fair
fixed sewer for single people.
If Being billed monthly means a $10 flat charge 12 times a year instead of 6, then I am opposed to it.
The added$5 surcharge for meter reading is not resonable as we already pay for meter reading in the
current rates.
I love the idea of changing sewer for actual usage. The idea of a third tier for people with big lawns or
large families!
The winter months are an inappropriate period to use as a base period. Fee is acceptable, but should
stop when automatic reading commences.
$10 per month to read-bill an account is grossly excessive. $2 per month should more than cover the
salary of a reasonably productive meter reader and the input and billing of the information.
Monthly billing is a silly way to disguise a vote increase; billing every other month seem more
economical (reading and billing costs)
Please keep up with water treatment technology.There seems to be so much cancer in our
community many people say it's the water.
Our water&sewer bills for just 2 people seem high and equal to other families of 4.We have no
sprinkler system or irrigation system. Perhaps they are being ESTIMATED rather than meter read.
Billing monthly is very inefficient.
1. Don't-spend money on newsletters-wasted effort and money. 2. Work to improve water quality.
The City thinks EVERYONE has deep pockets to finance the Citys needs.The City is forcing the
average person to leave SLO. The City of SLO IS NOT WILLING TO WORK WITH THE AVERAGE
PERSON JUST TRYING TO LIVE AND WORK HERE.
Determining SEWER rates on winter use overlooks the fact that some households have LOTS of
company in the summer, others none. I would think that extraordinary summer use could be
monitored.
Figure out a way to have tiered water/sewer billing system for businesses to encourage conservation
(usage divided by square feet or#of employed) ^_/
Have no way to answer#6 or 7 as have had no real contact. Leave the billing alone and keep it as is.
3
Attachment 1 �
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
#3 is a way to raise 'income without a rate increase.
You can serve me better by cutting costs and staff. How about annual billing or how about customer
read meters?You are too expensive now and asking for more!!
You have too many administrators, not workers.You should have people out cleaning gratings etc.,
local floods every shower. Some of the office people think they are God or W. Bush.
Do not have computer so cannot use online services.
1. Install automatic meter reading BEFORE starting monthly readings and billing. 2. If 3rd tier water
use is adopted, apply a higher fee only to the number of units above 50 bimonthly; the first 49 units to
be billed at the 2nd tier level.
Thank you.
Every other month billing works for me.
A lot of we seniors do not have, nor use computers, so-online services mean nothing to us. Onceor
every other month billing makes no difference, we have to pay no matter,as long as a good old check
will work..
The new proposed sewer bill system is much fairer when very little water is used.
Water measurement should consider family size and age and how active. Tier billing should be illegal.
There is no sewer meter to read -charge for sewer& H2O not fair. Large residential lots require more
Iandscape.H2O-rental unit landscape will suffer even more. Utilities dept. too much like a big brother
in your face-
My interest is how can we allow so much expansion with the water shortage?SLO is no longer the
quiet little town water a shame!.
Please go to a monthly billing system - it's much easier to budget for a $75 payment than a$150
payment!Also, if you implement automated reading systems,why charge a fee for it?Your getting rid
of meter readers, so you are guaranteed income that would more than cover the automated reading &
billing.
This survey should not be sent to the 150 people living in the Villages at the Palms.This is-an
independent senior residence.We pay monthly rent and all utilities are paid by the corporation
owning the facility.
Just another way of justifying more staff.You are fine as you currently are.
If at all possible, meters should be read on a 60 day cycle, or thirty days if changed to monthly.When
it goes to 62 or 63 days it tends to add an additional unit or two of water for that billing cycle.
Especially in summer time when lawns are watered.
Why are you needing more money for record keeping. Computers are supposed to streamline the
process, and I feel this should be just the start.
I see no reason why meters need to be read each month. Several months could be estimated readings
based on history,with,say, a quarterly reading to return to reality.
How about a direct deduction from our bank account?
4
Attachment 1
CUSTOMER.COMMENTS
Utilities Customer Service Survey in March RESOURCE
Can you put"average use for homes in your area"on the bill. I an tell how muc l used computer to ....
you but how much am I using computers to others. How much do you think my family should be
using? I need a"normal use"valve on the bill.
Good heavens, bill me$10 a month! Here's for a better idea: bill me say once or twice a year AND
further encourage conservation by incorporating this expense with the usage.
I appreciate the idea of community, but I'd sure save the time and money put into this newsletter. I've
lived in the same house for 30 years and never need to call for any reason.Your doing fine. Bill
paying/acct. accessing live are not necessary. Just the care of water&sewer.
Item#4 why discriminate?The heavy users are paying for what they use.
During the drought(1986-1992)water fees went up while water usage when down. Prices never went
down again.Water and utilities are much more expensive than my friend in North County I notice.
Give us"how-to's"to be in the lowest usage.
Monthly billing would be preferred but only if it will NOT increase fees.
How did you come up with $5 to read a meter?? How about read both on same day and save $5. How
do you put water usage to equal sewer usage?We have a dry winter and I water my yard... but I am
only ONE person using the system. How about based on number of people in the household?
We purchased a duplex in Santa Barbara several years ago. Both units had toilets that were leaking
continuously. Managed by a property manager.Water paid by landlord. No one seemed to care at all
that the water bill was very high.We fixed all the leaks and the bill went down tremendously. I think
people need to have incentive to make sure they are conserving and nothing does it like$$$$!
If a THIRD tier for water billing is created,why not have the threshhold be 30 or 40 units (every 2
months)instead of 50?50 units sounds like extravagant water use!
I'm a a bit concerned about sewer fees being based on water usage, as irrigation is often used during
the winter months, too.
There are still lots of residences that don't own computers that would make it difficult to get info online.
The local service charge is too high! I'm a single person 1 house hold and pay the same service that
as a large household.
I recently had a leak in the box where the meter is located. My water and sewer bill for 2 months is
around $86 for this time of the year. I received a bill for$584.42..If the meter was read every month
my bill would be 1/2 the$584.42.
Chumash Mobile Home Park:water and sewer is handled through Manderly Services. Since we DO
NO get any direct billing,we have no way to know how much water we use.
I dont'like any of the proposed online practices because not everyone has the capability of use.All
changes should always be based on actual use of service, not on averages or estimates.An additional
small surcharge for the cost of doing business is reasonable and should apply to all equally. Large
properties that use more should pay more.
The average should be yearly not winter. I prefer bi-monthly to save money. The third tier should start
at 30. How much will this survey cost?Will anyone pay attention to it?Thanks for asking, but it seems
to me you are looking for gimmicks for raising utility(water/sewage)fees under the guise of public
service. Sewer fees are exorbitant.
cp_ 11
5
Attachment 1 _
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
There isn't quite enough information on some issues. How can you separate toilet use from laundry,
shower, and food prep use. It looks to me as if the sewer bill would always show higher water use
because of the afore mentioned uses/ If it's tied to total water use then it would be way out of balance
and unfair.Why pick on residences only. During that last drought we had been strictly conserving &
then the water company tied on fines for uses over a % of current use. I was angry because this gave
us no lee-way while someone not conserving prior,water their lawns etc while ours had to die. That
was very unfair!
Keep it simple:Dividing and charging the fee structure adds complications. Reducing the cost to the
customer is the best proof of improving services. More Bang for the Buck no"More Bucks for the
Bang."
If a meter is read every 2 months,why the monthly$5.00 fee projected!? Each time a charge occurs it
costs the consumer more! not less.
Water usage was based on a time the city requested we ration our usage-this was not fair.
On numbers 6-7 1 have not had to deal personally with them, but when I tum on my tap,the water
comes out, so I guess it is excellent.
I am very careful with my water usage-my sewer bill is"out of sight". Let's have the new home
owners pay more for sewer service. us old timers have done our share!!!
I don't know why I HAVE TO PAY MORE FOR WATER&SEWER EVERY TIME SOMEONE BUILDS
A HOME OR COMMERCIAL, OR TRACT HOMES. The City raise the rates?
Yes, please fix the sewer problem to make it FAIR.Then, I and so many others, will be as happy as a
"hog in a Slop Bucket"Ya, you Betcha!Then, I'll rate"you" @ "10"!Yea!!
They have too many jobs going at once and it makes a lot of traffic jams in town. If not an emergency
take and spread out over a time span.
I am a renter& have no experience with utilities co. as I've rented for 12-13 years and landlords have
'handled all problems.
#3 The real amount appears to be$10 per month or$120/year to read meters. How much revenue
would be generated?
I called re the"fixed fee"charge for reading/billing.This to us (spouse & 1_was very misleading-as it
would add $10 to the bi-monthly billing amount.
I like your notes saying you'll come out and analyze our H2O usage(sometimes seems high)
Compare SLO current system to Paso Robles.There should not be a utility tax. Keep rates lower for
low income citizens. No$5 fee for sewer!Water bill includes sewer.
If you go to the monthly reading you will need more staff to read the meters. Double the
paperwork/postage/expenses etc. -the City is always saying they are short handed-why double the
work load &expenses-maybe think about quarterly billing-doing it 4 times a year would save money,
not cost more-saving is the direction to go for!
I find it ironic that when we had a drought rates went up because water consumption was down, then
after the drought with ample water, rates never were lowered. So much for rewarding good behavior
and conservation! dL– —4;)–/
The trouble with the gov. bodies of our country, is they care little about people or low income or retired.
Our money is very short. People with nice income can afford your raises.We can't.Think of that.
6
Attachment 1
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
As the water comes in and the sewage goes out, I guess gall are doing your jobs.
$5 meter reading is just another to raise our utility bill.
Overhead such as billing, meter reading, newsletter, etc. should all be included in water rate, not
itemized and charged separately.
Regarding items 6, 7.Water is always there when we tum on a faucet and our sewage goes away as
expected.We have no way of answering your question. Monthly billing would only add cost to the
process.
There is no justification for a billing charge of$5/month when you are paid automatically by me.
If you have to charge for meter reading (which I think stinks) I would rather it be done every two
months than monthly.
I really struggled during the last water shortage. I live on a comer lot& have a half block of trees and
yard.The restrictions didn't allow for this. I conserve water and don't deserve penalties.
I don't have a computer and live in a mobile home park and water is included in our rent.
Last time we had major water saving effort, prices/unit went up (to cover structural fixed costs)After
project was over, prices never went back down. You cheated!!
It appears that your"new"services are just a way to extract more money from us.
Sewer rates based on actual usage sounds good-depends on base rate. Fee to cover meter reading
&billing costs equal a NEW TAX OR COST not charged before.
I am not on a computer. I am age 76.
I'm all for charging extra for households that have no regard for water usage-however I think you'd
need a way to accommodate large families or group homes.
Why change something that is working?
Leave billing the way it is every 2 months. Actual usage is better. Every month billing creates more
cost to the customer.
So automated meter reading will reduce employment in SLO right?Will the automated readers make a
visual inspection of the meters as well?
Any changes that cause bill to increase is not desirable.
Monthly billing will expand"operating costs"to much higher level far outweighing the advantage to
customers"knowing their usage."
#4 Need to take into account-size of yard, these are considerable differences.
My concern with the change in sewer rate billing is that our house collects it's greywater for reuse and
returns less than half of it's water used to the sewer. Can we be compensated for our reduced impact
on the sewer?
Pay by phone using electronic debit payment.
7
Attachment 1
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
Why bill every month -many lots would multiply- postage, and no more income. Mostly good
customer service, but sometimes condescending tone.
We attempt to conserve greatly. Those who do not should pay the higher rates.
City would not replace over 55 yr old gas meter that.leaks;from time to time.
$3,500 per meter seems excessive, the meter reader takes maybe 1 min to read my meter,that's
$300 bucks an hour taken in by the City just another form of taking an income for the City. You raised
water rates and want to raise sales tax also. ENOUGH already.
think the basic H2O use should be 12 units. I think the$5.00 per month is ridiculous when it takes 30
seconds to read a meter&5%tax!! Another City scam.
#5- I already have automatic deduction from my checking account for paying the water bill-would like
monthly as every other month meaning a big hit-especially when mine happens around Christmas.
It is time to quit raising rates.The City needs to live within a budget as do the customers.Too much
money wasted on 'studies'and consultant fees.
Could there be any kind of consideration for like senior citizens who live alone and have much less
water usage than families??
I don't care about online options.
Monthly billing would double the billing workload, increasing costs, does not appear.to be a good idea.
Have a cut rate for single family or base on income like, RGE, Gas Company and cable.
#1 not fair to large families. #2 Not fair to large families. (The#of people in the home should be
considered.)
My bill for 5/23/05-7/25/05 showed I used 2.5 times as much water as last year. My bill for 7/25/05-
9/26/05 showed I used more than 4 times as much water as last year. My bill for 9/26/05- 11/2805
showed I used 4 times as much water as last year. I could find no big obvious leaks.Then I replaces
ALL water faucets and toilet valves!!! My bill for 11/28/05- 1/25/06 showed I used 5 units versus 6
units last year. Horray!!! P.S.When I was commanding officer of camp San Luis Obispo in 1962, 1
used to sell you water from Margarita Lake for$11 per acre foot.
The prorated bill could be more informative(tier, rate, etc.)Auto payment by credit card would be very
handy- I would not pay online and I use web a lot. Takes longer.
The City of SLO is very unforgiving for late bills, charging a high late fee immediate.All other utilities
let you skip a month if you need to without penalty and let you catch up later.
We favor keeping automatic bill payments.
#3 =/-41,000 population or=/- 13,000 residents x$10,00 =$130,000 per month-salaries&biling = ?
profit. (not including Poly. Make a base fee of$10. only for"people away from home&no use)#5
Already do through bank. #2 Basing sewer costs on water usage favors households with more people
verses 2 people households
With all the new homes being built and no new water source, if we have a drought where we will we
be,droughts do happen, you don't have compassion for seniors,who are on a FIXED INCOME.
Don't have a computer. oa—A3
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Attachment 1
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
have no computer so the online doesn't matter. I mis-marked every month billing—don't know.
Even if you checked water usage EACH month, you need only to send a bill each month saving
postage,etc. Sewer billing included every 2 months as it is now.
I do not want my personal use on a computer!
Don't we already pay you to read our meters?Why charge us to do so?What is wrong with the
present system?Sounds like you want to hire more employees.
$5.00 to read a meter?YOUR CRAZY!! This would be a windfall profit for the city. I would love to get
paid $5.00 for 1 min or work.You already have City taps on other Utilities.
Thank you for the monthly billing change. I send $50 on the unbilled month so I can afford the bi
monthly bill. I c/o very high water bills/no response from water company. I was using 549 gallons of
water per day 11/2003.
Re:#3 Sewer should also reflect no. of people occupied in the house.
Water in kitchen faucets!Water runs hot from "cold"faucet as soon as weather warms in spring.
I like the estimated sewer usage charge versus the fixed rate.There are only of us here and we're
not home much, yet are paying a large sewer fee currently.We also are LOW INCOME..
Very satisfied with the service.
$5 sewer"Billing"is excessive!
Should be a min fee for everyone-the fee based on usage.
I believe that those using water wasteful should be'penalized'by paying more! Eg: an allocation per
person free-then the tier system.Also info about how to landscape/garden to help water conservation
&prevent runoff/slides.
Question#3 the fee of$5 for water and again on sewer seems to be double billing.There is no sewer
meter to read.
Tie the charge to reading meters to use as well. The people who use a lot of waste a lot can afford to
pay more for this service.
I dont'have a computer. Isn't it less costly to read the meter every 2 months instead of each month?
I call and charge my water bill to my credit card. I look at a computer screen all day at work. I don't
want to come home and pay bills by looking into a computer screen.
More tiers =more equitable billing. Charge commercial heavy users more tiers to encourage
conservation.
I have tried to use as little water as sensible-no lawn -few guests overnight.
It seems that the fixed rates (both water&sewer)would really increase the bill for the people who
really conserve water and use little. Maybe if you use less than a certain amount you wouldn't have to
pay it. Also if"AMR"happens,would the fixed charge for meter reading be cancelled?Would the
charge reduce the usage rate? CP _
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Attachment 1
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
Older people use much less water and one person shouldn't have to pay such large sewer rates.
Encourage water efficiency via taxes,fees, and helpful individual paid consults.. ? auto pay?
People need to be charged for what they USE if at all possible.
Re-do question#4. It is confusing.
More pictures of Dean! Maybe have him write some articles.
The serious budget shortfalls the City faces should be taken into account for any computer upgrades
for you dept at.this time.
I live in Laguna Mobile Home Park where all bills are divided equally, whether there is 1 person to 6.
The sewer cannot be fairly separated by household use! Monthly billing and paperwork and meter
reading increases your costs and ours-why do that?You'll spend $10 to gain 1 cent-NONSENSE!
Please stay within your current budget like the rest of us and stop trying to increase your revenue
stream.
The bill paper in this household is not a computer user, so would not be able to pay on-line.
We use water for our landscape in ... &the dry parts of the Jan & Feb-we conserve water in the
house so your volume based sewer fee would penalize us. It seems extremely unfair to assume sewer
us based on water use it would tempt me toward a class action lawsuit. Just use a flat increase.
The City of SLO should give more or better incentives for bus. or res.that save water and buy water
saving app. or water saving landscapes.
If the argument to add the $5 fixed fee is about ... make the case much stronger and cleverer.The
message could be much clearer.
It isn't necessary to read meters every month. This means more work for your employees.A Possible
$5 fee. This fee is too high. Five dollars is a lot of$for low income people. It is good to make a 3rd tier
to charge wasteful people more.
I am opposed to the idea of charging a fee for meter reading.
Salaries of meter readers should come from existing fees- no additional fees should be charged.
If the$10/month fee makes my bill go up by 25%, I'm not interested! I work hard to conserve & don't
care to be penalized by fees.
The City needs to cut back on all landscapes, homes with large yards, parking lots with grass &plants,
parking lots are to park in not for good looks, now roads are smaller with plants in the middle, this all
needs water-roads are to drive on. We don't need plants everywhere they don't pay the water BILLS.
Anything to help lower the charges is needed. Billing every 2 months is too high and even paying
monthly would help.The third tier billing might help.
The$5 basic fee to read meters is a necessary expense for running a business. We don't and won't
pay a basic fee at the grocery store for using a cashier.
a -a- s
10
Attachment 1
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
Everybody includes worker's compensation costs as a factor in rising costs-worker's comp wastes
money on litigation. Why don't we go to a single payout medical plan so people don't have to waste on
multiple insurance plans that don't pay for care anyway. I would prefer that we be billed for what we
use,that bills come every two months and that the cost of billing and reading meters be included in the
bill.Think about it: when a home is on the market news of being resold, who would you bill for the cost
of reading the meter?
We have a large back yard plus we own the easement. I have a large garden plus boysen berries,
raspberries and blue berries. I also have a lot of fruit trees. I use a lot of water during the summer but
we don't use the sewer.We are charged too much for the sewer!.
OK No comment! H2O ok. Sewer ok.
I don't have a computer.
I would like to be able to have charges billed automatically to a credit card.
Landscape irrigation has a community beautiful in that the community benefits from well
maintained/watered landscape.
I live in a mobile home park. Not certain how this changes would apply. Billing once every two months
sounds reasonable to prevent costs.
We don't need anymore rate increases. I remember the increases during the drought years but i donit
recall any rate decreases during flood years.
Online payments are great! Maybe even have an auto-pay plan.
Online billing is okay, but I already use auto-pay.
$10 fee once a month not good biling EOM-good online stuff who cares-really-Est. usage of a
'normal'family is always LOW to to bring the 'excess usage' into effect.
You are doing a better job concerning the water problem.There has been a water shortage many
times. It is good to know someone is taking an interest.
Stop all benefits for illegal immigrants.
Large areas of landscaping require more water but provide benefits to air& life quality for all City
residents. These areas should not be overcharged for improving the City.
I don't like the idea of a 'reading'fee. It should come out of existing budget otherwise have meters
read automatically in your office.
Say no to illegal immigration draining our precious and limited resources!
My perception in general about the overall picture of changes being considered: 1. Generate more
monetary revenue for the Utilities Dept 2. Generate saving in the human resources department by
eliminating staff&.use electronics equipment instead.
The fixed fee amounts an increase in water and sewer bills. I don't need an increase when everything
else is increasing.
I love paying electronically-from checking account. I hate it when the gophers get in the meter area
and mess everything up.
11
Attachment 1 �
CUSTOMER COMMENTS
Utilities Customer Service Survey in March RESOURCE
I am suspicious that the proposed changes are a hidden way of raising rates.
Always considered current sewer use an arbitrary fee system. Mobile homes and multiples have a
lesser rate. Majority of mobiles are occupied by retired who are home/flush more.Then there is
thehMayor's daughter& husband in a mobile with 5-sometimes 7 children.Many apartments are
occupied by 4-5-6 college students who shower, shower, shower.
Water&sewer rates are already too high. You should consider making your operations more efficient
and economical so you can roll back prices to a more reasonable level.
I would like to see a long-term solution for water.that is wasted down the drain while waiting for it to
tum"hot".We rent and the water heater is in a detached garage far away from our bathroom. Perhaps
a creditlincentive for instant water heaters?
I don't understand why the prices charged for water and sewer never go down regardless of water
costs or how long the tertiary system for treatment has been built.Are there never any efficiencies
achieved?
During drought.years of the'90's mom was encouraged to read her own meter&for.the longest time it
was unreadble due to condensation on the glass.Walking dogs I still believe some meters in this
neighborhood are never opened. Meter was sinced changed-out. (Just a comment)Hier to house,
Rick Coderre.
Charging for sewer service in proportion to water consumption is a vast improvement over the current
system. My last bill for 12/7/05-2/8/06 ,Water-$8.79/Sewer-$64.44.The highest bill for 6/7/05
8/9/05,water= $35.60, sewer= $62.62.Will my sewer bill go down drastically with the new system? It
seems. Like it should. How do operation costs compare between the water system &sewer system?
Does the sewer system cost much more than the water system to maintain? My most recent bill-water
8.67, sewer$64.66!
A.senior citizen rate for 1 person household would be fair.
Going to monthly billing seems an unnecessary expense- How much will it cost or save to install
automatic meter results?
I feel overcharged for sewer under the current system.Will the proposed use-based systems be fairer
for conservative users? Nowhere does the description indicate an answer. 2. 1 oppose a fixed fee as
part of the bill. Charge fairly for use. period. People should pay their fair share. 3. 1 applaud the 3rd tier
water fee,and suggest a 4th tier is also in order.
12
Attachment
Final Report
City of San Luis Obispo
Financial and Engineering Services:
Utility Billing System Enhancements:
Water and Sewer Rate Structures, Automated
Meter Reading and Billing Systems
Volume 2 - AMR and Utility Billing System Review
March 2006
a
m
o �.I •Cl' - t_a,
Prepared by:
HDR Engineering, Inc. Jl�r-Ln�J1)Q
In Association with: C nghom
Consulting
Langham Consulting Services, Inc. services,Inc.
�— a-7
0 ATTACHMENT 2
ONE •
March 30, 2006
Ms. Sue Baasch
Administrative Analyst
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Dear Ms. Baasch:
HDR Engineering, Inc. (HDR), in association with Langham Consulting Services, Inc.
(Langham), was retained by the City of San Luis Obispo to provide a comprehensive review of
automated meter reading systems (AMR) and the City's utility billing system. This report
provides our findings and conclusions in both of these areas. In addition, we also discuss the
issue of billing frequency and water reuse rates.
This report was prepared using the City's data and information. At the same time, City
personnel were interviewed and data and information was also obtained in that manner. We have
worked with the City Council and City staff and management to gain an understanding of the
City's utilities.
We appreciate your contributions and assistance,along with that of City's management team and
the City Council in the development of this report. Thank you for the opportunity to provide this
technical assistance.
Sincerely yours,
HDR Engineering, Inc.
�J
Tom Gould
Vice President
HDR Engineering,Inc. 500108th Avenue NE Phone:J4251450-6200
Suite 1200 Fax:(425)453-7107
Bellevue.WA 98004-5549 www.hdrinc.com
C ATTACHMENT 2
Contents
Executive summary
Introduction.........................................................................................................ES-1
Key Objectives of the Study................................................................................ES-1
Automated Meter Reading Systems....................................................................ES-1
Evaluation of the.City's Billing Frequency..,......................................................ES-8
Compatibility of the City's Utility Billing System to the
Alternative Rate Structur;s ................,...........;.:..............................................ES-9
Technical Review of the City's Utility Billing System.......................................ES-9
Review and Development of the City's Water Reuse Rates.............................ES-15
Summary ..............................:................................................................:..:........ES-16
1 Introduction and Overview
1.1 Introduction..................:..........................................................................................1
1.2 Key Objectives/Issues for Conducting the Study....................................................1
1.3 Overview of the Volume 2 Report.......................................:..................................1
1.4 Summary .................................................................................................................2
2 Review of Automated Meter Reading Systems
2.1 Introduction..............................................................................................................3
2.2 System Review and Staff Interviews...:..............................................................:....3
2.3 AMR Options...................................................................:.......................................5
2.4 AMR Analysis and Findings........................:.........................................................13
2.5 AMR Conclusions..................................................................................................23
2.6 AMR Recommendations........................................................................................23
2.7 Recommended Next Steps............:.....:..................................................................26
2.8 Summary ............:....................................26
3 Evaluation of the City's Billing Frequency
3.1 Introduction........................................................................:...................................27
3.2 Evaluation of the City's Billing Frequency...........................................................27
3.3 Billing Frequency Recommendation.....................................................................29
3.4 Summary................................................................................................................29
T ^� city Luis i
l"'711� Volumm 2-
Volume 2-Revieww of of Automated Meter Reading and Utility Billing Systems ^ Q
Ki ACHMENT 2
4 Compatibility of the City's Utility Billing System to the Alternative
Rate Structures
4.1 Introduction............................................................................................................30
4.2 Water Utility Rate Structures.................................................................................30
4.3 Sewer Utility Rate Structures.................................................................................31
4.4 Summary................................................................................................................32
5 Technical Review of the City's Utility Billing System
5.1 Introduction............................................................................................................33
5.2 Objectives of the Billing System Review and Approach.......................................33
5.3 Current System Operation and Requirements........................................................33
5.4 Technical Overview...............................................................................................47
5.5 Future Requirements..............................................................................................50
5.6 Other Typical Interfaces ........................................................................................51
5.7 Summary Conclusions and Recommendations......................................................52
5.8 Summary................................................................................................................54
6 Review and Development of the City's Water Reuse Rates
6.1 Introduction............................................................................................................55
6.2 Generally-Accepted Methods to Establish Reuse Rates........................................55
6.3 Overview the City's Method to Establish Reuse Rates.........................................57
6.4 Recommended Method to Establish Reuse Rates..................................................57
6.5 Summary................................................................................................................57
Technical Appendix A—Customer Billing Documentation
falCity of San Luis Obispo it
Volume 2-Review of Automated Meter Reading and Utility Bitting Systems
a9l -3v
L, ATTACHMENT z
Executive Summary
Introduction
HDR Engineering, Inc. (HDR)and Langham Consulting Services, Inc. (Langham) was retained
by the City of San Luis Obispo (City) to provide a comprehensive evaluation of the city's water
and sewer rate structures, automated meter reading systems and utility billing systems. This
report will review the findings, conclusions and recommendations concerning the review of
automated meter reading systems and the City's utility billing system. At the same time, this
volume of the report will also discuss the issue of billing frequency and water reuse rates.
Key Objectives of the Study
In conducting this portion of the study, the City had a number of key objectives or goals that they
wished to achieve. Among these key objectives or goals were the following:
■ Review and determine methods to improve customer service and customer choice, using
technology to enhance the City's service and information
■ Review the systems needed to support the City's choice for new water and sewer rate
structures
■ Consider the costs/benefits of monthly billing
■ Review and determine methods to help minimize operational costs for the City (e.g. reduce
staff level of effort through AMR) while maintaining or improving service levels
■ Enhance the utility billing system information by reviewing the existing system's capabilities
and comparing the City's needs to the capabilities of a new utility billing system
Provided below is a summary overview of the findings and conclusions of the various topics
reviewed as a part of this Volume of the study.
Automated Meter Reading Systems
The technology associated with the water utility industry is ever-changing. All new technology
should be carefully evaluated and reviewed to assure that it meets the needs of the utility, but
more importantly, provides the cost savings or efficiencies desired. Automated meter reading, or
AMR, is one such technology. The City desired an assessment of current meter reading practices
and an analysis of various meter reading technologies.
The City currently manually reads the majority of the system meters. Radix hand-held meter
reading devices are used in the field to enter and store meter readings. This data is electronically
downloaded into the City's utility billing system so that manual data entry is not required. The
system now has approximately 14,400 active accounts and most of the meters are either 5/8-inch
or 3/4-inch.
The City has a limited number of AMR meter locations equipped with transponders that transmit
the meter data electronically to a laptop computer in the meter reader's vehicle. This system is
faqCity of San Luis Obispo ES-1
Volume.2-Review of Automated Meter Reading and Utility Billing Systems
CMD -3
ATTACHMENT 2
designed to save time and labor costs, but since their installation, the system has been plagued
with numerous technical problems that often result in false or no readings.
Based upon interviews with key City employees, a list of the City's.AMR goals and objectives
were established. These were as follows:
■ Goal 1: Best Use of Staff's Time through Optimal Use of Technology
■ Goal 2: Streamline Utility Metering and Billing Operations
■ Goal 3: A Reliable, Proven, and Low-Maintenance System
i Goal 4: Continue to be a Leader in Water Conservation
■ Goal 5: Continue to Improve Customer Confidence, Flexibility, and Overall Service
■ Goal 6: Information System Compatibility between Departments
AMR Historical Overview— One of the first significant advancements towards automatic
meter reading was the development of the remote meter reading system. This enabled the meter
reading on the water meter register to be recorded via a direct cable or wire to a mechanical
totalizer device. This device could be installed in a more accessible location than the water
meter itself. Unfortunately, these devices had several reliability issues associated with them. To
address this reliability issue, a direct outside reading system(touch read)was developed.
The next advancement came with the development of the "electronic" meter reading book. The
"electronic" meter reading book enabled reading information to be loaded onto these handheld
devices and the reading information to be captured with little or no human intervention. These
devices significantly improved the "read to bill" processing time and reduced reading errors.
Though the capture of meter reading data was automated, this touch type technology is generally
not considered"automatic meter reading".
The first commercially viable leap to AMR came with the development of the phone-based meter
reading system. This technology suffered from perceived privacy issues, and the lack of third
party cooperation from the phone company. Phone read systems deployment was all but
eliminated as radio systems and cell phone networks were introduced into the market.
The next generation AMR system was radio frequency (RF). RF systems are currently offered as
mobile or fixed network. The mobile system enables the meter reader to capture the meter
reading by driving by or walking by the account. Drive-by
units, due to their increased transmitter power and driving "Drive-by units, due to
speed, offer significant productivity gains on the order of at their increased transmitter
least ten times or more compared to touch read. power and driving speed,
offer significant
As with any technology, there is a trade-off between the cost of productivity gains on the
the technology, productivity gains and increased accuracy. order of at least ten times
Manual meter reading has the lowest capital and O&M costs, or more compared to-
but high labor costs. Touch read systems have a higher capital touch read."
cost than the manual read system, however, many of the same
labor costs apply to the touch read system as the manual read system. Mobile radio systems have
increased capital costs due to the addition of an RF reading device to the encoder meter register.
As additional electronic components are added to the metering system, operating and capital
City of San Luis Obispo ES-2
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
9 - 3 a..
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ATTACHMENT 2
costs rise. Electronics have a failure rate, typically in the area of less than 1% per year.
However, the major operations cost driver for an AMR system is the battery life of the RF
device. The longer the battery life and the life of the RF device, the more cost effective it
becomes.
The meter reading productivity for a mobile RF system is
"AMR reading significantly better than visual or touch read systems. Typically,
reliability is in the 98% drive-by reading productivity has been in the range of 5,000 to
range or better. Many 10,000 reads per day, but current systems are demonstrating
specifications have this significantly higher reading performance. Mobile radio AMR
requirement built into reading reliability is in the 98% range or better. Many
the purchase specifications have this requirement built into the purchase
agreement." agreement.
Fixed radio systems offer "true" automatic meter reading capability. The meter reading is
"captured" through a system of collectors that transmits the meter reading back to the utility
location. The RF devices are programmed to send the readings to the utility on at least a daily
basis. The reading productivity of the fixed network system is basically unlimited. Fixed
network systems have the same RF device reliability ratings and issues as the mobile systems.
Another promising development is "high powered" fixed network systems. These systems result
in significantly less collection device infrastructure. Depending upon the size and topographical
conditions of the utility, these fixed network systems may be priced at or close to mobile drive-
by systems.
AMR Analysis and Findings- The relative impacts that various meter reading options
have upon the City's current meter reading operation were reviewed as a part of this study.
Transaction Approach vs. Strategic Initiative- AMR is a significant investment, competing for
the same capital dollars as water quality regulation, infrastructure replacement, security issues,
and resource development. It is clear that almost all of the funds required to support municipal
utility capital investment will primarily come from the utility's rate payers. An important
consideration in making an AMR decision is linking the City's AMR goals to the features and
benefits that AMR has to offer. This may move the AMR investment decision from one that is
"transactional" to one that is "strategic." This includes difficult.routes, hard to read meters, large
meters, etc. that would benefit the City by implementing AMR with a strategic approach.
Alternatives Considered - Three reading alternatives were compared: touch-read, drive-by
mobile radio frequency (mobile radio), and fixed network radio frequency (fixed radio). A
summary comparison matrix of these alternatives is presented below in Table ES-1.
City of San Luis Obispo ES-3
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
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O
ATTACHMENT 2
Table ES-1
Cost and General Comparison of Automated Meter Reading Alternatives
Comparison nems Touch.Rea.d Mobile$adio Fixed Radio
Meter interface unit(MIU) Meter interface unit
Touch pad connected via connected to.an encoder connected to an encoder
Interface Equipment wire to an encoder register register via wire or register via wire or
integrated to meter integrated to meter
register. register.
Reading Device Hand-held interrogator Hand-held interrogator or System of collectors and
drive-by unit(laptop) repeaters
MIU:$40-$100 MIU: $80-$110
Hardware Cost
Touch pad:$10-$15 Hand-held: $3,50045,000 Collectors and repeaters
Hand-held:$2500,$3000 Drive-by:$25,000-
$40,000 cost vary significantly
Approximately 15 to 20 Approximately 15 to 20 Approximately 15 to 20
minutes of labor for pit set minutes of labor for pit set minutes of labor for pit set
Installation Cost meters and 30 to 40 meters and 30 to 40 meters and 30 to 40
minutes for inside set minutes for inside set minutes for inside set
meters. Large meters meters. Large meters meters.Large meters
higher. higher. higher.
10 to 20 years depending 15 to 20 years depending
upon battery life/or upon battery lifetor
Useful Life Basically unlimited replaceable battery. replaceable battery.
Warranty 5 years,with Warranty 5 years,with
extensions at higher cost extensions at higher cost
Maintenance service
contracts for collection
Maintenance.service devices,reading software
Maintenance service contracts for collection and programming devices
contracts for handheld devices,reading software Licensing fees with some
System Maintenance readers and reading and programming devices. products.Encoder register
and Operating Costs software.Encoder register Licensing fees with some replacement,RF device
replacement. products. Encoder register and collector maintenance.
replacement,RF device Fees for location of
and collector maintenance: collection devices possible
and for sending readings
from collectors to utility.
Operation Impacts — Investment in meter reading technology will impact the City's operations
for the next 10 to 20 years. This extended service period makes it difficult to predict changes in
meter reading technology within that time frame. Given that, flexibility and growth are two
important criteria when considering meter reading technologies. Table ES-2 summarizes some
key operational parameters that are commonly affected by the meter reading system.
City of San Luis Obispo ES-4
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
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ATTACHMENT 2
Table ES-2
Summary of Key Operational Parameters of Meter Reading Alternatives
touch Pad Mobile Radio Fixed Radio
Increase in frequency Monthly reading Several readings per
Meter reading frequency requires significant possible with 1 meter day without any meter
additional labor. reader. reading staff
Meter reading effort 250 to 600 reads/ 5,000 to 10,000 reads/ No meter readers
person/day person/day and higher
Reduce re-reads&customer 15 to 30 per.day/man 30 to 100 per day/man Unlimited
requested field service calls
Customer Service transaction 2 business days 1 to 2 business days 1 business day
times
Sets tamper flag if wire Sets tamper flag if wire Identifies tamper same
is cut or disconnected is cut or disconnected day and sends to
Tamper&theft of service from register. Pick up from register. Pick up collector unit.Utility
at time of reading or at time of reading or able to identify next
report report business day.
Complete flexibility in
Account must stay Account must stay establishing billing
Customize reading/billing dates within designated within designated cycle to meet account
billing cycle billing cycle needs. Rules and
priorities need to be
established.
Only for accounts Only for accounts Can be extended to
Bill consolidation within same reading within same reading accounts regardless of
Cycle cycle cycle
Monitor for compliance with No. Must police No,unless special Able to monitor
conservation or watering compliance manually. reading is conducted compliance remotely
restrictions
Support unaccounted-for water More than Touch Read. Provides daily,detailed
studies Limited but less than fixed data
Support inflow/infiltration Limited More than Touch Read, Provides daily,detailed
studies,hydraulic modeling but less than fixed data
Support cost of service rate More than Touch Read, Provides daily,detailed
modeling Limited but less than fixed data
Improve resource planning Limited More than Touch Read, Provides daily,detailed
but less than fixed data
Compatibility Issues—An important consideration in making an AMR investment is the level of
open architecture that the City is interested in achieving. In the City's situation, with most of the
meters located in pit applications, a factory potted, pre-wired register and RF device assembly
offers the greatest level of reliability. It is important to review this issue during the product
evaluation process.
Another important consideration in making an AMR investment is the ability to interface with
other utility systems or software applications. While this may have been an issue in the past,
these concerns have been mitigated as reading and meter manufacturers are working to
FaqCity of San Luis Obispo ES-5
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
V _3s�
ATTACHMENT 2
standardize software protocol. The detailed AMR discussion within this report has provided a
comparison of the compatibility of major AMR and meter manufactures for Mobile RF Systems.
Account Service and Billing Considerations - The Account Service and Billing costs incurred,
and the benefits that accrue by adopting AMR are not easily quantified. In general terms, the
cost of account services and billing is not affected by AMR. Account services and billing costs
will roughly double over their current levels if billing frequency is increased to monthly. If City
were to implement AMR, and not change bill frequency, HDR forecasts no Account Service cost
savings or increased customer revenue because the number of meter readings and bills issued per
year will not change. If the City increases bill frequency moving from bi-monthly to monthly
billing, Account Service costs will roughly double.
Impact on the Utility Department- The savings potential for using an AMR system can not be
evaluated without considering impacts to O&M, finance, water conservation, etc. Four different
scenarios were reviewed to estimate the potential savings, as measured in dollars per customer
served. These scenarios were as follows:
■ Scenario l: No AMR with Bi-monthly Water Service Billing Frequency(current system) -
III Scenario 2: No AMR with Monthly Billing Frequency
■ Scenario 3: AMR with Bi-Monthly Billing Frequency
® Scenario 4: AMR with Monthly Billing Frequency
Provided below in Table ES-3 is a summary of the various AMR scenarios reviewed and the
relative impacts to each other.
Table ES-3
Summary Matrix of the AMR Scenarios and Potential Impacts
AMR Scenarios
Issues impacts Scenario 1 Scenario 2 Scenario 3 Scenario 4
No AMR/Bi-mo. No AMR/mo. AMR/Bi-mo. AMR/mo.
AMR? No No Yes Yes
Frequency of Billing Bi-Monthly Monthly Bi-Monthly Monthly
Change in Postage,
Printing,and Supply None $47,000 None $47,000
Costs/year
Additional or Reduction2 person addition 2 person reduction 2 person reduction
in Meter Readers No Change to current staff from current staff from current staff
Additional or Reduction 1 person addition 1 person addition
in Customer No Change to current staff No Change to current staff
Service/Billing Personnel
AMR Capital Cost $0 $0 $2.88-$4.32 Mil. $2.88-$4.32 Mil.
Incremental Add'1 Cost
$/Accotmt/Month $0.00 $1.59 $0.51 -$1.21 $1.15-$1.85
Total Customer $3.31 $4.90 $3.83-$4.52/Mth $4.46-$5.16/Mth
Cost/M_onth
Total Customer Cost/Year $39.76 $58.78 $45.87-$54.24 $53.51 -$61.88
City of San Luis Obispo ES-6
Volume 2-Review of Automated Meter Reading and Utility Billing systems
ATTACHMENT 2
AMR Conclusions — HDR has concluded that an AMR system for the City could help to
further the City's major initiatives, and as noted above, the City's AMR goals and objectives.
However, in the opinion of HDR, installation of an AMR system does not appear to be cost
effective at this time. Current costs for AMR technology appear to outweigh benefits to the City
from staff reduction, customer service, and revenue recovery from inaccurate meters. As future
AMR technology improves and implementation costs reduced, the City may consider system-
wide AMR as an effective way to streamline the utility metering and billing operations.
AMR Recommendations— The following AMR recommendations should be considered
only if City decides to move to AMR system.
Preferred System - " , . in the opinion .
• Implement a radio frequency drive-by or fixed network AMR Of HDR, installation
system. of an AMR system
Deployment- does not appear to be
• Deploy the selected AMR technology solution within three (3) cost effective at this
years or less. tlme.n
• Examine whether the City can deploy the AMR system itself.
• Unless extenuating circumstances can be demonstrated, the initial meter replacement and
AMR deployment target area should be the limited at first to the new residential
development planned in the City service area.
Procurement-
• Once AMR technology and deployment solution strategies are determined, issue a bid
document. The bid document should allow proposals on both mobile and fixed network
radio frequency solutions. The benefit of a joint bid is that the price to the City may be
driven lower as a result of vendors offering competing solutions.
• The bid should be structured to maximize competition.
• The bid and vendor selection process should stress the value of open architecture.
• Select the AMR technology that provides the lowest whole life cost of ownership.
Implementation-
• During the procurement and implementation period, the City should continue with its
current meter replacement program using AMR compatible meters while minimizing
current meter inventory.
• Once an AMR technology solution decision is made, establish a team to identify and
implement strategies that will maximize this AMR investment.
• As soon as an AMR technology solution decision is made, suspend replacement of
manual read meters and any further investment in the existing meter reading system.
Operation
• Examine the meter accuracy of the small meter population and determine if extending the
current 10-year meter replacement cycle is warranted.
• Shift a negotiated proportion of the capital, operating and maintenance costs for meter
reading activities to the wastewater utility.
City of San Luis Obispo IES-7
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
ATTACHMENT 2
AMR Recommended Next Steps - While this study has examined AMR technologies
and provided rough estimates of costs, it certainly is not, in the opinion of HDR, sufficient to
make a fully informed decision regarding AMR if the City wants to adopt AMR technology.
Before an AMR implementation decision is made by the City, HDR would recommend that the
City continue to monitor AMR technology until it is better suited to clearly improve operations
and customer service. Once the City reaches that point, a more detailed financial analysis of the
costs and impacts of AMR would be required. Only if the model assures justification for the use
of AMR technology, the next step for the City is to develop a detailed bid document to solicit
proposals from meter reading vendors. If the City elects to move ahead with system-wide
deployment, HDR would recommend that in lieu of a pilot program, the City's senior staff
should conduct structured visits at one or two utilities that have implemented AMR to better
understand how these systems function, what is involved in successful deployment, and how the
utilities are coping with integrating the new technology into day-to-day operations.
Evaluation of the City's Billing Frequency
An important element to customer communication and the City's conservation efforts is
predicated on the frequency of customer billing. The customer. bill is the primary
communication between the utility and the customer concerning their consumption and the
amount of their bill. From this information, the customer may make a conscience decision to
modify or change their consumptive behavior.
At the present time, the City bills their water and wastewater residential and commercial
customers on a bi-monthly basis (i.e., every two-months). Bi-monthly billing is a widely
recognized and accepted billing practice. Historically, bi-monthly billing was essentially a by-
product of the following:
■ High labor costs and the inefficiency of manual meter reading
■ Relatively low water and wastewater rates and the resulting bi-monthly bills
■ A general lack of concern or interest in conservation or demand management.
Today, the three basic factors that once drove bi-monthly billing cycles in the past have
essentially disappeared. To better understand current utility practices, the AWWA 2004 Water
and Wastewater Rate Survey provides an overview and perspective of billing frequency. In the
2004 survey, monthly billing is the most predominate billing frequency. Roughly 60% of the
utilities surveyed used monthly billing frequency.
As a conservation tool, the California Urban Water Conservation Council recommends that
utilities consider monthly billing to clearly communicate the utility's rate structure and the
customer's current and historical consumption of water. It should be noted that the City's
current billing format does not provide historical consumption information (e.g. 12 months of
history and comparison to prior period usage).
Based upon the information developed as a part of the AMR evaluation, it was determined that
even without AMR, the cost per account to move to monthly billing is rather modest on a cost
per account basis. If AMR were to be installed, the decision to move to monthly billing would
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be essentially made. Depending upon the AMR technology selected, when compared to manual
reads, the incremental costs are driven more by the technology, rather than additional meter
readers or postage.
Given the above, HDR would strongly recommend that the City move to a monthly billing
frequency. The cost per customer appears reasonable, given the benefits to be derived to both
the City and the customer. Movement to this billing frequency should be timed and coordinated
with any decisions concerning AMR.
Compatibility of the City's Utility Billing System to the
Alternative Rate Structures
An important component of the evaluation of the alternative water and sewer rate structures is a
review of the compatibility of these rate structures to the City's current utility billing system.
Water Rate Structures— In the Volume 1 report, seven conceptual water rate structures
were reviewed. From these seven conceptual water rate structures, two alternative water rate
structures were selected for further review and technical analysis. These two water rate
structures were as follows:
■ Maintain existing water rate structure,but add a Yd block tier for residential
■ Fixed Charge+maintain existing water rate structure,but add a 3rd block tier for residential
Based upon the review of the City's utility billing system, both alternative water rate structures
are compatible with the City's existing ACS billing software.
Sewer Rate Structures— For the sewer utility, six different conceptual rate structures
were reviewed. From these six conceptual sewer rate structures, two alternative sewer rate
structures were selected for further review and technical analysis. After further reviewing the
two conceptual.rate structures in more detail, the City determined that an alternative sewer rate
structure may be more appropriate. At this time, the City is considering the following sewer rate
structures:
■ For residential customers, a fixed fee, plus a uniform volumetric charge with the volume
billed capped on an individual customer basis. Each individual customer will be billed up to
their average winter water use (AWWU).
■ Multi-family residential customers without an irrigation meter will be charged in a manner
W
similar to residential customers, using their AWU to create a cap on volumetric billing.
■ For non-residential customers, they will be billed in a manner similar to the current rate
structure
■ Multi-family customers with irrigation meters will be billed as a non-residential customer
Based upon the review of the City's utility billing system, the final alternative sewer rate
structures using an AWWU approach are compatible with the City's ACS existing billing
software.
Technical Review of the City's Utility Billing System
A review was undertaken of the City's utility billing (UB) system to determine whether the
current system would support the various alternative water and sewer rate structures that the City
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was considering, while at the same time reviewing the City's system for possible enhancements
and improvements as a means to improve customer billing and service. Langham Consulting
Services, Inc. (Langham), experts in utility billing system software systems, conducted the
review of the City's billing system.
Overview of the City's Utility Billing System— The City currently uses a utility
billing system provided by Affiliated Computer Services, Inc. (ACS). ACS is a long-established
company (30+years) and their utility billing system (ACS-UB) is one of a suite of products that
are targeted towards small municipalities such as the City. The City's utility billing software
product is basic in functionality but handles the automation of the majority of time consuming
tasks typically performed by smaller utilities.
Major challenges faced by the City are the continuing threat of drought conditions in Southern
California and a significant student population. A major drought could trigger the
implementation of emergency measures including the enforcement of special rates. The City
uses their billing system to encourage conservation via tiered rate structures and other measures.
Business Process Overview— The City's.business is operated based on a rigid read,
billing and collections schedule, which revolves around the two-month (bi-monthly) billing
cycle.
Meter Reading — Meters are generally read between Monday and Wednesday of each week.
Meters are read both manually and, for a limited number of meters, using a drive-by automated
meter reading (AMR) system. The routes to which a meter belongs, and the sequence in which
they are to be read, are managed in the billing system. At the close of each day, the meter reads
collected are uploaded to ACS-UB and any exceptions are resolved in time for billing on Friday.
The City occasionally has to estimate a customer's consumption when there has been a meter
reading error or a missing meter read. In addition, no complex meter set-ups are supported
within ACS-UB.
Bill Calculation —The billing of a customer is based around the metered services supplied. The
only items calculated in addition to water and sewer charges are a Utility Users Tax and an
Industrial User (wastewater inspection) Fee. Charges are also prorated where a mid-period rate
change occurs.
Billing—Billing currently occurs bi-monthly for every customer. Billing is run every Friday for
approximately 1/8 (12.5%) of the customer base.
Collections—In all circumstances unless manual intervention prevents it, a penalty charge and a
first notice will be issued the day after the due date. Penalty charges are automatically calculated
using the City's defined penalties. Absent payment, seven days after the first notice, a shut-off
notice is sent to the customer. The City has established a specific process for shut-offs.
This billing cycle is applied to all customers, regardless of whether they are residential,
commercial, good or poor payers and all charges tracked in the ACS-UB are eligible for
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collection action.
Payment Processing— Pentamation GRS (GRS) from SUNGARD is used to record payments;
payments are entered into ACS-UB manually at the same time. Customers are permitted to pay
using tender types of cash, check, credit card (Visa and MasterCard) or Automated Clearing
House (ACH). Payments may be made over the counter, through mail, by phone or at drop
boxes around the City. ACH payments can be established over the counter to be made from
checking accounts only. Phone payments are by credit card only and are processed in the same
way as credit card payments over the counter.
Deposit Processing — Customer deposits (currently $90) are taken from customers under two
circumstances. If the customer refuses to provide their social security number or if a customer's
account becomes delinquent and is shut off, then the customer is required to provide a deposit.
Customer Services Customer Service handles move-ins, move-outs, delinquency processing,
coordination with field crews and general customer interaction over the phone or in the City's
offices. Although the responsibilities of Customer Service are fairly typical, the spectrum of
issues dealt with is reduced by the simplicity of the offering to the customer.. One of the biggest
challenges for Customer Service is the high student population and the associated issues this
implies, such as high move-in/move-out frequency and inexperienced/first time customers.
Cashiering and General Ledger and Financial Balancing - Pentamation GRS (GRS) from
SUNGARD provides both cashiering and GL functions for the City. ACS-UB accommodates
three transaction types: billings, adjustments and payments. There is no automated interface
between ACS-UB and GRS. Monthly balancing of AR (including adjustments) is performed
between GRS and ACS-UB.
Inventory and Field Service-ACS-UB has a comprehensive inventory management system. As
inventory is installed, exchanged or maintained in the field, the utility is informed of what
changes have been made. In most circumstances they have.a record of the inventory already
entered in ACS-UB. In the case of new inventory, details are provided by Field Service. There
is no automated interface between ACS-UB and Field Service.
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Reporting—The ACS-UB provides a number of different reports. Provided below is a listing of
the various reports provided by the system.
• Utility Rates List • Zone Calculation Report
• User High Consumption • Consumption History Report
• Average Consumption Report • Revenue Forecast
• Disconnection Notices • Adjustment Report Year-End
• Adjusted History Edit Report Calculation Report
• Refuse or Flat Charge • Deposit Interest Notices
• Customer Listing With Meter Detail • User Flat Charge Report
• Estimated Readings • Owner Listings -
• Depositing Entry List • Deposit Transaction List
• Tax Exempt Amount List • Deposit Listing By Account
Number/Customer/Name/No
Deposit Customers
Given this overview of the City's current utility billing system and its capabilities, the focus
shifts to the.technical aspect of the system.
Technical Overview—The City's system is operated on an IBM AS400 platform, which is
a reliable and robust piece of hardware. AS400 is not cutting edge technology, but it is relatively
easy and inexpensive to maintain. AS400 technology has a very large install base and therefore
market skills are relatively easy to procure. Access to ACS-UB is through a Graphical User
Interface (GUI) with the release of ACS 4 on desktop PC's running MS Windows Operating
System.
The City does not employ a Computer Operations Department to run their utility billing system.
The City's utility department operates the system 5 days a week (Monday through Friday), nine
(9) hours a day. Therefore all batch,jobs, reports and extracts are run during the day and entry.of
transactions and system updates are scheduled around these runs. . All jobs are submitted
manually; therefore no scheduling software is used.
Direct access to the production database is permitted through ODBC links from Microsoft Excel.
There is no direct facility to extract data directly from screens other than regular Windows
functions (screen print or copy/paste). There is no real requirement for data marts or data
warehousing. The system is purged of data periodically retaining a history of four years.
The City has developed a customer web access site with a 3rd party (D&T Ventures), which is
due to be released in the 2nd quarter of 2006. Security is enabled to limit specific user access to
certain functions of the system. There are no hierarchical security requirements (example:
supervisor authorization of transactions). Customer's will access their information with a user
ID and password that will be provided after they submit their Social Security Number as proof of
identity to the system.
Automated Meter Reading(AMR)—The City implemented a pilot of 75 AMR devices on meters
that have proven difficult to manually read in the field. Metron has been the chosen technology
to date using a drive-by system. ACS-UB produces a flat file that is copied onto floppy disk and
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uploaded to the Metron data collector used by meter readers.. The City's meter readers drive the
specified routes on which they collect meter readings from radio frequency (RF) transmissions
sent by AMR devices connected to the meters. After the route is completed, the meter reader
hands back the floppy disk from which the updated flat file is copied back into ACS-UB and
uploaded for later billing.
Meter Reading — ACS-UB interfaces with Radix meter reading software. ACS-UB sends the
routes to be read in a flat file to Radix, which uploads information into handheld devices carried
by meter readers. Meters are read manually and readings are fed into a handheld device. Each
day, readings are automatically collated from hand-helds and uploaded into ACS-UB for later
billing.
Coding Accuracy Support System (CASS) — Postalsoft software from firstLOGIC is used to
automatically validate and update billing addresses in ACS-UB.. Postalsoft is CASS certified
which means that the post office will recognize billing addresses within ACS-UB implying a
better success of delivery to the customer and discount postage rates from the post office.
Computer Telephony Integration (CTI) — Phonetree by TTI is a predictive dialing system that
operates from a PC. A flat file containing customer information (including their telephone
number) is extracted from ACS-UB using Microsoft Excel and is used to feed Phonetree. The
file extracted contains those customers that ACS-UB intends to disconnect for non-payment
should a payment not occur. The file is extracted-the Wednesday before the actual shut off date.
Phonetree then calls customers in the list and plays a pre-recorded message warning the customer
of the risk of disconnection if they do not pay.
Web Interface—The City is currently implementing a web interface for their customers. D&T
Ventures has been employed to design and program a web interface to provide the following
functions to the City's customers:
■ Make Credit Card Payments
■ Make E-Check Payments
■ Request Connection for a New Service
■ View Billing Information
■ View Consumption History
Credit Card Validation - Credit card validation is performed on-line for customers paying in the
office or by phone. This is not currently an automated interface and can only be used for"one-
off'credit card payments and not recurring payments.
OCR reader - Currently, stubs are scanned manually by a hand-held OCR reader. This
automatically enters the payment information into the AS400.
Automated Clearing House (ACH) — ACH is a nationwide cleaning house for electronic fund
transfers. A flat file is extracted by a batch process within ACS-UB that contains all relevant
customer information such as bank account details and payment amounts for a given date. The
City copies the flat file from the AS400 to a PC and uploads it over a secure link to Bank of
America via the Internet. ACH is only available for customers with checking accounts. Credit
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card payments are not currently supported via ACH.
Desktop Software - Although there is no concept of a data-mart or data-warehouse at the City,
users do have the ability to query the ACS database directly through desktop products running
ODBC such as MS Excel. This facility is used to extract information for Phonetree, but can also
be used for ad-hoc reporting or queries. Specialist reporting tools such as Cognos or Crystal are
not used.
Future Requirements- Given the City's focus on conservation, the City should have a
billing format that includes a history of consumptive use. In addition, the City plans to provide
reclaimed (reuse) water to its customers. It appears that the functionality required to bill for
reclaimed water is currently available, and will be utilized in the near future.
Other Typical /ntelfaces — The review of the City's utility billing system also
considered other typical interfaces. Provided below is an overview of other typical interfaces.
■ GEOGRAPHICAL INFORMATION SYSTEM (GIS) - Although a GIS is operational and utilized
by engineers and community development, there is no interface to ACS-UB.
■ MOBILE DISPATCH / WORK ORDER MANAGEMENT SYSTEM — There currently is not an
active interface. Text messaging to the field service personnel may be used in future but will
probably not require integration with the ACS-UB.
■ BILL PRINT INTERFACE - Formatted bills are produced directly out of ACS-UB. No 3rd
party software is used to reformat the bill, change fonts, add graphs, graphics, logos or color.
■ OUTAGES—There current is not an active interface.
■ INVENTORY—There current is no automated interface to ACS-UB.
■ COUNTY ASSESSORS SYSTEM - No liens are put on properties by the utility. One reason is
that there is no record of landlords in the system.
■ PERMITTING/BUILDING INSPECTION—Community Development has a system but there is
no direct interface with the City's utility billing system.
■ GENERAL LEDGER (GL) INTERFACE - No automated interface exists between Pentamation
GRS and ACS-UB for accounts receivable, accounts payable or consumption. Manual
journal entries are made for AP (charges and adjustments) on a monthly basis. Payment
information is entered directly into Pentamation GRS real-time.
Summary Billing System Conclusions and Recommendations—Based upon
the review of the City's utility billing system, the following conclusions and recommendations
were reached:
■ ACS-UB as it is currently deployed supports all current business requirements.
■ ACS-UB will support the implementation of the alternative rate structures proposed within
this study.
■ ACS-UB will support the implementation of monthly billing.
■ The ACS-UB is capable of supporting the implementation of AMR.
■ ACS-UB supports the calculation of bills based on rates pertinent to different customer
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classes. If desired, this will give SLO the flexibility to establish different rate structures by
customer class of service.
■ Where ACS-UB does not support a future SLO requirement, ACS offers professional
services to modify the baseline product to fit these requirements.
From the above conclusions, the following recommendations concerning the City's utility billing
system is provided.
■ Langham recommends retaining the current Utility Billing System. In Langham's opinion, a
new system would offer the City no substantial incremental benefits (either functional or
material)based on our understanding of the City's business objectives.
Should the City choose, at some point in time, to adopt and implement AMR, Langham
recommends the City consider the following:
■ Automate the transfer of information from the AMR system to the ACS-UB.
■ As part of the procurement process, consider stating in the RFP that the AMR system should
use protocols and interfaces that are compatible with ACS-UB.
■ Consider what operational and management reporting is available from the AMR software.
■ Consider introducing an interface to automatically update ACS-UB with inventory changes
made in the field.
Finally, Langham would also recommend the City consider the following should monthly billing
be adopted:
■ A review of the respective usage of ACS-UB and Pentamation CRS. There appears to be a
risk that, given current practices, the two systems could get out of step due to human error.
■ Consider seeking professional advice, possibly from the vendor to determine the best way to
approach the movement of accounts from bi-monthly to monthly billing cycle.
Review and Development of the City's Water Reuse Rates
The City has water reuse (recycled water) rates which are developed based upon a combined
philosophical and cost-based approach. Water reuse and recycled water are resources that are
coming to the forefront of the water utility industry and water supply portfolios. Even with that,
it is still relatively rare to find water or wastewater utilities that have water reuse or recycled
water rates. For that very reason, at the current time, there is not a "generally accepted" or
endorsed methodology to establish prices (rates)for reuse water.
In establishing water reuse rates, there typically have been three different perspectives used in
the costing process. These are as follows:
IN Embedded Cost of Service Analysis
■ Avoided Potable Water Cost Analysis
■ Incremental Reclaimed Water System Cost Analysis
While each of the above costing approaches utilizes a very technical/analytical approach, the
current industry thinking on pricing of reuse water is far less analytical and more simplistic. An
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important element in the discussion of establishing reuse rates which differs significantly from
the development of water or wastewater rates is that water reuse rates may not, and are in all
likelihood, will not be based upon the cost of production and delivery of reuse water. The
reasons for this are two-fold. The costs associated with the production and delivery of reuse
water is likely greater than the cost of potable water. At the same time, there is a perception of
quality and value of reuse water. Reuse water is viewed as lower "quality" water and is not as
valuable a resource as potable. Therefore, in order to encourage customers to use reuse water,
utilities typically need to set the price at a competitive level that creates an economic incentive
(financial savings) to do so. This can only occur when the price of reuse water is less than the
alternative of potable water. In essence, the pricing is based upon a"value of service" approach
instead of a"cost of service" approach.
Reuse water is most commonly evaluated and priced in relationship to the price of potable water
(i.e. the alternative resource). Stated another way, the price of reuse water is set (pegged) in
relationship to the volumetric price of potable water(e.g. 90% of the price of potable water).
The City currently prices its water reuse at 90% of the potable water price. The basic logic used
to develop this pricing policy was the City's viewpoint that recycled water is equal in value to
potable water. However, the 10% reduction was intended to recognize the "industry standard"
that about 10% more watering is required to ensure the flushing of any salt accumulation in the
soils.
The City's approach to the pricing of reuse water produces a result that conforms, in general, to
current industry thinking. HDR would recommend the pricing of water reuse at the 80% to 95%
pricing level of potable water. Setting the City's water reuse rates equal to 90% of the potable
water rate is very reasonable and appears appropriate.
Summary
This volume of the report has provided a detailed discussion of a number of topics. The two
main topics discussed within this volume of the report were AMR and the City's utility billing
system. This volume of the report should assist the City in determining whether additional study
is needed in these areas before additional investment is undertaken.
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IntroductionSection I
Overview
1.1 Introduction
HDR Engineering, Inc. (HDR) and Langham Consulting Services, Inc. (Langham) was retained
by the City of San Luis Obispo (City) to provide a comprehensive evaluation of the City's water
and sewer rate structures, automated meter reading systems and utility billing systems. These are
three distinct areas of study, yet they are each interrelated. A two volume report has been
developed which review these topic areas. This report, Volume 1, will review the findings,
conclusions and recommendations concerning the review of the City's water and sewer rate
structures.
1.2 Key Objectives/Issues for Conducting the Study
In conducting this portion of the study, the City had a number of key objectives or goals that they
wished to achieve. Among these key objectives or goals were the following:
■ Review and determine methods to improve customer service and customer choice, using
technology to enhance the City's service and information
■ Review the systems needed to support the City's choice for new water and sewer rate
structures
■ Consider the costs/benefits of monthly billing
■ Review and determine methods to help minimize operational costs for the City (e.g. reduce
staff level of effort through AMR) while maintaining or improving service levels
■ Enhance the utility billing system information by reviewing the existing system's capabilities
and comparing the City's needs to the capabilities of a new utility billing system
1.3 Overview of the Volume 2 Report
This report is designed to document the approach used to evaluate AMR systems and the City's
utility billing system. These topics are discussed in detail within this report, along with other
miscellaneous rate and billing issues.
Section 2 of this report discusses the review of automated meter reading systems. The City
currently has a limited number of AMR meters and this section of the report provides a technical
and cost review of expanding AMR across the City. The next section of the report discusses the
issue of billing frequency and the potential of moving to a monthly billing system. Section 4
discusses the compatibility of the City's existing utility billing system to the rate structures that
were developed in Volume 1 and subsequently refined through further analysis. Section 5 of this
volume is the technical review of the City's utility billing system. This provides an
understanding of the City's current system and general business requirements of a system. The
review also provides an understanding of potential future requirements and the various user
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interfaces. The final section of the report, Section 6, provides a discussion of the development of
water reuse rates. As water becomes an even more valuable commodity, cities and water
agencies will be relying on water reuse to meet various irrigation needs on their system. This
section of the report provides a background discussion of the City's current pricing approach and
the recommended approach to use going forward.
1.4 Summary
This section of the report has provided a brief overview of the Volume 2 report prepared for the
City which primarily reviews the City's current utility billing system, along with AMR
technology. The next section of the report will the review of automated meter reading systems.
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Section 2
Review of • • Meter Reading
2.1 Introduction
'The technology associated with the water utility industry is ever-changing. All new technology
should be carefully evaluated and reviewed to assure that it meets the needs of the utility, but
more importantly, provides the cost savings or efficiencies
desired. Automated meter reading, or AMR, is one such "The objective of this task
technology. was to provide the City of
San Luis Obispo with an
The objective of this task was to provide the City of San Luis assessment of current meter
Obispo with an assessment of current meter reading practices reading practices and an
and an analysis of various meter reading technologies. While analysis of various meter
there were no apparent, immediate concerns or issues, the City reading technologies."
wanted a guide to ensure that its current, and more
importantly, future meter reading processes provided the most cost-effective and reliable results
to its customers.
The main elements of this task were as follows
■ Review existing AMR process and system to help assess the meter reading operations and
conduct a series of individual interviews with representatives that would likely be impacted
by an AMR.system
■ Review meter reading technology options
■ Provide an analysis and findings
■ Provide to the City recommendations and"next steps" on AMR.
Based upon the review and analysis undertaken by HDR, provided below is a summary of our
findings, conclusions and recommendations.
2.2 System Review and Staff Interviews
The City currently has 70 AMR locations. The initial step in reviewing the AMR technology,
and its wide-spread applicability for the City, was to gain an understanding of the City's current
AMR process and system. Provided below is a discussion of our review of the City's current
system.
Current AMR Process and System - The City currently operates two automatic meter reading
systems. Radix hand-held meter reading devices are used in the field to enter and store meter
readings. This data is electronically downloaded into the City's utility billing system so that
manual data entry is not required. The system now has approximately 14,400 active accounts
and most of the meters are either 5/8-inch or 3/4-inch.
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Seventy (70) Metron Meter Company water meters were recently installed on the City's largest
water accounts (Y and larger). The Metron meters are equipped with transponders that transmit
the meter data electronically to a laptop computer in the meter reader's vehicle. This system is
designed to save time by eliminating the need to physically locate, open, read, and enter meter
data at each account location. In concept, this system was appealing to the meter readers, but
since its installation, the system has been plagued with numerous technical problems that often
result in false readings. The incorrect readings require verification by traditional meter reading
means.
The trouble with the existing 70 AMR meters varies. Some
"The trouble with the of the meters have performed well since they were first
existing 70 AMR meters installed while others have had problems with weak signal
varies. Some of the meters strength due to their location in vaults or underground
have performed well since structures. Others have had problems with water seeping
they were forst installed into the wiring systems and causing internal malfunctions.
while others have had Installation of the AMR system must also be done under dry
problems. . ." conditions due to the sensitivity of the units to moisture.
This has required the attention by the manufacturer's
representative on many occasions to perform adjustments and modifications that the City staff is
unable to perform.
Employee Interviews— As part of this study, interviews were conducted with key employees to
evaluate City stakeholder issues, needs, and requirements for future AMR installations. Since
accurate meter readings are critical to the Utility Department's revenue, input was sought from
representatives across the City's various departments. On August 15, 2005, HDR conducted
interviews with six City staff members representing Management, Customer Service, and the
Finance and IT Department. Overall, the City employees interviewed all agreed that AMR could
be a powerful and useful tool, but the current AMR system failures and excessive maintenance
have prevented the City from seeing this as a reliable system for system-wide deployment.
After conducting individual interviews with the City staff, issues, concerns, and expectations
were discussed in a group forum. Many of the same issues were expressed from different
departments. In a group forum conducted after the individual interviews, common issues
expressed by staff were focused into six categories. The categories summarized the goals
specific to the City's AMR program review. These goals pertain to staffing resources, utility
billing processes, maintenance, conservation, customer service, and information technology.
The following is a brief explanation of each of these goals listed in no particular order.
17 Goal 1: Best Use of Staff's Time through Optimal Use of Technology
The time required by the City staff to check and re-check meter readings, at the limited number
of AMR sites, is obviously inefficient and this time could be better spent. Three full-time
employees spend at least one-third of their time reading meters. Staffing time saved by
deploying an AMR system should not be compromised by an increase in the time required for
system maintenance. In addition, a reliable AMR system could lessen risk of on-the-job staff
injuries and workman's compensation claims.
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11 Goal 2: Streamline Utility Metering and Billing Operations
Water meters are the Utilities Department's "cash registers". Without reliable and accurate
Water metering, the City could lose potential revenue. Rate increases are necessary in the
immediate future to fund on-going O&M activities as well as planned capital projects to meet
adopted master plans. The financial impact of rate increases on customers, and providing
options for customer choice and service, is a great concern to the staff. One method of reducing
the impact of increasing costs is to move to monthly billing. However, converting the City to a
monthly billing cycle is expected to require more staff, assuming the current method of obtaining
meter readings remains the same. A reliable AMR system would potentially allow the City to
move to a monthly billing cycle without increasing the number of metering staff.
M Goal 3: A Reliable,Proven,and Low-Maintenance System
The City has installed AMR devices on approximately 70 of the largest meters in the system. At
this time, the City has not achieved the reliability or the confidence needed to continue with
system expansion. In order to further consider AMR
technology, the.City must be assured that a system has a proven "In order to further
track record of meeting specific environmental and operational consider AMR technology,
conditions. the City must be assured
that a system has a proven
■ Goal 4: Continue to be a Leader in Water Conservation track record of meeting
Accurate and reliable data obtained by the City, and made specific environmental and
available to the customers, should improve water operational conditions."
accountability, enhance water conservation, and reduce lost
revenue. This data will improve the management and maintenance of the water distribution
system allowing the City to be more proactive with conservation efforts.
■ Goal 5: Continue to Improve Customer Confidence,Flexibility,and Overall Service
The City seeks to continuously improve customer service without increasing the number of staff.
Customer service calls may be reduced and customer field follow-ups minimized (re-reads and
high bills)with the implementation of a reliable AMR system.
■ Goal 6: Information System Compatibility between Departments
Operations, finance, and the.conservation groups are currently operating on different data base
platforms, but all have access to the A400. Efficiently sharing data will improve overall
management of the system.
Given these goals, the focus of this report shifts to the various AMR options that may be able to
meet the City's AMR goals.
2.3 AMR Options
This section of the report reviews the various meter reading technologies available to water
utilities, and begins with a brief overview of the history of AMR meter reading technologies. It
follows with discussion of the four most common meter reading approaches. Emerging
technologies such as electric wire and cable do not have sufficient market penetration or proven
falCity of San Luis Obispo 5
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field experience, and as a result, will not be discussed in detail. In addition, three AMR
implementation scenarios are presented and discuss the potential impacts on the City's Utility
Department.
AMR Historical Overview— One of the first significant advancements towards automatic meter
reading was the development of the remote meter reading system. This enabled the meter
reading on the water meter register to be recorded via a drive cable or wire to a mechanical
totalizer device. This device could be installed in a more accessible location than the water
meter itself. For inside set meters, this meant location on the outside of a building. For pits and
vault set locations, this meant a location outside of the pit or vault or underneath the lid. This
resolved the significant increase in access issues caused by fewer residential customers being
home during normal utility meter reading hours. It also eliminated the problems associated with
confined space entry.
The visual outside reading device had several reliability issues that resulted in the inside meter
register reading being different than the outside device: Many of these problems stemmed from
the lack of maintenance/replacement of the outside device. Water intrusion was also a common
problem particularly in pit situations. As a result of these problems there were in
applications of this technology.
To address the mechanical visual outside reading device problems, a direct outside reading
system (touch read) was developed. The development of the encoder register, which allowed the
register to be electronically interrogated, laid the platform for AMR. A reading device was
plugged into a set of pins or touch pad containing an induction coil that would capture the
reading directly from the meter register. These devices also had some problems with bent pins
or non-numeric characters when the register was interrogated. However, their reliability and
lack of maintenance requirements made them a popular replacement of the mechanical outside
reading device. Advances in register sealing systems also enabled these devices to be more
reliably deployed in pit and vault situations, improving reading productivity and addressing
confined space issues.
After the outside reading device, the next most significant advance in automated meter reading
came with the development of the"electronic" meter reading book. Manual read and early touch
read systems required writing the meter reading in route books or on mark sense cards. This
manual entering of readings created opportunities for reading errors. The "electronic" meter
reading book enabled reading information to be loaded onto
"For touch read systems, these handheld devices and the reading information to be
handheld devices have captured with little or no human intervention. Manual entry
progressed to point where into the handhelds resulted in some errors, but significantly less
readings are captured than route books or mark sense cards..
without any meter
reading data entry by the For touch read systems, handheld devices have progressed to
meter reader." point where readings are captured without any meter reading
data entry by the meter reader. These devices significantly
improved the read to bill processing time and reduced reading errors. Though the capture of
meter reading data was automated, this touch type technology is generally not considered
City of San Luis Obispo 6
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"automatic meter reading"..
The fust commercially viable leap to automatic meter reading came with the development of the
phone-based meter reading system. Phone read systems are operated as either dial in-bound or
dial outbound systems. The dial in-bound system was based upon the meter's interface device
initiating a call on a pre-programmed basis to the water utility. If the line was in use at the time
of the call, it would attempt to call later. Phone company cooperation was not needed for this
method of reading, and the utility was not charged by the phone company for the call.
The outbound system approach required the utility to initiate the call to the meter, which was
done on a pre-programmed automated basis as well. This approach required phone company
cooperation resulting in an additional charge for phone number administration and call usage for
each account.
Phone read technology gained early success for large commercial and industrial accounts that
needed monthly meter reading, and in utilities that were looking to significantly reduce meter
reading costs. This technology suffered from perceived privacy issues, and the lack of third
party cooperation from the phone company. Phone read systems deployment was all but
eliminated as radio systems and cell phone networks were introduced into the market. In fact
many early adopters of the phone read system have converted to or in the process of converting
to radio frequency AMR systems.
The next generation AMR system was Radio Frequency (RF).
RF systems are currently offered as mobile or fixed network. "Drive-by units,due tt
The mobile system enables the meter reader to capture the meter their anddincreased transmitter
reading by driving by or walking by the account. Walk-by Power and driving speed,
systems do not provide significant productivity gains over touch offer significant
read as meter readers must be in close proximity to the meter Productivity gains on the
interface unit to"capture"a reading. Drive-by units, due to their order of at least ten times
increased transmitter power and driving speed, offer significant or more compared to
productivity gains on the order of at least ten times or more touch read"
compared to touch read.
The fixed network system provides an additional layer of automation in that meter readings are
brought back directly to the utility on a fixed collection network that is deployed for this specific
purpose. Similar to phone read systems, some fixed network systems make use of existing
networks such as electric power lines, cell phone, and cable.
Radio Frequency systems were initially adopted in the gas and electric utility industry because
gas and electricity rates were 3 to 5 times greater than water rates which prompted movement to
more frequent meter reading and billing. The same drivers that confronted gas and electric
utilities have created the need to move to a higher level of reading automation in the water utility
industry. As a result, the water utility industry is now experiencing a higher growth rate in AMR
than other industries. While RF system meter reading has been available to water utilities for
nearly 15 years,it is only recently that it has become the technology of choice for water utilities.
City of San Luis Obispo 7
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Most water utility early adopters of AMR systems were accounts with inside set meters.
However, in the late 1990's and continuing today, AMR has been adopted by accounts with
sizable, if not exclusive pit/vault set applications. Mobile RF solutions have been deployed in
major cities including Houston, Texas, Richmond, Virginia, Charlotte, North Carolina,
Montgomery, Alabama, and Memphis. Tennessee. Cincinnati, Ohio is nearing completion of a
mobile RF system implementation. The District of Columbia Water and Sewer Authority is
wrapping up the largest fixed network deployment in the water industry. A fixed network
solution is currently underway for Corpus Christie, Texas for both water and gas meters. Bid
specifications have recently been released for Kansas City, Missouri for its 160,000
inside/outside water accounts. Specifications and request for proposals are pending for both
Henrico County, Virginia, San Diego, California, and Atlanta, Georgia.
Manual Meter Reading— Manual meter reading requires the meter reader to visually obtain the
meter reading directly from the meter register located on the meter or from a visual reading
device which means the meter reader must physically gain access to the meter register or reading
device. These readings are typically entered into a handheld "electronic" meter reading device.
that downloads reading data to the billing system.
Relative to the other meter reading systems on the market, visual read systems have the lowest
capital cost. The water meter and standard/generator registers are staples in the industry and
their manufacture is highly automated. Operating and maintenance cost of this metering system
is also relatively low. The meter body, regardless of the reading technology is the same
throughout. The meter itself has a history of reliability and when failure does occur, it is
generally more cost-effective to replace the meter then it is to repair it. The meter register has
also increased in reliability with the advancement of sealing techniques. Moisture under the dial
face, which used to obscure the meter reading, rarely occurs today.
The low initial capital cost and ongoing operating and maintenance costs of visually read
systems are greatly offset by the labor cost needed to collect the reading. Productivity rates are
constrained by geography, density, access, weather, and most notably by the physical ability of
the meter reader. Depending upon the system used for
processing the meter reading, reading errors lead to additional "The low initial capital cost
customer service and field costs. Manual systems typically and ongoing operating and
have the lowest productivity rates, and the highest reading maintenance costs of
error rates. For industrial and commercial accounts, reading visually read systems are
productivity, depending on the factors noted above could be in greatly offset by the labor
the 50 to 100 reads per day range, and in some cases require cost needed to collect the
two meter readers in confined space situations. For residential reading."
accounts, inside set meters with visual remotes would see - —
productivity rates in the 350 to 400 reads per day area, whereas pit setting could be in the 300 to
500 range. Any increase in meter reading frequency would require a sizeable increase in labor.
Reliability issues for the manual reading system revolve around the ability of the meter reader to
gain access to the meter or reading device, and to accurately record the usage, assuming the
reading device was in sync with the meter register. Lack of access normally results in an
estimated bill, which can lead to a billing dispute investigation, meter re-read, re-billing and a
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possible meter test as well.
Touch Read— Touch read systems enable the meter reader to gather the meter reading through
an outside meter reading device (touch pad) connected to the meter register. Unlike the
mechanical, visual read remote system, the touch read system allows for direct interrogation of
the meter register. As with the manual system, the meter reader must visit every account site to
obtain the meter reading from the touch read device. Readings are collected when contact is
made between the handheld reading device and the outside reading device (or pad).
Additional capital costs associated with this reading system are the encoder register and the
outside reading device. The encoder register electronically stores the meter reading and provides
the current meter reading at time of interrogation. This reading system also provides for tamper
detection should the wire between the meter's register and the outside reading device be
disconnected or cut.
Many of the same labor costs apply to the touch read
"Many of the same labor costs system as the manual read system. The touch read
apply to the touch read system system, in a pit application, will increase reading
as the manual read system. ... , productivity compared to manual read, but the range is
Operating costs for the touch limited. Typically a touch read system in a pit application
read system,will increase over might increase productivity in the 10% to 20% range.
the manual read system This range might increase if.a high percentage of the pits
depending upon the failure are constantly submerged in water and have to be pumped
rate of the encoder register." prior to reading. Further, productivity may be gained
from route optimization and meter reader incentive
systems. However, the productivity ceiling is limited, and as the number of meter readings
increases, more readers will be required, thereby increasing labor costs.
Operating costs for the touch read system will increase over the manual read system depending
upon the failure rate of the encoder register. While the encoder register has a decent reliability
record, there have been reported incidences of manufacturing failures that have resulted in non-
numeric readings. The non-numeric reading does cause an estimated bill to be sent or perhaps a
re-read. Some utilities have established procedures where a field service call is not made until
two consecutive non-numeric reads have occurred. Similar to the manual read system, anything
that results in an estimated bill results in additional customer service cost.
Touch read systems have proven to be a reliable alternative to the visual outside reading device.
They have been effective at addressing confined space issues, and the outside reading pad is
virtually maintenance free with no moving parts. The encoder register provides a stepping stone
to more automated forms of meter reading discussed below.
Mobile Radio — The mobile radio system enables the meter reader to collect meter readings
while walking or driving by a meter equipped with an RF reading device. The mobile reading
system requires the addition of an RF reading device (also called a meter interface unit or MN)
to the encoder meter register. The RF device is powered by a battery, and can either be an
absolute encoder or digital encoder. The type of encoder might impact the RF device that is
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used.
As additional electronic components are added to the metering system, operating and capital
costs will rise. Electronics have a failure rate, typically in the area of less than I% per year.
However, the major operations cost driver for an AMR system is the battery life of the RF
device. The longer the battery life, and the life of the RF device, the more cost effective it
becomes.
Additional benefits accrue in situations where the meter life is in lockstep with the RF device life
so that both the meter and MN can be replaced at the same time. RF device products are being
offered with an estimated battery life' of 10 to 20 years. Warranty coverage becomes an
important component of owning and operating an AMR system
so it is important to clearly define warranty terms ahead of "The mobile radio
implementation. Additional costs will be involved for coverage system enables the
beyond the standard warranty. meter reader to collect
meter readings while
RF devices operate in two different transmitting modes. Some walking or driving by a
systems are always transmitting and the reading device just meter equipped with an
happens to "bump into"the reading signal. These systems have a RF reading device."
lower production cost because only signal sending electronics is -
needed. The battery life for such products is approximately 10 years, though some companies
offer longer battery-life guarantees. The other transmitting mode requires the RF device to be
"woken up" to transmit the meter reading data. The battery life for these systems is in the 18 to.
20 year range. These systems are generally more expensive because they contain sending and
receiving electronics, but the additional service life may offset the additional capital cost.
Operation costs might also include software licensing and upgrade fees, maintenance of reading
equipment, and FCC licensing fees. Reading systems are offered in both licensed and unlicensed
frequencies. Unlicensed frequencies operate in the 900 MHz range, and compete for space with
other RF operated consumer products which may cause some problems in "capturing" meter
readings. Licensed systems provide the utility with its own unique operating frequency that
eliminates the interference issues associated with unlicensed frequency, thus making the system
more reliable. There is an annual fee for these licensed products. Most manufacturers will assist
with the licensing process.
The meter reading productivity for a mobile RF system is significantly better than visual or touch
read systems. The actual productivity achieved by a utility is based upon many, ever-changing
factors such as meter population density, location of the RF device, weather, temporary
obstructions,and average driving speed. Typically, drive-by reading productivity has been in the
range of 5,000 to 10,000 reads per day, but current systems are demonstrating significantly
higher reading performance. Some utilities read during late evening hours or off peak traffic
hours to improve reading productivity. Given the initial capital cost of a mobile collector unit, it
is better suited for high volume,repetitive work.
The RF handheld reading devices have a typical reading productivity of 800 to 1,500 reads per
day. Typically these devices become part of an AMR strategy used in special and final readings.
IaRCity of San Luis Obispo 10
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It is typically more cost effective to use the mobile, drive-by collector for routine meter reading
functions and reserve the special and final readings for the handheld collectors. Special and final
readings occur at various locations throughout the service territory and may average a few
hundred per day, depending upon the size of the utility. It may be more cost effective from an
operations standpoint to have this division of labor and equipment than using a mobile collector.
AMR reading reliability is in the 98% range or better. Many
"AMR reading specifications have this requirement built into the purchase
reliability is in the 98% agreement. The initial reading reliability rate may be less during
range or better. Many the early stages of implementation, normally for non-product
specifications have this related issues.. For example meter readers getting used to the
requirement built into equipment and reading routes may result in lower reading rates.
the purchase There may be some RF device location issues that might be
agreement." affecting the range of the device. This problem occurs with
higher frequency in large meter/vault locations.than in residential
and small commercial accounts. Temporary obstruction issues such as cars parked on or near the
RF device, or the device being under water will also affect transmission range and the reading
rate. Such items will need to be addressed and accounted for prior to pursing equipment related
issues with the vendor.
Following manufacturer's installation instructions is an important consideration for reading
reliability, especially in a meter pit set environment. For cast iron lids, maximum reading range
is obtained by installing the RF device through the lid. If plastic or polymer concrete lids are
used, the RF device may be installed below the lid without significantly affecting reading range.
Reading range claims for RF products need to be tempered with how it will actually affect the
meter reading process. There maybe some degradation in.the reading distance over time.
However, unless the signal strength is so great that it enables the utility to consistently reduce its
total drive time or mileage, the extra range may not be operationally beneficial.
Fired Radio—Fixed radio systems offer a "true" automatic meter reading capability. The meter
reading is "captured" through a system of collectors that transmits the meter reading back to the
utility location. The RF devices are programmed to send the readings to the utility on at least a
daily basis.
Additional capital costs for this reading system include an array of collectors and repeaters
positioned throughout the service territory. The number of collection units required is mainly
dependent upon the topography of the area. Typically "Fixed radio systems offer a
collectors are placed upon public buildings, power poles, or truly fully automatic meter
water towers. A specialized system server for collecting the reading capability. The
reading data, and software for its operation, is needed as well. meter reading is "captured"
These hardware and software purchases add to the initial cost
of this option. through a system of
collectors that transmits the
Additional operating costs include FCC licensing fees, meter reading back to the
utility location."
cellular fees for the transmission of readings from the data -.
collectors to the utility, hardware and software licensing fees and memory and software
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upgrades, if not included in the licensing fees. Optional monitoring fees, where the vendor is
replicating the data received by the utility, is an additional service that is available. Depending
upon the location of collection units, owners of buildings and power poles may require some
form of compensation for use of those facilities.
The reading productivity of the fixed network system is basically unlimited. As long as there is
sufficient memory and software capacity in the collection and utility based components, the
utility can collect as much usage data as it wants without sending a meter reader or other
personnel into the field.
Fixed network systems have the same RF device reliability ratings and issues as the mobile
systems. During initial project start up, some adjustments may need to be made, including
relocation of the RF device to get more reliable, consistent readings. Due to temporary
obstructions, meter readings at a property can be missed for several days. Meter reading policies
should be established as to when to make an investigative field service call to address these
missed readings.
Communication with the fixed network RF device can be one way or two-way. One way systems
receive data from the RF device. Two way systems can communicate with the device, for
example to initiate a demand reading or reprogram the reading frequency.
Technology Review; Near Term — AMR manufacturers, those that solely manufacture AMR
devices, such as Itron, Hexagram and Datamatic, have been providing devices that are
compatible with various metering products for many years.
"AMR manufacturers, those Meter manufacturers that have manufactured, or marketed
that solely manufacture their own line of proprietary meter reading products have
AMR devices,such as Itron, been branching out to make their RF devices more
Hexagram and Datamatic, compatible with other vendors' meters. Meter
have been providing devices manufacturers have also been developing their own lines of
that are compatible with drive-by and fixed network products in order to add value to
various metering products their metering product line. Meter manufacturers are
for many years." building more capabilities into their encoder registers to
address the movement towards fixed network systems.
Additional capabilities have also been built into some drive-by systems to provide more than a
single day's reading when interrogated. As.a result, utilities may be offered more equipment
choices, and more competitive prices.
Another promising development is "high powered"fixed network systems. These systems result
in significantly less collection device infrastructure. Depending upon the size and topographical
conditions of the utility, these fixed network systems may be priced at or close to mobile drive-
by systems.
In the near term, the market should still expect a continued level of proprietary products from
AMR and meter vendors. A certain level of compatibility may exist with some equipment
manufacturers, but utilities should be cautioned as certain system hardware and software will not
have a high degree of interoperability.
HTRCity of San Luis Obispo 12
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Technology Review;Five to Ten Years— Even with the advent of"high powered"fixed network
systems, which is still proprietary, there is continued movement to making use of existing public
networks. Public networks include phone lines, cable, power lines, cellular phone, and the
internet. Efforts have been underway on how to tap these existing networks cost-effectively to
offer the utility a more cost-effective AMR alternative. Cost-effective gateways into these
networks are being developed. For example, short hop radio that will enable the water meter
reading to send its signal to the electric meter for use by power line carrier systems. Satellite
reading systems may be perfected in this time frame as well.
It is a difficult choice to decide whether to wait for the "latest and greatest" or make the AMR
investment now. The consumer electronics market (personal computers, cell phones, MP3
players, etc.) contributes to this confusion when we observe overnight technology and capability
changes. The analysis conducted in the following subsection will provide a financial framework
for this crucial investment decision.
2.4 AMR Analysis and Findings
This subsection of the report will analyze three suggested meter reading alternatives. The
relative impacts that various meter reading options have upon the City's current meter reading
operation will also be addressed. The first part of this section focuses on the bigger picture in
which this investment decision will be made.
Transaction Approach vs. Strategic Initiative - Automatic Meter Reading is a significant
investment. Complicating this investment decision is other challenges confronting the utility that
are competing for the same capital dollars. Some of these competitive challenges include water
quality regulations, infrastructure replacement, security issues, and resource availability. These
issues are creating enormous financial, management, staffing, and administrative challenges that
must be balanced by the municipal utility.
Compounding the investment decision challenge is the issue of rate increases. A recent AWWA
newsletter published the results of water and wastewater rate increases for 75 utilities from 1996
to 2004. It showed that water and wastewater rates rose at an annual rate of 8.36% compared to
the Consumer Price Index (CPI) rate of 2.31%. The key message is that consumers will be
paying a higher proportion of their incomes for water resource services, and for some customers,
water usage may become an affordability issue. The City is clearly aware that it is not immune
from rate adjustments that exceed inflationary levels.
Funding sources for the capital investments and operation improvements needed to meet these
challenges is also in question. Even though 90% of respondents to a poll published in the March
2005 AWWA Journal noted that clean and safe water is a national issue that deserves federal
investment, federal and state loans, and grant sources may be reduced or eliminated.
It is clear that almost all of the funds required to support municipal utility capital investment will
primarily come from the utility's rate payers. Establishing and maintaining a meaningful,
partnering relationship with rate payers and local stakeholders might be the best method for
T T�� City of San Luis Obispo 13
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receiving the resource support needed by the City. An important consideration in making an
AMR decision, and perhaps a particular AMR investment, is linking the City's AMR goals to the
features and benefits that AMR has to offer. This may move the AMR investment decision from
one that is "transactional" to one that is "strategic". As the business case model will help build
the hard cost justification for AMR, there are also considerable soft cost areas that-deserve
consideration such as minimizing liability risk by providing a safer means to collect meter
readings.
Alternatives Considered — Three reading alternatives were compared: Touch-read, drive-by
mobile radio frequency (mobile radio), and fixed network radio frequency (fixed radio). A
comparison matrix of these alternatives is presented below in Table 2-1.
Table 2-1
Cost and General Comparison of Automated Meter Reading Alternatives
Comparison Items Touch Read Mobile Radio Fated Radio
Meter interface unit(MIU) Meter interface unit
Touch pad connected via connected to an encoder connected to an encoder
Interface Equipment wire to an encoder register register via wire or register via wire or
integrated to meter integrated to meter
register. register.
Reading Device Hand-held interrogator Hand-held interrogator or System of collectors and
drive-by unit(laptop) repeaters
MIU:$40-$100
Touch pad:$10-$15 Hand-held:$3,500-$5,000 MIU'$80-$110
Hardware Cost Collectors and repeaters
Hand-held: $2500-$3000 Drive-by:$25,000=
$40.000 cost vary significantly
Approximately 15 to 20 Approximately 15 to 20 Approximately 15 to 20
minutes of labor for pit set minutes of labor for pit set minutes of labor for pit set
Installation Cost meters and 30 to 40 meters and 30 to 40 meters and 30 to 40
minutes for inside set. minutes for inside set minutes for inside set
meters. Large meters meters. Large meters meters.Large meters
higher. higher. higher.
10 to 20 years depending 15 to 20 years depending
upon battery life/or upon battery life/or
Useful Life Basically unlimited replaceable battery. replaceable battery.
Warranty 5 years,with Warranty 5 years,with
extensions at higher cost extensions at higher cost
Maintenance service
contracts for collection
Maintenance service devices,reading software
Maintenance service contracts for collection and programming devices
contracts for handheld devices,reading software Licensing fees with some
System Maintenance readers and reading and programming devices. products.Encoder register
and Operating Costs software.Encoder register Licensing fees with some replacement,RF device
replacement. products.Encoder register and collector maintenance.
replacement,RF device Fees for location of
and collector maintenance. collection devices possible
and for sending readings
from collectors to utility.
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ATTACHMENT 2
Table 2-1 (continued)
Cost and General Comparison of Automated Meter Reading Alternatives
Comparison Items Touch Read Mobile Radio Fixed Radio
✓ Cheaper capital cost ✓ Higher productivity ✓ Highest reading
✓ Visual contact with than touch read. productivity
reading device ✓ fewer meter readers ✓ Minimal meter readers
✓ Utility presence required than touch required
maintained in service read ✓ Enables movement to
area ✓ Enables movement to more frequent reading
more frequent reading and billing at no
&billing with minor additional capital or
capital and operating operating cost
cost ✓ Site visit not needed
✓ Utility presence for re-reads or
maintained in service customer requested
area reads.
✓ Reduced site visits for ✓ Enables proactive leak
re-reads and customer detection and customer
Advantages requested reads notification.
✓ Enables customized
billing cycles and bill
consolidation
✓ Provides nearly
immediate notification
of tampering
✓ Provides data for
resource,meter,and
rate management
functions
✓ Can adapt to system
growth with minor
capital costs
✓ Caps meter reading&
related operating costs
✓ More frequent reading ✓ Higher capital cost ✓ Highest initial cost
and billing requires than touch read,but ✓ Slightly more
additional.staffing and less than fixed radio. expensive to maintain
support. ✓ Reads impacted by than mobile radio
✓ Reading cost subject to radio reception
inflation and wage limitations
Disadvantages adjustments ✓ More expensive to
✓ System growth maintain than Touch
requires additional Read
staffing V Migration path to
✓ Re-reads and customer fixed network may be
requested reads are more expensive than
labor intensive purchasing fixed
network initially
City of San Luis Obispo 15
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ATTAC-HhiEHT 2
Operation Impacts— Investment in meter reading technology will impact operations for the next
10 to 20 years. This extended service period makes it difficult to predict changes in meter
reading technology within that time frame. We can look at the past as an indicator, but that may
cause us to miss or fall short of what future demands may be. "Investment
Flexibility and growth are two important criteria when vestment y will impact
meter reading
technology
considering meter reading technologies, and generate the
erations for the next 10
following questions. Does the system provide flexibility for opyears. This extended
to
future requirements, and if not, what will it cost to provide se
operating flexibility? Can the system keep pace with growth service period makes it
issues, such as the number of accounts, expansion of difficult to predict changes in
territory, and other resources needed to support that growth? meter reading technology
within that time frame."
Table 2-2 identifies several operational parameters that are
commonly affected by the meter reading system. Some of these parameters have defined, hard
costs associated with them that will be addressed in the financial model, and other parameters
have less well defined soft costs that will require further research to quantify costs.
T T�� City of San Lois Obispo 16
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Table 2-2
Operational Comparison of Meter Reading Alternatives
Touch Pad Mobile Radio Fixed Radio
Increase in frequency Monthly reading
requires additional possible with 1 meter
labor.Bi-monthly reader.Depending on
reading requires 4+ configuration of growth, Several readings per
Meter reading frequency readers and monthly one additional day of day without any meter
reading requires 8+ reading for every 6%to reading staff
readers,unless routing 9%of growth. Add
and incentives increase collector after growth
productivity reaches 100.000 to
120,000 accounts
Meter reading effort 250 to 600 reads/ 5,000 to 10,000 reads/ No meter readers
person/day person/day and higher
Dependent upon meter Dependent upon meter Almost all,unless
reader capturing a reader capturing a reading system at meter
Eliminate estimated bills location is not
read/visiting the read/visiting the
property property functioning anew days
prior to billing date
Reduce re-reads&customer
requested field service calls 15 to 30 per day/Titan 30 to 100 per day/man Unlimited
Customer Service transaction 2 business days 1 to 2 business days 1 business day
times
Same as touch pad,
Whatever can be done unless additional
reading done for high-
from monthly readings. Single to multiple daily
Proactive high-bill traclang Too few data points to bill tracking purposes: reads enable this
and notification develop meaningful RF device with function
trend information. profiling capability
- provides daily usage
and leak detection
Sets tamper flag if wire Sets tamper flag if wire Identifies tamper same
is cut or disconnected is cut or disconnected day and sends to
Tamper&theft of service from register. Pick up from register. Pick up collector unit.Utility
at time of reading or at time of reading or able to identify next
report report business day.
Complete flexibility in
Account must stay Account must stay establishing billing
Customize reading billing cycle to meet account
within designated within designated
dates needs. Rules and
billing cycle billing cycle
priorities need to be
established.
Only for accounts Only for accounts Can be extended to
Bill consolidation within same reading within same reading accounts regardless of
cycle cycle cycle
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Table 2-2 (continued)
Operational Comparison of Meter Reading Alternatives
Touch Pad Mobile Radio Fixed Radio
Provide consumption profilesSome capability, Daily information
Some capability, depending on system,
for high bill investigations available. Web access
and conservation depending on system including on site possible.
information
Same as touch pad;
unless additional
Whatever can be done reading done for high-
bill tracking purposes.
from monthly readings. Single to multiple daily
Ability to monitor for leaks in Encoder with logging
Too few data points to reads enable this
customer's premises capability provides
develop meaningful function
trend information. daily usage and leak
detection.Some
systems set flag for
continuous usage
Monitor for compliance with No. Must police No,unless special Able to monitor
conservation or watering compliance manually. reading is conducted compliance remotely
restrictions
Support unaccounted-for Limited More than Touch Read, Provides daily,detailed
water studies but less than fixed data
Support inflow/mriltration Limited More than Touch Read, Provides daily,detailed
studies,hydraulic modeling but less than fixed data
Support cost of service rate More than Touch Read, Provides daily,detailed
modeling Limited but less than fixed data
Improve resource planning Limited More than Touch Read, Provides daily,detailed
but less than fixed data
Compatibility Issues An important consideration in making an AMR investment is the level of
open architecture that the City is interested in achieving.. As noted earlier, the options for AMR
are limited depending upon the open architecture of the RF devices. For example, the meter and
meter register are normally produced by the same manufacturer, though several makes of meters
may still be deployed throughout the system. The RF device, collection devices and the software
are normally produced by the same manufacturer creating "zones" of proprietary products. A
complicating factor may arise when the RF device is connected to the meter register. In the
City's situation, with most of the meters located in pit applications, a factory potted, pre-wired
register and RF device assembly offers the greatest level of reliability. It is important to review
this issue during the product evaluation process.
Another important consideration in making an AMR investment is the ability to interface with
other utility systems or software applications. While this may have been an issue in the past,
these concerns have been mitigated as reading and meter manufacturers are working to
standardize software protocol. The benefits of open architecture include the ability to use more
than one meter vendor's product with existing utility systems and applications. The City will
need to determine what value to place upon open architecture. That final decision may not be
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made until the AMR procurement evaluation process is completed.
The level of open architecture that the City is able to achieve is related to the amount of the
existing meter base, and its connected encoder register that will be retained versus what will be
replaced.
The following two tables present a compatibility comparison between the various major meter
brands and AMR systems that are currently on the market. Table 2-3 is for mobile RF systems
and Table 2-4 is for Fixed Network Systems.
Table 2-3
Compatibility of Majo r AMR and Meter Manufacturers for Mobile RF Systems
Meter Brand
AMR Brand
Sensus Neptune Badger AMCO
Sensus-Radio Read Yes Yes Nott Note
Neptune-R900 Yes Yes No No(l)
Badger-ORION Yes(2) Yes(') Yes Yes-digital&
Scancoder
AMCO-TRACE NO(3) No(a) Yes-RTR
No-ADE(3) g yes-digital encoder
Itron-ERT Yes Yes Yes Yes
(I) Sensus is developing technology to read Badger registers. Sensus and Neptune can read AMCO registers per
AMCO.
(2) Badger recently introduced a universal ORION RF device that is capable of reading selected Sensus/Neptune and
AMCO encoders.Different device needed to read Badger's digital encoder.
(3) AMCO in process of imbedding Sensus protocol into its encoders.
Table 2-4
Compatibility of Major AMR and Meter Manufacturers for Fixed Network Systems
AMR Brand Meter Brand
Sensus Neptune Badger AMCO
Sensus-Nexus Yes Yes No No(3)
Neptune-R900 Micro Yes Yes No No(3)
No-not for No-not for No-not for
Badger—Galaxy initial release initial release Yes initial release
Hexagram—Start" Yes Yes Yes Yes
Itron—Fixed 2St:t Yes Yes Yes Yes
(1) Hexagram is marketed directly, through AMCO, and other meter vendors. Different RF device is needed for
absolute and digital encoders.
(2) Itron Fixed Network 2.5 uses one RF device for either absolute or digital encoders.
(3) Sensus and Neptune can read AMCO registers per AMCO.
Account Service and Billing Considerations - The Account Service and Billing costs incurred,
and the benefits that accrue by adopting AMR are not easily quantified. In any case, the means
to calculate the impact on Account Service activities lies outside the scope of this project.
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In general terms, the cost of account services and billing is not affected by AMR. Account
services and billing costs will increase dramatically if billing frequency is increased to monthly..
If the City were to implement AMR, and not change bill frequency, HDR forecasts no account
service cost savings or increased customer revenue because the
number of meter readings and bills issued per year will not change. "In general terms,
the cost of account
If the City increases bill frequency moving from bi-monthly to services and billing
monthly billing, account service costs will increase. The most obvious is not affected by
is bill printing and postage costs should roughly double. Additional AMR."
account service staff will need to be added to handle the review of an
increased number of meter readings associated with bill preparation. In addition, more account
service staff will be needed to handle an increased number of customer requested meter readings.
These requests should also roughly double in number, but there may be more requests than
received under bi-monthly billing.
While there will be an improvement in productivity related to field service meter readings, HDR
does not forecast a decrease in account service costs because the number of customer requested
meter readings will not decrease.
HDR has accounted for the increased cost of account service through the increase in meter
readings. As the number of meter readings increases, the cost of providing customer service
increases at the same rate. Using this proxy, the account service operating cost associated with
monthly billing is double that of bi-monthly billing.
Impact on the Utility Department- The savings potential for using an AMR system can not be
evaluated without considering impacts to O&M, finance, water conservation, etc. The potential
savings, as measured in dollars per customer served, are evaluated below in four different
scenarios.
Scenario 1: No AMR with Bi-monthly Water Service Billing Frequency (current system) -
Under the current water billing system, meters are read every other month and customers are
billed for their water consumption since the prior meter reading. Generally, meters are read
every Monday, Tuesday, and Wednesday. Meter data is submitted to the Billing Department at
the end of each meter reading day. This data is used to update the accounts in the utility billing
system (ACS). The data is also reviewed to identify accounts that appear to be out of normal
consumption range or are unusually high or low relative to the previous meter read. Service
orders are issued as these unusual meter reads are identified. Service orders usually involve
going to the customer's address and verifying the meter reading. All service orders are due back
to the Billing Department by 4:00 p.m. on Thursday so that bills may be mailed to the customers
on Friday. System wide meter reading, meter reading verification (service orders), and billing
are done continuous and approximately half of the accounts (7,200) are billed each month.
Usually, the City can read all water service meters in 11 business days.
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Conclusions—Scenario I—No AMR with.Bi-Monthly Billing Frequency
■ Under this scenario, no additional or new costs will be incurred by the customers served, nor
are there any cost savings.
■ Under this scenario, the meter reading, billing and customer accounting cost per customer is
roughly$6.63/customer account/bi-month ($39.76/year or$3.31/month).
Scenario 2: No AMR with Monthly Billing Frequency - Under this scenario the City will
continue to read water meters on a continuous basis but will be required to obtain field data for
all 14,400 meters, enter the data into the ACS billing system, check for inaccuracies, validate
unusual reads, and issue bills in one month. To accomplish this increase billing frequency,
additional staff will be required. The City estimates that the additional work load will require
three (3) additional employees in addition to increased printing and postage costs. The three
additional employees will include two (2) additional Meter Readers and one (1) additional
Customer Service/Billing person. The City estimates that these additional costs will total
approximately $273,900 per year. Assuming 14,400 active accounts in the City, this is
equivalent to an additional cost of$19.02/account/year($1.59/account/month).
Conclusions—Scenario 2—No AMR with Monthly Billing Frequency
■ Under this scenario, up to three (3) additional personnel may be required two (2) additional
meter reading persons and one (1) additional customer service/billing person.
■ There will be increased printing and postage costs—roughly double the current level.
■ Under this scenario the additional cost to the customers served will be approximately
$19.02/customer account served/year ($273,900 divided by approximately 14,400 accounts)..
This is equivalent to approximately $1.59/customer account/month in addition to the current
baseline cost of$3.31/customer account/month (i.e. total net cost = $4.90/customer account
/month).
Scenario 3:AMR with Bi-Monthly Billing Frequency- Under this scenario a fully operational
AMR system would be installed, but the billing would continue on a bi-monthly basis. This
scenario assumes all meters are upgraded or replaced with a mobile and/or fixed AMR system.
The time required to read all the meters in the system will be greatly reduced. Using a mobile
radio AMR, the time required to read all meters in the system can be reduced to less than three
days and eliminated with a fixed radio AMR system. This will potentially result in a two (2)
person reduction in meter reading staff, but the Customer Service/Billing staff will remain the
same. The capital cost of this system is estimated to be between $200 and $300/ account. This
cost range includes the annual O&M cost bourn by the AMR system vendor as part of a long
term service contract.
Conclusions—Scenario 3—AMR with Bi-Monthly Billing Frequency
■ Under this scenario, the total capital investment required may be in the range of $2.88
million to $4.32 million. This is an average investment per customer account of $200 to
$300.
■ Under this scenario, no additional administrative/billing personnel may be required, with the
potential reduction in meter readers of two (2) positions (approximately $76,200/year
savings/position).
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■ There will be no change in postage costs.
■ Under this scenario the net additional cost to the accounts served will be between $0.51 and
$1.21/customer account/month if the capital cost of the AMR system is financed with a long-
term bond at 5.5% interest and a 20 year term and two meter reading positions are
completely eliminated.
■ Under this scenario, the meter reading, billing, and customer accounting cost per account is
estimated to be in the range of$3.83 to $4.52/customer account/month. The City's current
baseline cost for bi-monthly billing is $3.31/customer account/month. The costs included
under this scenario include the City's current baseline reduced by the estimated cost of the
two (2) eliminated meter reading positions. This reduced baseline cost is $2.43/customer
account/month.
Scenario 4: AMR with Monthly Billing Frequency - Under this scenario billing will be
conducted on a monthly basis as described above in Scenario 2, but a fully operational AMR
system is installed and operating properly. Scenario 4 assumes aU meters are upgraded or
replaced with a mobile and/or fixed AMR system. The time required to read all the meters in the
system will be greatly reduced. Using a mobile radio AMR, the time required to read all meters
in the system can be reduced to less than three days and eliminated with a fixed radio AMR
system. This will potentially result in a two (2) person reduction in meter reading staff.
However, the change to monthly billing may require one (1) additional Customer Service/Billing
person (similar to Scenario 2). The capital cost of this system is estimated to be between $200
and $300/account. This cost range includes the annual O&M cost bourn by the AMR system
vendor as part of a long term service contract..
Conclusions—Scenario 4—AMR with Monthly Billing Frequency
■ Under this scenario, the total capital investment required may be in the range of $2.88
million to$4.32 million. This is an average investment per customer account of$200 -$300.
■ Under this scenario, one (1) additional person may be needed for Customer Service/Billing.
This salary is assumed to be$63,000/year/position including benefits..
■ The number of meter reading personnel may be reduced by two (2) positions. These salaries
are assumed to be$76,200/year savings/position including benefits.
■ There is an assumed additional postage and printing material and other non-labor cost of
$47,000/year to move to monthly billing.
■ Under this scenario the net additional cost to the accounts served will be between $1.15 and
$1.85/customer account/month if the capital cost of the AMR system is financed with a long-
term bond at 5.5% interest and a 20 year term and two (2) meter reading positions are
.completely eliminated and one (1)customer service positions are added
■ Under this scenario, the meter reading, billing, and customer accounting cost per account is
estimated to be in the range of$4.46 to $5.16/customer account/month. The City's baseline
cost for monthly billing is estimated to be $331/customer account/month and is included
under this scenario.
Provided below in Table 2-5 is a summary of the various AMR scenarios reviewed and the
relative impacts to each other. Bi-monthly costs are divided by two and shown as monthly
values for ease of comparison.
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Table 2-5
Summary Matrix of the AMR Scenarios and Potential Impacts
AMR Scenarios
Issues/Impacts Scenario 1 Scenario 2 Scenario 3 Scenario 4
No AMR/Bi-mo. No AMR/mo. AMR/Bi-mo. AMR/mo.
AMR? No No Yes Yes
Frequency of Billing Bi-Monthly Monthly Bi-Monthly Monthly
Change in Postage,
Printing,and Supply None $47,000 None $47,000
Costs/year
Additional or Reduction No Change 2 person addition 2 person reduction 2 person reduction
in Meter Readers to current staff from current staff from current staff
Additional or Reduction
in Customer No Change No Change 1 person addition 1 person addition
Service/Billing Personnel to current staff to current staff
AMR Capital Cost $0 $0 $2.88-$4.32 Mil. $2.88-$4.32 Mil.
Incremental Add']Cost
$/Account/Month $0.00 $1.59 $0.51 -$1.21 $1,15-$1.85
Total Customer $3.31 $4.90 $3.83-$4.52/Mth $4.46-$5.16/Mth
Cost/Month. -
Total Customer Cost/Year 1 $39.76 1 $58.78 1 $45.87—$54.24 1 $53.51 -$61.88
2.5 AMR Conclusions
Given a review of the various types of AMR systems, along with a review of the various
potential AMR scenarios for the City, HDR has developed a 'set of conclusions. These are
discussed in more detail below.
HDR has concluded that an AMR system for the City could help to further the City's major
initiatives. As noted previously, the City's main objectives or goals in considering AMR were as
follows:
■ Goal 1: Best Use of Staff s Time through Optimal Use of Technology
■ Goal 2: Streamline Utility Metering and Billing Operations
■ Goal 3: A Reliable, Proven, and Low-Maintenance System
IS Goal 4: Continue to be a Leader in Water Conservation
■ Goal 5: Continue to Improve Customer Confidence, Flexibility, and Overall Service
■ Goal 6: Information System Compatibility Between Departments
While HDR has concluded that an AMR system for the City could help to further the City's
major initiatives, in the opinion of HDR, installation of an AMR system does not appear to be
cost effective at this time. Current costs for AMR technology appear to outweigh benefits to the
City from staff reduction, customer service, and revenue recovery from inaccurate meters. As
future AMR technology improves and implementation costs reduced, the City may consider
system-wide AMR as an effective way to streamline the utility metering and billing operations.
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2.6 AMR Recommendations
If in the future, the City makes a decision to move towards AMR; HDR offers the City the
following automated meter reading system recommendations. These recommendations are
separated into five main categories: Preferred System, Deployment-, Procurement,
Implementation, and Operation. These recommendations should be considered only if City
decides to move to AMR system.
Preferred System -
O Implement a radio frequency drive-by or fixed network AMR system. This technology
provides the City with the type of benefits that delivers the level of service envisioned by
the City's AMR goals. Drive-by and fixed network
AMR provides the flexibility to address future "Implement a radio
challenges and uncertainties that the current touch .frequency Drive-by or Fixed
read system cannot hope to address,including: Network.AMR system. This
► Provides the City with an immediate strategy to technology provides the City
eliminate and cap certain labor costs, while with the type of benefits that
positioning itself for low-cost service territory delivers the level of service
expansion. envisioned by the City's
► Elevates meter reading and billing from a AMR goals."
transaction to a relationship with the customer - a
utility trend. Customer relationship management is mission critical to the City as it
faces the financial challenges associated with water quality, regulatory, infrastructure
replacement, security, and water resource availability issues.
► Provides an unparalleled amount of data that can be crafted into proactive customer
service and utility management information. Customer service enhancements include
providing customers with consumption history/analysis, identifying leaks before they
escalate out of control, reducing response time to customer inquiries. Utility
management information includes consumption data that can assist with hydraulic
modeling, real-time evidence of meters that are starting to under-record volume, and
increased data for water audits and leak detection analysis.
Deployment-
o Deploy the selected AMR technology solution within three (3) years or less. The sooner
the system is installed, the sooner the City receives solution benefits. This avoids
running the current radix read system in parallel with the new AMR system for too long
reducing operating confusion, differences in service level delivery, and overall meter
reading operating costs.
e Examine whether the City can deploy the AMR system itself. There are several well-
qualified installation service contractors available in the market. However, the City may
be able to save resources and build capacity by performing the deployment themselves.
Should the deployment or entire project be contracted out to a single vendor,the City will
still have an extensive project management responsibility and role. How this
responsibility and role will be performed must be reviewed and estimated.
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e Unless extenuating circumstances can be demonstrated, the initial meter replacement and
AMR deployment target area should be the limited at first to the new residential
development planned in the City service area. This service area will be adding a
significant number of meters within the next two years and will increase the overall meter
reading operating costs.
Procurement-
• Once AMR technology and deployment solution strategies are determined, issue a bid
document. The bid document should allow proposals on both mobile and fixed network
radio frequency solutions. The benefit of a joint bid is that the price to the City may be
driven lower as a result of vendors offering competing solutions.
• The bid should be structured to maximize competition. This may require abandonment of
existing metering product before the end of its useful life.
• The bid and vendor selection process should stress the value of open architecture.
Reading system should be able to read multiple makes of meters, while minimizing RF
device inventory requirements.
• Select the AMR technology that provides the lowest whole life cost of ownership.
Factors such as useful life,battery life, warranty coverage and terms, failure rates, ease of
maintenance, ease of operation may be more important factors than initial purchase price.
Soft cost and non-economic factors may play a key role in the decision making process.
Implementation-
• During the procurement and implementation period, the City should continue with its
current meter replacement program using AMR compatible meters while minimizing
current meter inventory.
• Once an AMR technology solution decision is made, establish a team to identify and
implement strategies that will maximize this AMR investment. Many opportunities will
present themselves and the City needs to have a mechanism in place to take advantage of
them.
• As soon as an AMR technology solution decision is made, suspend replacement of
manual read meters, and any further investment in the existing meter reading system.
Any meter replacements should be completed with product that is compatible with the
selected AMR technology solution.
Operation
• Examine the meter accuracy of the small meter population and determine if extending the
current 10-year meter replacement cycle is warranted. The most cost effective operation
of an AMR system occurs when meter and AMR replacement/service activities are
performed at the same time, and when both systems are at the end of their useful lives.
Normally, a longer installed life of a meter and RF system, the lower the total cost of
ownership.
• Shift a negotiated proportion of the capital, operating and maintenance costs for meter
reading activities to the wastewater utility. At the present time, residential wastewater
customers do not have a volumetric rate, but have a fixed rate. However, as a part of the
rate structure study, the City is interested in implementing a volumetric wastewater rate
for residential customers. The wastewater utility should be charged a proportionate share
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of meter reading and billing activities. As the City moves towards AMR deployment, the
equitable allocation of these costs between the two utilities is even more critical.
2.7 Recommended Next Steps
While this study has examined AMR technologies and provided rough estimates of costs, it
certainly is not, in the opinion of HDR, sufficient to make a fully informed decision regarding
AMR, if the City wants to adopt AMR technology. This study was intended to be more of a
"screening" device to determine whether AMR was worth greater thought and investment.
Before an AMR implementation decision is made by the City, HDR would recommend that the
City continue to monitor AMR technology until it is better suited to clearly improve operations
and customer service..Once the City reaches this point, a more detailed financial analysis of eh
"While this study has costs and impacts of AMR would be required. Development
examined AMR of a financial model would provide the City with a tool to run
additional scenarios, changing variables to test the
technologies. . . it "sensitivity" of results. There are many soft cost and non-
certainly is not, in the economic factors to apply to an AMR technology decision.
opinion of HDR,sufficient However, by focusing on the financial model results first, the
to make a fully informed relative cost effectiveness of each meter reading technology
decision regarding AMR can be examined. The model would forecast the operating
and capital cost for each meter reading alternative, using both
bi-monthly and monthly meter reading frequency over 10 and 15-year planning horizons.
Only if the model assures justification for the use of AMR technology, the next step for the City
is to develop a detailed bid document to solicit proposals from meter reading vendors. The City
should request two bid prices relating to 5- and 3-year system-wide AMR deployment. Vendor
proposals should also include pricing for a "tum-key" AMR installation. Once proposal pricing
is submitted,the cost model can be re-run with actual and not estimated costs. The model results
are extremely sensitive to meter equipment pricing, particularly the cost of the meter interface
unit. The price of the meter interface has a large impact on the results. The rate of deployment
and meter reading productivity also impacted the ranking of results. For this reason, the City is
encouraged to investigate the cost of meter reading equipment more thoroughly through a
competitive bidding process.
If the City elects to move ahead with system-wide deployment, HDR would recommend that in
lieu of a pilot program, the City's senior staff should conduct structured visits at one or two
utilities that have implemented AMR to better understand how these systems function, what is
involved in successful deployment, and how the utilities are coping with integrating the new
technology into day-to-day operations. The City of Santa Cruz is one example of a near-by
utility that would share their AMR experiences with the City.
2.8 Summary
This section of the report has provided a review of automated meter reading technology and the
potential alternatives for the City. The next section of the report will discuss the evaluation of
the City's billing frequency.
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Section 3
Evaluation of the City's Billing Frequency
3.1 Introduction
An important element to customer communication and the City's conservation efforts is
predicated on the frequency of customer billing. The customer bill is the primary
communication between the utility and the customer concerning their consumption and the
amount of their bill. From this information, the customer may make a conscience decision to
modify or change their consumptive behavior-. This section of the report will discuss the issue of
billing frequency.
3.2 Evaluation of the City's Billing Frequency
At the present time, the City bills their water and wastewater residential and commercial
customers on a bi-monthly basis (i.e. every two-months). Bi-monthly billing is a widely
recognized and accepted billing practice. The obvious advantage of the bi-monthly billing cycle
is the lower costs associated with meter reading and billing. Historically, bi-monthly billing was
essentially a by-product of the following factors:
® High labor costs and the inefficiency of manual meter reading
■ Relatively low water and wastewater rates and the resulting low bi-monthly bills
■ A general lack of concern or interest in conservation or demand management.
Today, the three basic factors that drove bi-monthly billing cycles in the past have essentially
disappeared. First, as has been discussed in the previous section of this report, AMR has
advanced meter reading to the point that labor costs are minimized and essentially a non-factor in
the decision to bill on a monthly vs. bi-monthly basis. The second issue, the size of the utility
bill, is probably the primary driver that utilities now use in the decision to move from bi-monthly
to monthly bills. As water, and particularly wastewater bills, have increased at a rate greater
than overall inflation, a number of utilities have explored monthly billing as a means to make the
bills more "affordable." An alternative approach that some utilities
have moved to is "budget" billing in which the utility maintains bi- "Today, the three
monthly billing, but bills the customer an average amount so that basic factors that
large fluctuations are removed. The basic problem with this drove bi-monthly
approach is that it counteracts or defeats any conservation or billing cycles in the
demand management initiatives the utility may be undertaking. The past have essentially
use of"price signals" to change or modify consumptive behavior is disappeared"
a cornerstone of efficient use and conservation. Movement to
monthly billing provides the benefit of greater "feedback" to the customer concerning their
consumptive use. Finally, the perspectives of conservation and efficient use have changed
significantly over the last 10 to 15 years. Today, it is widely recognized that customer feedback
concerning consumptive use is one of the best tools to encourage conservation.
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To better understand current utility practices, the AWWA 2004 Water and Wastewater Rate
Survey provides an understanding of current
Suryeyor Residential Bluing Methods industry practices as they relate to billing
frequency. In the 2004 survey, monthly billing is
21 the most predominate billing frequency. Roughly
m" 1h,1 60% of the utilities surveyed used monthly billing
° y frequency. Bi-monthly billing, the City's current
70%tj! 59°h o Quartery
approach, is used by only 20% of the utilities
selected in the AWWA survey. It is interesting to
- - note that quarterly billing is used by
approximately 21% of the utilities surveyed. Typically, smaller and more rural utilities tend to
use this method, particularly when manual meter reading may be difficult or costly due to a lack
of customer density or weather conditions (unable to read "meters in the winter).
At the same time, from a conservation perspective, the industry recognizes the importance of
monthly billing. The California Urban Water Conservation Council (the "CUWCC")
recommends the following:
"Utilities should consider establishing a monthly billing system that clearly
communicates the Utility's rate structure and the customer's current and historical
consumption of water, if it is cost effective for the utility to do so.
The CUWCC is recommending monthly billing, but more importantly, it is recommending
monthly billing as a means to clearly communicate current and historical consumption of water.
The City's current billing format does not provide historical consumption information (e.g. 12
months of history). The City has a strong conservation ethic, and is taking steps within this
study to consider rate structures that will potentially send a stronger price signal concerning
conservation and efficient use. Movement to monthly billing would certainly complement the
City's proposed changes in rate structures.
The other advantage that is often cited concerning moving from 6i-monthly meter reading to
monthly meter reading is the one-time improvement (injection) in cash flow. While this is a
financial benefit, in the opinion of HDR, the decision to move to monthly billing should not be
predicated upon the benefit of improved cash-flow. Cash flow issues are better dealt with
through establishment of adequate operating reserves.
The previous section of the report provided a discussion of AMR and monthly billing. A
summary of those findings are provided below.
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Table 3-1
Summary Matrix of the AMR Scenarios and Potential Impacts
AMR Scenarios
Issues/Impacts Scenario 1 Scenario 2 Scenario 3 Scenario 4
No AMR/Bi-mo. No AMR/mo. AMR/Bi-mo. AMR/mo.
AMR? No No Yes Yes
Frequency of Billing Bi-Monthly Monthly Bi-Monthly Monthly
AMR Capital Cost $0 $0 $2.88-$4.32 Mil. $2.88-$4.32 Mil.
Incremental Addl Cost
$/Account/Month $0.00 $1.59 $0.51 -$1.21 $1.15'-$1.85
Total Customer Cost/Billing $3.31 $4.90 $3.83-$4.52/Mth $4.46-$5.16/Mth
Total Customer Cost/Year $39.76 $58.78 $45.87—$54.24 $53.51 -$61.88
As can be seen, even without AMR, the cost per account to move to monthly billing is rather
modest. With AMR, the decision to move to monthly billing would be essentially made.
Depending upon the AMR technology selected, the incremental costs are driven by the
technology, not necessarily additional meter readers, customer service personnel or postage.
Should the City move to a new billing system, the ability to provide historical.usage on a
monthly basis would be an added benefit and meet the criteria of the CUWCC.
3.3 Billing Frequency Recommendation
HDR would strongly recommend that the City move to a monthly billing frequency. The cost
per customer appears reasonable, given the benefits to be derived to both the City and the
customer,even without the implementation of an AMR system.
3.4 Summary
This section of the report has reviewed the issue of billing frequency. The City should consider
movement towards a monthly billing frequency, but do so in a coordinated and cost-effective
way.
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Section 4
Compatibility of
to the Alternative Rate Structures
4.1 Introduction
An important component of the evaluation of the alternative"water and sewer rate structures is a
review of the compatibility of these rate structures to the City's current utility billing system. A
comprehensive evaluation was undertaken of the City's "utility billing system (See Section 5).
From that review and evaluation, a determination could be made of the compatibility of the
existing utility billing system to the alternative rate structures. This section of the report will
review our findings on this compatibility issue.
4.2 Water Utility Rate Structures
The City currently has a two-block volumetric water rate structure. This type of rate structure is
commonly used by other water utilities and the City's utility billing system does not have any
problems or issues supporting this rate structure.
For the water utility, seven different conceptual rate structures were reviewed'. In summary
form, the conceptual water rate structures were as follows:
■ City's Current Rate Structure (2 blocks)
IN City's Current Rate Structure with Modified (Defined) Block Sizes(3 blocks)
■ Modified Current Rate Structure with Individually Tailored Block Sizes(3 blocks)
■ Seasonal Rate Structure with Defined Block Sizes (1 block winter, 3 blocks summer)
■ Seasonal Rate Structure Using Average Water Consumption (AWC) to Define Blocks (1
block winter, 3 blocks summer)
■ Water Budget Using AWC for First Block Size and Lot Size/ET for Block 2 (4 blocks)
■ Water Budget w/Fixed Threshold for 1" Block Size and Assumed Lot Size for 2nd Block (4
blocks)
From these seven conceptual water rate structures, two alternative water rate structures were
selected for further review and technical analysis. These two water rate structures were as
follows..
■ Maintain existing water rate structure,but add a P block tier for residential
■ Fixed Charge+maintain existing water rate structure, but add a 3rd block tier for residential
The alternative water rate structures selected for further technical review are very similar to the
City's existing water rate structure. The first alternative simply adds an additional consumption
For a more detailed discussion of each alternative water rate structure,see Volume 1 —Utility Rate Structure
Evaluation.
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block to the rate structure for residential customers. The second alternative is similar to the first
alternative, but adds a fixed charge. The fixed charge is the same for all customers regardless of
water meter size or volumetric use.
`: . . both alternative
water rate structures COMPATIBILITY OF THE ALTERNATIVE WATER RATE
are compatible with STRUCTURES TO THE CITY'S EXISTING UTILITY BILLING
the City's existing SYSTEM — Based upon the review of the City's utility billing
ACS billing software." system, both alternative water rate structures are compatible with
the City's existing ACS billing software.
4.3 Sewer Utility Rate Structures
The City currently has two different sewer rate structures in place. For residential customers,
there is a fixed charge. For non-residential customers, there is a fixed charge and a variable
charge that is based upon a customer's volumetric water consumption. No adjustments are made
to the volumetric water consumption reading (e.g. use 80% of water use for billing purposes,
etc.). Both of these sewer rate structures are commonly used by other sewer utilities and the
City's utility billing system does not have any problems or issues supporting either of these rate
structures.
For the sewer utility, six different conceptual rate structures were reviewedZ. In summary form,
the conceptual sewer rate structures were as follows:
IS City's Current Rate Structure (Fixed Charge)
■ Modified Current Rate Structure With Fixed Charge Based Upon Customer's AWWU
■ Fixed Charge, Plus Volume Charge Based Upon Metered Water Use
■ Volumetric Rate Structure.Based Upon Metered Water Use, With a "Cap" for Residential
Billed Volumes
■ Fixed Charge, Plus Volume Charge Based Upon Metered Water Use — Capped at Class
Average
■ Fixed Charge, Plus Volume Charge Based Upon Metered Water Use — Capped at Customer
AWWU
From these six conceptual sewer rate structures, two alternative sewer rate structures were
selected for further review and technical analysis. These two sewer rate structures were as
follows:
■ 100% volumetric rate structure with a"cap" on volumetric billing for residential
■ Fixed Charge + 100% volumetric rate-structure with a "cap" on volumetric billing for
residential
The first sewer rate structure is a pure (100%) volumetric rate structure that uses the customer's
water consumption for billing purposes. This is very similar to the billing approach currently
used for non-residential customers. However, in this particular sewer rate structure the
residential billing is "capped" at a fixed volume. That is, the residential volumetric billing can
2 For a more detailed discussion of each alternative sewer rate structure,see Volume I —Utility Rate Structure
Evaluation.
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be no greater than some defined volume. The second alternative rate structure is the same as the
first alternative, but the only difference is that a fixed charge is added to the rate structure.
After reviewing the above two conceptual rate structures in more detail, the City determined that
an alternative sewer rate structure may be more appropriate. At this time,the City is considering
the following sewer rate structures:
❑ For residential customers, a fixed fee, plus a uniform volumetric charge with the volume
billed capped on an individual customer basis. Each individual customer will be billed up to
their average winter water use (AWWU).
❑ Multi-family residential customers without an irrigation meter will be charged in a manner
similar to residential customers, using their AWWU to create a cap on volumetric billing.
❑ For non-residential customers, they will be billed in a manner similar to the current rate
structure
❑ Multi-family customers with irrigation meters will be billed as a «, . , the final
non-residential customer alternative sewer rate
structures using an
COMPATIBILITY OF THE ALTERNATIVE SEWER RATE AWWUapproach are
STRUCTURES TO THE CITY'S EXISTING UTILITY BILLING SYSTEM compatible with the
— Based upon the review of the City's utility billing system, the City's existing ACS
final alternative sewer rate structures using an AWWU approach billing software."
are compatible with the City's existing ACS billing software.
4.4 Summary
This section of the report has reviewed the compatibility of the City's utility billing system to the
alternative water and sewer rate structures reviewed in the Volume 1 report and subsequently
refined by the City and HDR. Based upon the review of the City's billing system and the rate
structures selected, HDR found no issues or concerns with regard to billing system compatibility
and the alternative water and sewer rate structures.
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Section 5'
Technical Review of the City's Utility Billing
System
5.1 Introduction
A review was undertaken of the City's utility billing system (UBS) to determine whether the
current system would support the various alternative water and sewer rate structures that the City
was considering, while at the same time, reviewing the City's system for possible enhancements
and improvements to improve customer billing and service. Langham Consulting Services, Inc.
(Langham), experts in utility billing system software systems, conducted the review of the City's
billing system.
5.2 Objectives of the Billing System Review and Approach
The City requested a high level review of the City's utility billing system. Specifically, the
objective of the utility billing system review was as follows:
"Develop a list of requirements and an assessment for a utility billing system that
potentially supports the City's alternative water and sewer rate structures. Provide a
recommendation for the most appropriate utility billing software package meeting the
City's requirements."
In order to achieve the above objectives, the following approach was taken in reviewing the
City's utility billing system.
s Developed a high level understanding of the current functional requirements of the City's
Utility Department and determine how they relate to the current Utility Billing application
software.
■ Review the findings, conclusions and recommendations of the rate structure alternatives,
billing frequency and automated meter reading tasks and compare those AMR; billing
frequency and rate structure recommendations to the current capabilities of the City's system
■ Examine possible customer information system (CIS) / utility billing packaged software
solutions in the marketplace that will support the City's utilities in the future.
Valuable bi-products of this exercise will be a list of functionality available in both the current
utility billing system and other utility billing software and practices used within other utilities
that the City might consider valuable to implement in future.
5.3 Current System Operation and Requirements
The first step in-reviewing the City's utility billing system was to conduct a high level review of
the City's current utility billing system and the current utility business practices of the City.
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Provided below is a summary of the system review that was undertaken.
OVERVIEW OF THE CITY'S UTILITY BILLING SYSTEM—The City currently uses a utility billing
system provided by Affiliated Computer Services, Inc. (ACS). ACS is a long-established
company (30+ years) and they have sold ACS Utility Billing
"The City currently (ACS-UB) systems to hundreds of small utilities during that time.
uses a utility billing Their utility billing system is one of a suite of products (mainly
system provided by ERP applications) that are targeted towards small municipalities
ACS. ACS is a long- such as the City.
established company
(30+years)" The City utility billing software product is basic in functionality
but handles the automation of the majority of time consuming
tasks typically performed by smaller utilities (according to ACS). Among these tasks are the
following:
■ Calculate and print utility bills ® Calculate penalties
■ Print notices E Record collections
■ Maintain customer balances ■ Maintain customer history
■ Produce accounting reports ■ Provide a comprehensive audit trail
■ Operational overview
ACS-UB is utilized 5 days a week, 9 hours a day. There are two (2)constant users of the system
that handle most of the day-to-day operations. The first user handles customer service (cut-ins,
cut-outs, delinquency processing and coordination with field crews); the other user handles
billing, payments and the shut off process. In addition to the two main users, there are seven (7)
casual users of the system.
On the City's system, approximately 14,000 metered water services are billed. The majority of
these services also have an associated sewer service. Irrigation is typically provided through the
water meter, although even if a separate meter is installed, the rate charged to the customer is the
same as that for potable water with no associated sewer charge. Private fire.service lines are also
billed at the same rate as potable water. A utility tax is applied to all but governmental agency
accounts.
Two additional services or programs are offered that are invoiced through the utility billing
system. The first is an industrial user fee used,to cover inspection of and wastewater treatment
costs for high-strength wastewater effluent. The second service is a low-income program where
a reduced rate (15% less on sewer and water charges)is charged to customers that can prove they
are needy.3
Major challenges faced by the utility are the continuing threat of drought conditions on the
Central Coast of California and a significant student population. A major drought could trigger
the implementation of emergency measures including the enforcement of special rates. The City
3 Financial proof is not required. If the customer is drawing supplemental Social Security, food stamps, is receiving
veteran benefits or can produce a bill showing that they are part of the utilities low-income program they are
deemed eligible for the SLO low-income program.
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has a significant conservation program and effort. The City offers many programs to encourage
conservation in the home such as free showerheads and retrofit rebates. Three features/tools are
utilized by the City in the ACS billing system to encourage conservation and they are as follows:
■ A tiered or inverted block rate structure that charges customers a higher price for usage over
a defined threshold;
■ The conscious decision not to introduce budget billing (based on the premise that the
customer should be fully aware of high consumption when it is incurred via a strong price
signal);
■ A report goes to the City's water conservation group of the customers that consume greater
than 40 CCF per billing period.
The other utility billing system challenge noted by the City was the large student population.
The presence of a student population implies peak customer service volumes for move-ins and
move outs in September and June/July respectively. Excluding this population though, the
demographic is reasonably typical of a small semi-rural municipality. There is generally
manageable growth and delinquency is not a major problem.
In addition to the above, there have historically been other issues or concerns:
■ No reversion of utility accounts to landlords, where tenants move out
■ As a result of no reversion of accounts to landlords, there are incidences of water usage
between tenants. This can be monitored and may be actioned if the amount of consumption
is considered too high
■ Whether monthly billing is preferable to bi-monthly billing
■ The perceived disparity/inequity between the amount invoiced for potable water and
wastewater. (currently, residential wastewater is billed as a flat fee, whereas water is billed
based on consumption).
BUsmss PROCESS OVERVIEW — The City's business is operated based on a rigid read, billing
and collections schedule, which revolves around the two-month (bi-monthly)billing cycle.
The simplest way to explain this billing and collections cycle is by examining a typical billing
cycle example. Figure 5-1 provides an overview diagram describing the cycle for accounts on
meter reading routes 100, 115 and 120. Each step is covered in detail in the sections that
follow.
It should be noted that although the billing and collections cycle(up to the production of the shut-off notice)
operates around a weekly schedule, the shut-off process itself operates around a monthly cycle starting generally
on the last Tuesday of the month. For this purpose, the table refers to this last Tuesday as"N' from which the rest
of the schedule is calculated..
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Table 5-1
Overview of the City's Typical Billing Cycle
Timing in Period Example Dates Process Description
Between Monday and Wednesday April 11th, 12th and 13th q Readings Taken
Friday April 15th { Bills Calculated and Printed
Due Date=Bill Date+31 days May 16th
Reminder Notice
Due Date+1 Day May 17th
Penalty Applied
r
Reminder Notice Date+7 Days May 24th Shut-Off Notice _ a
Last Tuesday of Month=N May 30th-June 3rd { Remove Customers From List .i
N+1 Day June 1st i __ Phone Call
N+3 Days @ 2 p.m. June 3rd { Last Chance to Pay
Monday Following"N" June 6th { Shut-Off Meter
METER READING — Meters are generally read between Monday and Wednesday of each week.
Meters are read both manually and, for a limited number of meters, using a drive-by automated
meter reading (AMR) system. The routes to which a meter belongs, and the sequence in which
they are to be read, are managed in the ACS-UB. Typically; a route is read daily. The day
before, a file is produced from the ACS-UB that tells a meter reader which meters are to be read,
and in which order. This file is either transferred to the Radix meter reading system, if the route
is read manually, or copied to a floppy disk if the route is driven to collect AMR reads. At the
close of each day, the meter read data collected is uploaded to the ACS-UB and any exceptions
are resolved in time for billing on Friday.
Reports are run that "trap" high and low readings (compared to the same period the previous
year), inactive accounts with consumption and zero consumption on active accounts.
Appropriate action is taken which may be a referral to the City's conservation department or a
referral to the water crew (this is initiated and tracked by a service order). These issues are
generally resolved before close of business Thursday, with any required adjustments being
entered into the system on that day.
There are certain notes and exceptions.to the City's meter reading process. These notes and
exceptions are as follows:
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■ The City very infrequently has to estimate a customer's consumption. This occurs mainly in
those situations where there has been a meter reading error. Due to the schedule of weekly
billing, there generally is sufficient time to get any rereads back into the system before billing
is run.
■ No complex meter set-ups are supported within the ACS-UB system. Subtractive/additive
meters, compound meters, remote meters, flushing meters are all recorded and billed as
single register meters in the system. This is either done within the meter reading system
(Radix) or manually in the field. Effluent (wastewater) flow meters are used at Cal.Poly and
the Madonna Inn.
BELL CALCULATION —The billing of a customer is based.around the metered services supplied.
If, for example, a hotel has multiple meters, one serving the rooms, one for cooling and another
for irrigation, the hotel will receive three (3) separate bills. If a customer has multiple properties,
each meter at each property will be billed separately, but the mailing address for each account
may be set so that all bills are delivered to an address of the customer's choice.
Sewer is billed as an associated service to the metered water service. In complex scenarios, such
as mobile home parks and multi-family residences, special rates may apply and the calculated
amount may account for the number of units in the multi-unit complex.
The only items calculated in addition to water and sewer charges are a Utility Users Tax and an
Industrial User (wastewater inspection) Fee. The Utility Users Tax is calculated as a percentage
of the water charge. The Industrial User Fee is a per annum fee based on a classification of the
customer, prorated over the 6 billing periods. The fee is held in the ACS-UB system and is
associated with the customer class. The billing of the account is manually triggered.
Off-cycle billing is performed on customer "move-outs" based on a final read. For customer
"move-ins", the meter is read and the customer is billed at the next scheduled date. Charges will
be prorated based on the number of days of service for that account during that billing period.
Charges are also prorated where a mid-period rate change occurs. New rates have historically
been implemented effective July 1. The ACS-UB system will prorate consumption for the
period that includes the rate change, charging the customer proportionally based on the old rate
before the effective date of the rate change and on the new rate.after the effective date of the rate
change.
There are certain items that should be noted and certain exceptions concerning the calculation of
water and sewer bills. These notes and exceptions are as follows:
■ A levelized budget billing program is not offered by SLO, although customers can obviously
set up regular and fixed payments through ACH (or via credit card over the web in the
future). Occasionally, customers may be contacted when the credit amount on their account
is growing substantially.
5 There is no ability to group accounts for the same customer on a single bill.
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■ There are no complex fees or charges billed for: stormwater, water line reimbursement fees,
or sewer treatment charges (BOD, TSS or COD charges).
■ There are no special requirements in calculating bills that are incurred by the City itself, other
than the fact that the City is tax exempt. Bills are printed and distributed to the.respective
departments for information purposes, finance makes appropriate journal entries to move
monies from one department's fund to the utility. The entire process is performed manually.
BELLING— Billing currently occurs bi-monthly for every customer. Billing is run every Friday
for approximately 1/8 (12.5%) of the customer base. There are 3 larger routes that produce
around 2,400 bills in a single billing run. Bills are stuffed, folded and enveloped at a local
printing company, if there are more than 500 bills in a run. The billing process sets a due date 31
days in the future. Provided in the Technical Appendices is an example of the customer bill
format.
There are certain items that should be noted and certain exceptions concerning the billing
process. These notes and exceptions are as follows:
■ There is no support for multiple or seasonal mailing addresses. Addresses are changed
manually on demand. An additional address may be entered for a 3`d party notification. This
may be used to inform a student's parent or to provide a billing copy to a central office
location where a company owns many properties.
■ If an error in billing occurs, or if a customer disputes a charge that is settled in the customers
favor, the bill in question is neither cancelled nor re-issued through the ACS-UB, although a
bill may be hand-written if the customer demands it. A financial adjustment according to the
amount settled is made to the account that is then reflected on the next bill issued.
■ Reprints of previous bills are supported by the ACS-UB although email, fax or electronic bill
presentment are not supported.
COLLECTIONS — In all circumstances, unless manual intervention prevents it, a penalty charge
and a first notice will be issued the day after the due date. Penalty charges are calculated at the
great of either 1.5% of the delinquent amount or$10.00.6
Seven days after the first notice, a shut-off notice is sent to the customer. The shut-off process
actually occurs over a 7-day period.. In the example shown on Figure 4-1, potential shut-offs
(referred to as a Turn-Off list report) are reviewed between May 30`h and,June P. Customers
may be removed from the list if they meet specific criteria (for example if they have less than
$20 of arrears or they are on a payment plan). On June 1", the predictive dialer informs the
customer that they must pay by close of business on June 2nd If payment has still not occurred,
the customer is physically disconnected on June 6d'. A door tag informing the customer of the
shut off and how to get reconnected is attached to the property. Provided in the Technical
Appendices are example formats for fust notice and shut-off notice.
After a meter shut-off, field service representatives visit the property. On the following
6 CSR's do have the authority to waive the penalty charge if appropriate,once in every 12 month period per
customer.
7 The last point at which SLO actually allow the customer to pay to prevent cut-off is 2pm on 6/3.
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Wednesday, the field representative checks to see if the customer has illegally turned their meter
back on. If they have done so, the meter is locked. On the following Friday, if the customer has
removed the lock,.the meter may be removed altogether.
If by Friday it is apparent that the customer has vacated the premises,the account is closed and
the outstanding balance is sent to the Medicodental collection agency.s Medicodental receives a
screen scrape from the ACS-UB that includes the customer's details and Social Security
Number. Medicodental may forward customer details to credit reference agencies. They also
are used to deal with bankruptcy cases.
This billing cycle is applied to all customers, regardless of whether they are residential,
commercial, good or poor payers and .all charges tracked in the ACS-UB are eligible for
collection action.
There are certain items that should be noted and certain exceptions concerning the City's
collection process. These notes and exceptions to the collection process are as follows:
■ Delinquent customers for solid waste are also pursued by the City, although these charges
and actions are not tracked through the ACS-UB.
PAYMENT PROCESSING — Pentamation GRS (GRS) from SUNGARD is used to record
payments; payments are entered into the ACS-UB manually at the same time1o. If a multiple
tender payment is made, this is recorded in GRS, but recorded as a single payment in ACS-UB.
Customers are permitted to pay using tender types of cash, check, credit card (Visa and
MasterCard)" or Automated Clearing House (ACH). Payments may be made over the counter,
through mail, by phone or at drop boxes around the City. ACH payments [electronic transfers]
can be established by application over the counter to be made from checking accounts only.
Phone payments are by credit card only and are processed in the same way as credit card
payments over the counter.
Payment plans or payment arrangements are not specifically supported by the ACS-UB.
However, the City can arrange a payment plan with a customer and use service order
functionality in ACS-UB to reflect the record and monitor it. When a payment plan is
established with a customer, one or more service orders are entered and used to manually track
payments according to the arrangement established with the customer. These agreements are
generally not offered to customers during the June time frame (as exiting Cal-Poly students could
potentially abuse this)unless the customer is personally known to the City.
GRS is used to record payment rejections (such as non-sufficient funds [NSFs]). These are not
recorded financially in the ACS-UB. This situation is reconciled on a daily basis. When a
payment rejection is received, a Service Order is scheduled in the ACS-UB to disconnect the
8 Medicodental may also be used to collect unpaid industrial fees after two years
9 No credit rating is maintained for the customer.
10 If a stub is available,this may be scanned,automatically filling in the payment and account details on the ACS-
UB screen.
The third party fee for credit cards is absorbed by SLO and is not passed on directly to the customer.
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customer's service in 14 days.
The above description has provided an overview of the payment process. However, there are
certain items that should be noted and certain exceptions concerning the City's payment process.
These notes and exceptions to the City's payment process are as follows:
❑ A peak of payment activity occurs on Monday's as a result of the due date usually falling on
a Monday. Figure 5-2 shows the number of payments entered daily during the period June 1,
2005 through June 29, 2005.
700-
600
500
400
300
200-/1
I
I
i
100
I
I
0 -
. N N N N N N N N N N N N N N N N N N N N
O O O O O O O O O O O O O O O O O O O
O _
Note: Monday's=June 6, 13,20 and 27
❑ Municipal payments are not made automatically. Charges are generated in the ACS-UB'
system and bills produced. Bills are set aside and payments manually inserted in
Pentamation GRS and the ACS-UB system based on the amount owed. Manual journal
entries are created to transfer funds interdepartmentally and the payments are registered in
ACS-UB.
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■ Payments through the web via credit card are planned (details will be entered by the
customer and validated through Verisign prior to payment being taken). The customer may
choose to make a"one-off'payment or set up recurring payments each time a bill is issued.
■ The customer may contact the Economic Opportunity Commission (EOC) which may agree
to pay the entire bill (less penalties and reconnection fees. after shut-off). In this
circumstance, the City transfers payment from a City fund, managed by the EOC, the account
is adjusted down (not paid) and a manual journal entry is made in the General Ledger.
■ Wire transfers are also accepted, although only a few customers currently use this facility,
including Southern California Gas (SCG) and government entities. A wired payment is
accompanied by an email from the payer. After payment receipt at the bank is verified, these
are entered into both Pentamation GRS as a.manual journal entry and a cash payment in the
ACS-UB system.
■ When check payments are received, and entered in the ACS-UB system, the indicators of a
customer being a"poor payer" are generally the number of NSF checks received by the City
and the history of delinquent actions against the account. Under these circumstances, the
customer may be taken off ACH and payment by check may be refused.
■ Where two ACH payments fail within a 12 month period for a customer, that customer will
be taken off ACH.
DEPOSIT PROCESSING— Customer deposits (currently $90) are taken from customers under two
circumstances. These two circumstances are as follows:
■ On sign-up, the customer is requested to provide their Social Security number. This may be
used should the customer become delinquent and the debt needs to be referred to a collection
agency or simply as a means of identifying the customer. The Social Security number is
provided to the agency and used by them to recover the debt. If the customer refuses to
provide their Social Security number, the City requests a deposit from the customer.
■ If the customer becomes delinquent and their account is shut-off, in addition to the amount
owing and the re-connection fee (currently$53)charged by the City, a deposit is demanded if
one has not already been paid. The customer is informed of this deposit requirement on the
shut-off notice.
In these circumstances, the deposit must be paid prior to the service being physically connected.
The deposit does not appear on the bill and is tracked as a separate financial entity in the ACS-
UB system and in a separate GL Account. The City may waive the deposit amount (on the first
infraction) if the customer has a good payment history and the shut-off is clearly due to an
oversight rather than an unwillingness to pay by the customer.
A "customer deposit journal" report is monitored to determine that only one deposit is collected
per customer and to determine if deposits should be refunded to the customer or applied to
outstanding balances on inactive or "finale& accounts. A deposit may be refunded to the
customer if the customer stays clean (no delinquency actions) for 12 months. Deposits are
automatically applied to customers' accounts and distributed according to system rules.
There are certain items that should be noted and certain exceptions concerning the City's deposit
process. These notes and exceptions to the deposit process are as follows:
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❑ No interest is applied(or refunded to the customer) for deposits held by SLO.
❑ Non-monetary deposits are not taken.
CUSTOMER SERVICES - Customer Service handles move-ins, move-outs, delinquency
processing, coordination with field crews and general customer interaction over the phone or in
the City's offices. The majority of their responsibilities are embedded in other sections of this
report.
Although the responsibilities of Customer Service are fairly typical, the spectrum of issues dealt
with is reduced by the simplicity of the offering to the customer. For example, a single
collection strategy, a regimented billing and collections cycle, the decision not to offer budget
billing, a simple rate structure from a billing system perspective and bi-monthly billing all imply
a lower risk environment for the CSR and a lower cost operation.
One of the biggest challenges for Customer Service is the student population. This demographic
tends to:
❑ Have numerous parties that may share bill payment on a single service.
❑ Have peak periods of demand on customer service (at the start and end of each academic
year). Figure 5-3 shows the number of move-ins and move=outs per month for the period
July 2004 through June 2005.
Guam@
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00700600
500-Z
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i
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City of San Luis Obispo 42
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
Figure 5-4 shows the number of phone calls taken by customer service per month for the period
July 2004 through June 2005.
G�Q4
Q u- Qfn�3� Tc�'j � i • a�i p i �
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There are certain items that should be noted and certain exceptions concerning the City's
customer services. These notes and exceptions to the customer services are as follows:
o New installs are initiated by Community Development. Simultaneously, notification is
received by the'utility of the new service address and meter. At this point, the City sends a
letter to the new customer informing them that, unless notified within three (3) weeks, an
active account will be established in their name, once a meter is set. This process is tracked_
manually by the Customer Service Supervisor(since no account exists in ACS-UB).
13 Customer contacts are not maintained other then when deemed necessary by the CSR (where
a dispute is anticipated) or when the customer demands it. When required, service orders are
used to record events in the system. An outgoing log of customer contacts is maintained
automatically by the system for notices and service orders.12
12 Service orders are the de facto method of either recording or scheduling an event in the UB system.
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■ When a new customer requests a service to be turned on, a move-in fee (currently $36) is
automatically generated which appears on the customer's fust bill. A change of name is
always accomplished by a move-out and move-in.13
■ Statistics are maintained via an MS Excel spreadsheet.
■ Public works (corporation yard) takes care of main breaks and outages as a result of e-mail
notification from the utility. The customer is informed reactively of emergencies - if they
call, their location is matched with any known outages. If there is no known outage in that
vicinity, a call is used to send someone out from the corporation yard to investigate the
problem. Pre-printed door tags (not generated from ACS-UB) are used to inform customers
of scheduled outages.
■ No payment arrangement contract letter and/or no welcome letter are produced. Any other
correspondence would be produced manually via word processor.
■ Call scripts are not used to drive calls with the customer.
■ Customer service options will also be offered over the Internet (refer to "Interfaces, Web"
below).
CASHIERING AND GENERAL LEDGER AND FINANCIAL BALANCING - Pentamation GRS (GRS)
from SUNGARD provides both cashiering and general ledger(GL) functions for the City.
ACS-UB accommodates three transaction types: billings, adjustments and payments. The ACS-
UB system does not recognize different types of adjustments. The following rules apply for
financial transaction processing:
■ Regardless of the tender type, payments without an accompanying stub are entered by
account into the ACS-UB system.
■ All non-automated payment types are batched in the cashiering system; the total batch
amount is sent to the general ledger (GL) as a single accounts receivable (AR) line entry
when it is balanced and closed at the end of business each day,
■ For ACH payments, the total value of the file sent to Bank of America (BofA), created by
ACS-UB, is entered as a single journal in GRS.
■ For payments that are accompanied by a stub, the stub is scanned using a handheld OCR
reader directly into ACS-UB. Payments are batched in the cashiering system and the total
batch amount is sent to the GL when the batch is balanced as a single AR line entry.
■ Checks for refunds and settlements in the customer's favor are cut from GRS, adjustments
having been approved by a supervisor and entered in the ACS-UB system. This occurs only
when the account is closed (and the account credit balance is $10 or greater) or in the case
where a customer specifically requests a refund..
■ The General Ledger is manually updated for deposits refunded and automatically updated
when deposits are accepted through the cashiering system.14
■ Any monies collected by the City's collection agency (Medicodental) are applied (net of
commission)to the GL write-off account and AR account.
13 The associated fee may be waived for changes of name as a result of a divorce or for the spouse of a deceased.
14 Deposits are entered and maintained as a separate entity in ACS-UB.
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ATTAW I ENT 2
There is no automated interface between ACS-UB and GRS. With one exception, ACS-UB and
GRS are financially in balance, at least on a monthly basis.15 The financial balancing and
reconciliation process accounts for these idiosyncrasies. Balancing is performed daily between
GRS and bank deposits. Monthly balancing of AP (including adjustments) is performed between
GRS and ACS-UB. AR and adjustments are generated in the ACS-UB system on a weekly basis
(Fridays and Thursdays respectively). A journal entry for these is made on a monthly basis to
GRS..
There are certain items that should be noted and certain exceptions concerning the City's
cashiering and general ledger and financial balancing. These notes and exceptions to the
cashiering and general ledger and financial balancing process are as follows:
■ There is no automatic authorization of adjustments, refunds, batched payments or any
financial transaction regardless of the amount or type in ACS-UB. Adjustments and refunds
are captured manually and approved before the adjustment is made in ACS-UB and the check
cut in AP (if appropriate).
■ There appears to be no issue with suspense. That is, there are no significant payment
amounts that reach the City that are untraceable.
INVENTORY AND FIELD SERVICE — ACS-UB has a comprehensive inventory management
system, although it is not truly the system of record for meter inventory;ACS-UB maintains-only
enough inventory information (active meters) in order that customers are accurately bille . At
this point, it is unclear if this is truly the system of record. As inventory is installed, exchanged
or maintained in the field, the utility is informed of what changes have been made. In most
circumstances they have a record of the inventory already entered in ACS-UB. In the case of
new inventory,details are provided by Field Service.
There is no automated interface between ACS-UB and Field Service. A paper-based system is
used: service orders and reports generated out of ACS-UB drive work in the field. Field Service
schedules its own work. Their objective is to clear all service orders by close of business each
Thursday, so that Friday's billing is run on current data.
Figure 5-5, shows the number of service orders per month for the period July 2004 through June
2005. There were 4,458 service orders during this period, or an average of 372 per month.
15 This exception is when payment rejections are received(specifically NSFs).NSFs are entered as a financial entity
only in GRS(a service order records this in ACS-UB).The reason for this is that there is no mechanism to record
this information in ACS-U11 as there is no way to either differentiate between different types of adjustment or enter
a negative payment
City of San Luis Obispo 45
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
C;�� cl/
J ATTACrt 3EINT 2
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REPORTING=The ACS-UB provides a number of different reports. Provided below is a listing
of the various reports provided by the system.
O Utility Rates List O Zone Calculation Report
O User High Consumption O Consumption History Report
O Average Consumption Report O Revenue Forecast
O Disconnection Notices O Adjustment Report Year-End
O Adjusted History Edit Report Calculation Report
O Refuse or Flat Charge O Deposit Interest Notices
O Customer Listing With Meter Detail O User Flat Charge Report
O Estimated Readings O Owner Listings
O Depositing Entry List O Deposit Transaction List
O Tax Exempt Amount List O Deposit Listing By Account
Number/Customer/Name/No
Deposit Customers
Given this overview of the City's current utility billing system and its capabilities,the focus
shifts to the technical aspect of the system.
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5.4 Technical Overview
The City's system is operated on an IBM AS400 platform, which is a reliable and robust piece of
hardware. AS400 is not cutting edge technology, but it is relatively easy and inexpensive to
maintain. AS400 technology has a very large install base and therefore market skills are
relatively easy to procure.
Access to the ACS-UB system is through a Graphical User Interface (GUI) with the release of
ACS 4 on desktop PC's running.MS Windows Operating System.
The City does not employ a Computer Operations Department. The City's utility department
operates the system 5 days.a week (Monday — Friday), 9 hours a day. Therefore all batch jobs,
reports and extracts are run during the day and entry of transactions and system updates are
scheduled around these runs. All jobs are submitted manually; therefore no scheduling software
is used.
Direct access to the production database is permitted through ODBC links from Microsoft Excel.
There is no direct facility to extract data directly from screens other than regular Windows
functions (screen print or copy/paste). There is no real requirement for data marts or data
warehousing. The system is purged of data periodically retaining a history of four years. There
are no apparent performance issues with either on-line access or the run-time of reports or batch
processing.
The City prints all reports, bills and notices. For volumes of bills more than 500 pages, a local
company (SLOmailing) is used for enveloping, stuffing and mailing.
No user exits are available in the product; standard API's are unknown at this time.
Modifications to the base software requested by the City are few and simple. The City has
developed a customer web access site with a 3rd party (D&T Ventures), which is due to be
released in the near future. Customers will access their information with a user ID and password
that will be provided after they submit their Social Security Number as proof of identity to the
system.
Security is enabled within the ACS-UB application to limit specific user access to certain
functions of the system. There are no hierarchical security requirements (example: supervisor
authorization of transactions).
Figure 5-6 provides a context diagram and the subsequent narrative discussing the interface
describes how the ACS-UB system interacts with other systems.
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2004Figure 5-6
Customer Service Orders; July 00
0
Micro t�AMR -
Phonetree
MS
Radix
Meter y /
Reading i
ACS /
Utility Billing Pentamation
System ' a
...................
CAS Cashtenng
A'
\
\
\
World Wide \
\
Web(future) \ a .
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BofA®
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Key:
A strong solid line indicates an automatic interface.
A strong dashed-line indicates an interface where an electronic file is manually fed to another system.
A weak dashed line indicates data is manually re-entered into another system.
AUTOMATED METER READING(AMR)—The City implemented a pilot of 75 AMR devices on
meters that have proven difficult to read in the field. Metron has been the chosen technology to
date using a drive-by system.
The ACS-UB system produces a flat file that is copied onto a floppy disk and uploaded to the
City at
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ATTAUMENT 2
Metron data collector used by meter readers. The City's meter readers drive the specified routes
on which they collect meter readings from radio frequency (RF) transmissions sent by AMR
devices connected to the meters. After the route is completed, the meter reader hands back the
floppy disk from which the updated flat file is copied back into the ACS-UB system and
uploaded for later billing.
METER READING—The ACS-UB system interfaces with the Radix meter reading software. The
ACS-UB system sends the routes to be read in a flat file to Radix, which uploads information
into handheld devices carried by meter readers. Meters are read manually and readings are fed
into a handheld device. Each day, readings are automatically collated from hand-helds and
uploaded into the ACS-UB system for later billing.
CODING ACCURACY SUPPORT SYSTEM (CASS) — Postalsoft software from firstLOGIC is used
to automatically validate and update billing addresses in the ACS-UB system. Postalsoft is
CASS certified which means that the post office will recognize addresses within the ACS-UB
system records implying a better success of delivery to the customer and discount postage rates
from USPS. A batch process is run every 6 months that uses Postalsoft to validate and update
where necessary all billing addresses in the ACS-UB system..
Service addresses are entered manually from paperwork provided by Community Development.
This is typically a one-time activity as they will rarely change once established (parcels may be
subdivided, properties may be demolished, but this is rare). Therefore, Postalsoft only cleans
billing addresses. Billing addresses often change particularly due to the turnover of the student
population. There is no on-line component to this interface.
COMPUTER TELEPHONY INTEGRATION(CTI)—Phonetree by TTI is a predictive dialing system
that operates from a PC. A flat file containing customer information (including their telephone
number) is extracted from the ACS-UB system using Microsoft Excel and is used to feed
Phonetree. The file extracted contains those customers that ACS-UB intends to disconnect for
non-payment should a payment not occur. The file is extracted the Wednesday before the actual
shut off date. Phonetree then calls customers in the list and plays a pre-recorded message
warning the customer of the risk of disconnection if they do not pay. More information
concerning this aspect of the City's system can be found at htty://www.tti.net/comnuter-
telenhonv/computer-telephony.html.
WEB INTERFACE — The City is currently implementing a web interface for their customers.
D&T Ventures has been employed to design and program a web interface to provide the
following functions to the City's customers:
■ Make Credit Card Payments. Credit card details are entered securely online at the City's
service center. One-off and recurring payments may be made.16
■ Make E-Check Payments. One-off payments may be made by entering check information.
This information will be validated on-line as far as check digits and sort codes are concerned
although there is still a chance that the check may bounce.
■ Request Connection for a New Service. Requests for move outs are not accepted.
16 Partial payments are not accepted on accounts that are 60 days or more overdue.
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■ View Billing Information. Information displayed is not a facsimile of the bill itself but the
detailed information that comprises the bill (that is consumption, charge, taxes, adjustments,
payments).
■ View Consumption History. A history of consumption for each period for up to 24 periods
(4 years).
The interface will comply to the ADA (American Disability Act) offering friendly options for
users with impaired sight or hearing. This interface is slated for go-live in the 2nd quarter of
2006. For more information on this subject,refer to: http://dtventures.net/utility.billingl.htm.
CREDIT CARD VALIDATION-Credit card validation is performed on-line for customers paying in
the office or by phone. This is not currently an automated interface and can only be used for
one-off credit card payments and not recurring payments.
OCR READER - Currently, stubs are scanned manually by a hand-held OCR reader. This
automatically enters the payment information into the AS400.
AUTOMATED CLEARING HOUSE (ACH)— A flat file is extracted by a batch process within the
ACS-UB system that contains all relevant customer information such as bank account details and
payment amounts for a given date. The City copies the flat file from the AS400 to a PC and
uploads it over.a secure link to Bank of America via the Internet. ACH is only available for
customers with checking accounts. Credit card payments are not currently supported via ACH.
This interface is one way: payment rejections are not fed back by Bank of America
electronically.
DESKTOP Soi•rwARE - Although there is no concept of a data-mart or data-warehouse at the
City, users do have the ability to query the ACS database directly through desktop products
running ODBC such as MS Excel, This facility is used to extract information for Phonetree, but
can also be used for ad-hoc reporting or queries. Specialist reporting tools such as Cognos or
Crystal are not used.
5.5 Future Requirements
Given a better understanding of the City's existing utility billing system, the focus shifts to the
future requirements of the system. Provided below is a brief overview of the City's potential
future requirements.
BILLING HISTORY — Given the City's focus on conservation, the City should have a billing
format that includes a history of consumptive use.
ADDITIONAL SERVICES—The City plans to provide reclaimed water to its customers starting in
the near future. Initially, large users such as the City will benefit from this service. The rate for
reclaimed water has not yet been established. It appears that the functionality required to bill for
reclaimed water is currently available, as part of the ACS-UB base product.
Due to the volume of payments if monthly billing is introduced, lock-boxes may be considered
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for payment. Functionality is generally available in the market place.
AUTOMATED METER READING-HDR's review of automated meter reading (AMR) technology
brings with it a number of tangible and intangible benefits to the Customer Service, Field Service
and Planning departments within the City. Some of these benefits are listed below:
■ Dispute Resolution — Customer profile data can be used to resolve customer disputes by
providing daily data to customers and customer service representatives (this depends upon
the AMR technology deployed).
■ Billing Accuracy—AMR systems generally improve the quality of the read taken. Readings
are gathered correctly the first time, improving customer satisfaction. Better quality data
implies better load management of the infrastructure and forecast of revenue streams.
■ Eliminate Estimated Bills —Missed reads, and therefore the requirement to estimate reads,
are reduced to negligible numbers.
■ Make Final Bills Quick and Easy to Obtain —A final bill cannot be estimated. AMR can
obtain final reads on demand(depending on the AMR technology deployed).
■ Meter Accuracy and Warranty Disputes— AMR can verify if meters are not exceeding
their rated register capacity and can verify that meters are operating in accordance to
manufacturers guarantees.
■ Leak Detection—Profile data has the potential to indicate a major leak within the system
■ Back Flowing/Zero Consumption Meters - AMR can alert the utility to meters with zero
or negative consumption. This can be an indication of tampering, faulty or incorrectly
installed meters.
■ Conservation Monitoring—Programs such as odd/even irrigation days are easily monitored
using daily profile data(dependent upon the AMR technology employed
■ Distribution Network — AMR can be used to monitor the distribution network, helping to
detect leaks, significant sources of unaccounted for water, and helping predict and plan
network load and expansion.
5.6 Other Typical Interfaces
The review of the City's utility billing system also considered other typical interfaces. Provided
below is an overview of other typical interfaces.
GEOGRAPHICAL INFORMATION SYSTEM (GIS) - Although a GIS is operational and utilized by
engineers and community development, there is no interface to ACS-UB.
MOBILE DISPATCH/WORK ORDER MANAGEMENT SYSTEM—There currently is not an active
interface. Text messaging to the field service personnel may be used in the future„but again, will
probably not require integration with the ACS-UB system.
BELL PRINT INTERFACE- Formatted bills are produced directly out of the ACS-UB system. No
3rd party software is used to reformat the bill,change fonts, add graphs, graphics, logos or color.
Any logos and color are pre-printed by the paper supplier on the stock. An example bill print
format can be found in Appendix A.
OUTAGE—Currently,there is no outage system with which to interface.
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INVENTORY—There currently is no automated interface to ACS-UB.
COUNTY ASSESSORS SYSTEM - No liens are put on properties by the utility. One reason is that
there is no record of landlords in the system. Service addresses are provided by Community
Development and are validated on a quarterly basis with information sent electronically from the
County Assessor.
PERMITTING/BUILDING INSPECTION—Community Development does a system but there is no
direct interface with the City's utility billing system.
GENERAL LEDGER(GL)INTERFACE-No automated interface exists between Pentamation GRS
and the ACS-UB system for A/R, A/P or consumption. Manual journal entries are made for A/R
(charges and adjustments) on a monthly basis. Payment information is entered directly into
Pentamation GRS real-time.
5.7 Summary Conclusions and Recommendations
Based on a high level understanding of both the City's Utility business and the ACS-UB product,
the following conclusions are drawn:
■ ACS-UB as it is currently deployed supports all current business requirements.
■ ACS-UB will support the implementation of the alternative rate structures proposed within
this study. SLO could accomplish this implementation at no additional cost (other than the
internal labor costs required to change, test and implement the new rate structures).
■ ACS-UB will support the implementation of monthly billing. SLO could accomplish this at
little additional cost depending on the method employed to identify and move the accounts
from a bi-monthly to monthly billing cycle. This may entail the writing of one-time reports
and scripts to automate the process.
■ The ACS-UB is capable of supporting the implementation of AMR. The cost impact to SLO
of any implementation would depend on compatibility of the AMR vendor's interface with
ACS-UB and the extent to which the City wishes the two systems to be integrated.
■ ACS-UB supports the calculation of bills based on rates pertinent to different customer
classes. This will give SLO the flexibility to establish different rate structures not only for
the types of service provided (such as reuse and potable water) but for the groups of
customers to which those services are provided (for example, multi-family residential,small
commercial, large industrial).
■ Where ACS-UB does not support a future SLO requirement, such as the implementation of
emergency rates that may be implemented under severe drought conditions, ACS offer
professional services to modify the baseline product to fit these requirements.17
17 Modifications to a baseline product should always be approached with caution..Any such modifications carry their
own risk in that they can cause a stable system to become less reliable.The methodology used by the vendor in
order to accomplish such.modifications may also add additional risk and cost to upgrades to future product releases.
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From the above conclusions, the following recommendations concerning the City's utility billing
system is provided.
■ Langham Consulting Services, Inc. recommends retaining the current Utility Billing System.
Langham makes this recommendation, based on both the conclusions above and the cost of
procuring and implementing an alternative solution. Depending on the solution chosen, the
choice of an alternative solution could imply a cost of between $20 and $50 per customer
(implying a ballpark cost of $288,000 and $720,000 for the entire implementation). In
Langham's opinion, this would offer the City no benefits (either functional or material)based
on our understanding of the City's business objectives.
Should the City choose, at some point in time, to adopt and implement AMR, Langham
recommends the City consider the following:
■ Automate the transfer of information from the AMR system to the ACS-UB. Currently a
manual process is used to copy files between the ACS-UB and the Metron AMR system
using floppy disk. Firstly, the reliability of this method of transfer is questionable for what
will be the main consumption data feed to a billing system. Secondly, a complete or near-
complete implementation of AMR implies a volume of data that would likely exceed the
capacity of a floppy disk.
■ As part of the procurement process, consider stating in the RFP that the AMR system should
use protocols and interfaces that are compatible with ACS-UB18. This may reduce
implementation costs.
■ Consider what operational and management reporting is available from the AMR software.
Many of the benefits of AMR (not typically included in a cost-benefit analysis) are achieved
through data analysis such as trending. If the AMR software is weak in reporting, custom
reports may have to be written for either the CIS or the AMR system, potentially driving up
implementation costs.
■ Consider introducing an interface to automatically update ACS-UB with inventory changes
made in the field. Although not a real issue at the moment, an automated interface can be an
excellent way of tracking the progress of a meter change out program and AMR deployment
(reports from ACS-UB can be reconciled to invoices submitted by the installation
contractor).
Finally, Langham would also recommend the City consider the following should monthly billing
be adopted:
E A review of the respective usage of ACS-UB and Pentamation CRS. There appears to be a
risk that, given current practices, the two systems could get out of step due to human error.
This risk is currently mitigated by close scrutiny of data which is possible because of a small
number of transactions and a limited number of people entering them. With monthly billing,
this risk increases as the number of transactions occurring within Customer Service
18 ACS have assured Langham that they support interfaces to and from Sensus,Schlumberger,Badger,Radix,Itr_on,
Neptune,NiGas,Hexagram and Logican in their baseline product for AMR.It should be noted that most main-
stream AMR vendors and CIS vendors are now complying to general standards or protocols where interfaces are
concerned.
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ATTACHMENT 2
potentially doubles with an assumed corresponding increase in the number of personnel. A
possible solution to this would be have an automated interface between ACS-UB and
Pentamation CRS that would post payments to ACS-UB (that have been entered through
Pentamation CRS) and make ledger entries in Pentamation that are currently posted
manually.
■ Consider seeking professional advice, possibly from the vendor themselves regarding the
best way to approach the movement of accounts from a bi-monthly to monthly billing cycle.
There may be tools available that could facilitate the move of accounts en mass from one
billing cycle to another and apply cycle and route leveling if required.
5.8 Summary
This section of the report has reviewed the City's utility billing system. This system is capable
of billing the alternative rate structures reviewed as a part of this study. In addition, it is capable
of dealing with the issues of monthly billing and AMR.
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Section 6
Review and Development of the City's Water
Reuse Rates
6.1 Introduction
The City has water reuse rates which are developed based upon a combined philosophical and
cost-based approach. This section of the report will discuss the City's approach to establishing
their water reuse rates and discuss generally-accepted and alternative approaches to the pricing
of this commodity.
6.2 Generally-Accepted Methods to Establish Reuse Rates
Water reuse and recycled water are resources that are coming to the forefront of the water utility
industry and water supply portfolios. Even with that, it is still relatively rare to find water or
wastewater utilities that have water reuse or recycled water rates. For that very reason, at this
time, there is not a "generally accepted" or endorsed methodology to establish prices (rates) for
reuse water. Unlike the water utility industry that has the American Water Works Association
MI manual, Principles of Water Rates, Fees and Charges, there is no specific manual that the
industry points to for guidance on rate making concepts for reuse.i9
The other problem encountered in establishing water reuse rates is
"In establishing water the specific entity that is selling the reuse water and setting the
reuse rates, there rates. It is not unusual for the commodity to be sold by either a
typically have been wastewater or a water utility. For purposes of this discussion on
three different pricing, the general perspective has been that water reuse is a water
perspectives used in supply resource, similar to raw water or irrigation water. The
the pricing process." alternative perspective is that the reuse is a method of disposing of
wastewater effluent.
In establishing water reuse rates, there typically have been three different perspectives used in
the pricing process. These are as follows:
■ Embedded Cost of Service Analysis
■ Avoided Potable Water Cost Analysis
■ Incremental Reclaimed Water System Cost Analysis
Under the embedded cost approach, historical or current accounting costs are allocated to water
reuse customers in a "fair and equitable" manner that reflects the proportional benefit derived.
19 A recent publication,Good Until the Last Dron—A Practitioner's Guide to Water Reuse,by the.American Public
Works Association and HDR Engineering,Inc.,provides some guidance on rate making concepts for reuse.
lalCity of San Luis Obispo 55
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
ATTACHMENT 2
The avoided potable water cost analysis considers the avoided cost of the demands that water
reuse customers would have placed upon the water system if they were to use the water system.
This may result in higher infrastructure and operating costs. Finally, the incremental reclaimed
water system cost analysis views the incremental cost of serving reclaimed water customers from
the excess or future capacity of the water system created by reclaimed water customers. While
each of the above pricing approaches utilizes a very technical/analytical approach, the current
industry thinking is far less analytical and more simplistic.
An important element in the discussion of establishing
reuse rates which differs significantly from the "An important element in the
development of water or wastewater rates is that water discussion of establishing reuse
reuse rates may not, and are in all likelihood, not based rates which differs significantly
upon the cost of production and delivery of reuse water. from the development of water or
The reasons for this are two-fold. First, typically the wastewater rates is that water
costs associated with the production and delivery of reuse rates may not, and are in
reuse water is likely greater than the cost of potable all likelihood, not based upon the
water. These higher costs are a typically a function of cost of production and delivery
the cost of treatment, limited opportunities for reuse of reuse water."
economies of scale and the need for a separate (new)
water reuse distribution system. Taken together, this typically adds up to an "embedded or
accounting" cost per unit for reuse water that is greater than the cost of potable water. Simply
stated, people will not purchase and pay for reuse water when the price for potable water is less.
The second main reason why water reuse rates are not typically cost-based is the perception of
quality and value of reuse water. Reuse water is viewed as lower "quality" water and is not as
valuable a resource as potable. Past research and surveys bear these statements out. A survey of
water reuse rates conducted in the late 1990's noted:
"The utility that reported that its reclaimed water charges were recovering 100% of its
cost of service also reported that public acceptance of reclaimed water charges was
poor. The issues that were at the root of the public relations problems included the
public's perception that a lower quality alternative to potable water should not cost so
much. In addition, there was a perception that potable water supplies were plentiful.20
Reuse water has verylimited applications when compared to potable water. Therefore, in order
to encourage customers to use reuse water, utilities typically need to set the price at a
competitive level that creates an economic incentive (financial savings) to do so. This can only
occur when the price of reuse water is less than the alternative of potable water.21 In essence, the
pricing is based upon a"value of service"22 approach instead of a"cost of service" approach.
20 AWWA/WEF Water Reuse Conference Proceedings,P.244.
2'In some instances,utilities will not allow customers to use potable water for irrigation of certain types of
landscape(e.g.golf courses). In those instances,a price incentive is notrequired since the customer is required to
use reuse water,but there is still a perception of the quality and value of the reuse water which likely dictates the
rice in relation to potable water.
Value of service is the concept that the price is established based upon the"value"derived from the customer
from the commodity. As an example,cell phones are priced using,in part,a value of service concept in that all
suppliers have a$19.95 per month plan. Consumers are willing to pay at least$19.95 for the value derived from
having a cell phone. In the water utility industry,private fire protection services are often priced using a market-
based(comparable neighboring utility)or value of service principles.
IMCity of San Luis Obispo 56
Volume 2-Review of Automated Meter Reading and Utility Billing Systems
a- -/tea
ATTACHMENT 2
Given the above discussion, reuse water is most commonly evaluated and priced in relationship
to the cost of potable water (i.e. the alternative resource). Stated another way, the price of reuse
water is set (pegged) in relationship to the volumetric price of potable water (e.g. 90% of the
price of potable water). By using this method, the utility recognizes that it will probably not
recover 100% of the cost of production and delivery of reuse water. However, by creating a
market for reuse water the utility may ultimately have significant savings for the water utility
(e.g. deferred expansion of new supply or treatment,etc.).
6.3 Overview the City's Method to Establish Reuse Rates
The City Council adopted a policy of pricing recycled water at 90% of the potable water price.
The basic logic used to develop this pricing policy was the City's viewpoint that recycled water
is equal in value to potable water. The 10% reduction was used to recognize the "industry
standard" that about 10% more watering is required to ensure the flushing of any salt
accumulation in the soils.
6.4 Recommended Method to Establish Reuse Rates
The City's current approach to the pricing of reuse water produces a result that conforms, in
general, to current industry thinking. That is, the price for reuse water should be set at a level
that is less than potable water, if the City desires to market and
"The City's current expand the use of reuse water. While the City has established a
approach to the pricing more complicated basis or reasoning for developing the pricing
of reuse water produces approach, the end result is comparable to that which HDR would
a result that conforms, recommend. HDR would recommend the pricing of water reuse
in genera4 to current at the 80% to 95% pricing level of potable water. Setting the
industry thinking." City's water reuse rates equal to 90% of the potable water rate is
very reasonable and appears appropriate.
6.5 Summary
This section of the report has discussed the issue of establishing a pricing philosophy for reuse
.water. At the present time, the City's logic for establishing the price appears reasonable and the
end result appears appropriate.
ZCity of San Luis Obispo 57
Volume 2-Review of Automated Meter Reading and Utility Billing Systems —/O
J
ATTACHMENT 2
CustomerTechnical Appendix A
• Documentation
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ATTACHMENT 2
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$Tt.T.m sa�aaY --
Reath-.g PREV BALANCE 64.58 Meter dates
PAYMENTS 64.58 Period: 4/18/2005 To; 6/20/2005
LATE CHARGES
BALANCE FORWARD
=RRSA': CHARGES 56.04
*AL&= DQE 56.04
41 Drb.tm Cu"rw-7"O-rw-1
WATER SERVICE 10.84 323 327 H 4 4
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SEWER CHARGE 44.66
UTILITY TAX S4
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R•MAIL QUESTIONS TO ub9m1ccity.org
BILL NG INQUBWO CALL(805)781-7133_ub*sly__
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logs San WS ME=CA 93403.8112 (em)781-7133
PAST DUE AM= 92.32
service LATE C}IARGB ASSESSBD 10.00
Location SLO CA 934D1
MM by 7/04/2005 102.32
Acc=t Ma0ar
235-0924-00-02
SOLMAD CA 93960-4664
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past Due Remin"r
THIS IS NOTIFICATION THAT YOUR WATER AND SERER BILL IS PAST
VM. A PENALTY HAS BEEN ASSESSED TO YOM ACCOUNT. PLEASE
MARE PAY603NT IN PULL BY THR ABOVE DATE TO AVOID SEMM OFF
NOTIFICATION. CREDIT CARR FATKMTS ARE ACCEPTED BY PHONE
(B05-781-7133) OR AT THE CITY'S FINANCE COUNTER LOCATED AT
990 PALP STREET.
235-092 x02 service
Locative SID CA 93401
1
SOLEDAD CA 93960-9664
PAST DUE AIAOU11T 92.32
LATE CHARGE ASSESSED 10.00
DUE BY 7/04/2005 102.32
Thin Statement Reflects Daymms Received as at 06/27/2005
CITY of NW L11I5 08ISP0 005-781-7133
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ATTACHMENT 2
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°w° (805 781_7193 SHUTOFF NOTICE
3+7E BEFORE 2:00 P.M. 140.B5
Servt Ce _ ADD AFTER 2.:00 P.M. 143.00
L=atim SLO CA 93401
DUE BY 8/04/2005
•CAR-RT SORT* R007
!4ccount Nuirixr
225-1466-00-02
SAN IUIS OBTSPO CA 93401 IIII�DI�Im181
Shut Off Notice
PAYMENT IN FULL MUST BE RECEIVED IN OVR OFFICE BY THS DUE
HATS STATED ABOVE. PAYME29T MUST BE RECEIVED BEFORE 2:00 P.M.
TO AVOID DISCONT1NUENCS OF WATER SERVICE.
AFTER 2:00 P.M. IN ADD1-TIO; TO THE PULL PAYM.1=, A SERVICE
CHARGE AND DEPOSIT WILL BE REQUIRED TO CONTINUE YOUR MATER
SERVICE. AABANGEMEI15 KUST BE IMPT AS SCHEDULED.
ww POST!4ARKS ARE NOT ACCEPTABLE ••
215-146 02 $&nice
uxuattaf SLO CA 93401
SAN LUIS OBISPO CA 93401
DUE BEFORE 2:00 P.M. 140.88
A® AFTER 2:00 P.K. 143.00
DUE BY 8/04/2005
7hia Star,.== 7tef_eeta Paye to RoCeived as of D6/2712005
CITY OF SARI LUIS OBISPO 805-781-7133
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CITY OF SAN LUIS OBISPO
FROM: Jay D. Walter, Director of Public Works
Prepared By: Barbara Lynch City Engineer
SUBJECT: MISSION SIDEWALK DISTRICT DANA STREET BOUNDARY
CAO-RECOMMENDATION
Define the westerly boundary of the Mission Style Sidewalk District on Dana Street to end at
the first property on each side of Dana Street which also abuts Nipomo Street.
DISCUSSION
The Public Works Department recently received.a request from a property owner on Dana Street,
who will be replacing sidewalk along their frontage, to be allowed to 'put in standard gray
concrete in lieu of the Mission Style concrete. During review of the project, it appeared it was
within the Mission Style Sidewalk District and so replacement with Mission Style was required.
The property is residential and the owners prefer not to have a commercial oriented appearance.
(Attachment 1)
Staff did some research to determine how the District's boundaries were defined. Attachment 2
provides the various exhibits that have accompanied the City Council Resolutions adopting the
district. While most of the District is now defined by intersections of streets, as shown in
Attachment 2 page 3, the westerly limit, as it affects Dana Street, remains somewhat ambiguous,
In early exhibits, it appears to line up with the intersection of Beach Street. Staff, however, was
unable to locate documentation to clearly define this westerly limit. The Council is being
requested at this time to clarify that boundary.
In looking at the land use and property lines for Dana Street there appears to be an obvious break
point for what is intended to be the commercial sidewalk area(Attachment 3.) The first property
on the southwesterly corner, the Soda Works, is zoned commercial and redeveloped several
years ago. Consistent with the adopted District, Mission Sidewalk was installed. The adjacent
property on Dana Street, the property whose owners have requested the removal of their property
from the District, is zoned residential.
The property across Dana Street, Reis Mortuary,is on the northwest corner of Dana and Nipomo
and is zoned office space. While the second property is also zoned office, it is fronted with
granite curbs. These are considered historical and it is unlikely the City would require them to
be removed to install Mission Style sidewalk. The third parcel along the northerly side of the
street, 532 Dana, is zoned residential.
After looking at the history of the district adoption, the current land use designations, and taking
into consideration property owner concerns, staff is recommending the district boundary on Dana
Street be defined to include only those two comer properties with frontage on Nipomo Street
zoned commercial and office. ��_/
Mission Sidewalk District Dana Street Boundary Page 2
CONCURRENCES
Before making a recommendation to the City Council regarding a revision to the district, staff
contacted the Downtown Association (DA) Administrator who recommended speaking with a
member of the original Downtown Concept Plan team. Staff spoke with Pierre Rademaker who
indicated the proposal to tie the District to the corner property made sense to him as well. The
DA Administrator did not believe there would be any concerns from the rest of the Board with
the consent of Mr. Rademaker. Staff will attend the DA Board's April 11`x' meeting to provide
information on the proposal and confirm there are no concerns from the Board.
FISCAL IMPACT
There is no fiscal impact to the City, with the possible exception of a lower cost to replace
sidewalks for the City in this area. It will also reduce costs for property owners along Dana
Street who are obligated to complete sidewalk replacements.
ATTACHMENTS:
Attachment 1 - Request from Property Owner
Attachment 2 - Evolution of the Sidewalk District
Attachment 3 - Current zoning and property lines
i:%-=mportsQ00ftreeWoftVnissiorKlislu-18-W darn mission disLdoc
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' Attachment 1
-----Original Message-----
From: Sheila Henley
Sent: Tuesday, February 07, 2006 12:03 PM
To: Hal Hannula
Cc: 'Brian Roth' ;
Subject: 581 Dana Street
Dear Hal,
On Friday, February 4, 2006 Mark Williams of the Public Works Department
had a meeting at our job site, 581 Dana Street with Mike Garcia. At that
meeting, it was determined by Mark that the existing curb, gutter and
sidewalk would have to be removed and replaced with the "Mission Style
Sidewalk" per Engineering Standard #4220, since our home is within the
boundaries.
In a meeting with Jeff Hook at the city on another project, we brought
this up which prompted our phone call and Brian and I to write this
letter.
The property next door, The Soda Works, is commercial and does have the
"Mission Style Sidewalk" however, our property is residential. Visually
we feel Engineering Standard #4220 is inappropriate for residential. We
have learned that the city's boundary is just beyond our property line.
The commercial property across the street, "Reis Mortuary" does not have
the Mission Style Sidewalk and it most likely will not need to be
replaced in our lifetime. No other commercial or residential property on
Dana Street has the "Mission Style Sidewalk. "
We were completely unaware that the city would possibly require us to
replace the curb, gutter and sidewalk. Our approved "Grading, Drainage
and Erosion Control Site Plan, prepared by Tim Roberts, Civil Engineer
states, "Saw cut and remove existing driveway ramp. Construct new city
standard drive ramp with 4 ' minimum handicap walkway. " Our Site Plan
prepared by Tim Becher, Architect also indicates to saw cut drive ramp
and replace. However the city Engineering Standard #4220 is also a Note
on the Site Plan. Confusing!
We would like to request that the city move their boundary line to end
at The Soda Works. Our concern is aesthetics. It would be unfortunate to
have our dream home interpreted as commercial.
Thank you for your consideration.
Regards,
Brian P. Roth and Sheila Henley
C2 -3
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Attachment 2
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REQUESTING
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council memoizanoum
April 11, 2006
TO: City Council RECEIVED
VIA: Ken Hampian, City Administrative Officer APR 1 1 2006
FROM: Jay Walter, Public Works Director SLO CITY CLERK
SUBJECT: Consent Item 2 — Mission Sidewalk Dana Street Boundary
Staff made a brief presentation on this issue to the Downtown Association Board at their
April 11th meeting. The Board expressed no concerns regarding the definition of the
Dana Street boundary as the first corner property. A couple of the Board members
commented that it appeared to make sense.
COUNCIL
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ZPACAO '® FIN DIR
19 ATTORNEYFIRE CHIEF - MEETING AGENDA
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CITY O F SAN LUIS O B I S P O
FROM: Betsy Kiser, Parks and Recreation Director
SUBJECT: RECONSTRUCTION AND RELOCATION OF THE COURT OF HISTORIC
U.S. FLAGS
CAO RECOMMENDATION
1. Approve relocating and modifying the flag exhibit now in Mission Plaza to an exterior
wall of 919 Palm Street, in order to reestablish the display of historic U.S. flags in a way
that properly honors the flags, complements the educational purpose of the City-County
Library, and restores an area of the Plaza that has become degraded and hazardous..
2. Accept the offer from Palm Street Parking Structure, LLC to fabricate and relocate the
piece to 919 Palm, subject to the review and approval of the site by the Architectural
Review Commission (ARC), per the public art policy.
DISCUSSION
Background
The Court of Flags is a piece of public art created by the ,
community in 1976 to commemorate the Country's bicentennial 1
anniversary. The piece consists of eight ceramic flag panels and
accompanying plaques, circling the base of the American flag
and surrounded by public seating. A descriptive piece sits in the
foreground detailing the origin of the piece. The Court of Flags w .
is located in Mission Plaza adjacent to the San Luis Obispo 4
County Art Center.
4
h
Over the years, the Court of Flags has aged poorly. One of the
ceramic panels fell off several years ago and the remaining
pieces are chipped from vandalism and faded from the elements.
In addition, nearby tree roots have uprooted the brick surface o
underneath the piece and surrounding area, making it a tripping
hazard.
At the June 2, 2005 City Council meeting, Councilmember Settle raised the issue of the
condition of the Court of Flags and Council asked staff to do something about the missing panel
and to look into some way of either "sprucing up" the piece or considering other alternatives.
Since then, staff has been seeking a solution to the expressed concerns and this report
summarizes both the results of the effort and a proposal to recreate the piece and relocate it,
respecting both its origin and its significance.
C -
Court of Flags Page 2
Origin of The Court of Flags
The Court of Flags was a gift to the citizens of San Luis Obispo to commemorate the Country's
1976 Bicentennial Celebration.. Spearheaded by the local Elks Lodge#322 as part of their annual
flag day services, funds for the project were raised by selling the bricks making up the plaza area
under and around the piece. Each purchased brick has the name of a donor imprinted on the
underside of the brick. The artwork itself, the ceramic panels representing the eight principal
flags that had flown over the Country in the 200 years preceding 1976, was created by Bob
Nichols, a local artist and professor at.Hancock Community College.
Issues Related to the Repair of the Court of Flags
1. Original Design Flaws. Staff first contacted the artist to discuss the renovation of the ceramic
panels, Mr. Nichols indicated that each panel was an original sculpture; no molds had been
created for the pieces, therefore he could not recast them. Furthermore,when he proceeded
to fire them, they exploded in the process, resulting in the need to glue them together and
hand paint rather than glaze them, thus the reason they weathered so poorly. Mr. Nichols
indicated that he would not be able to salvage the original pieces if they were disturbed but
would rather recreate them, as he was never pleased with the end product. Staff requested
Mr. Nichols to prepare a proposal for fabricating and installing new panels.
2. Art Center Reconstruction. For several years now the City has been working with the San
Luis Obispo Art Center on the construction of a facility at its present site. The Art Center's
concept plan (which will be discussed at a Council workshop tentatively scheduled for the
May 16, 2006 Council meeting) calls for the removal of the Court of Flags. In March 2003,
the ARC approved a preliminary site plan for the Mission Plaza Expansion that showed that
the Court of Flags would be relocated.
Because of these two issues, and the fact that lit flagpoles and flags exist at the opposite end of
Mission Plaza (negating the need for another flag pole), staff began to research the possibility of
moving the piece to an alternate site outside of Mission Plaza.
Stakeholders Input
Prior to seeking a new site for the Court of Flags, staff sought input from those in the community
who were involved with the original design and installation. Unfortunately, very few of those
involved are still in the community, for one reason or another. Staff first spoke with Former
Mayors Ken Schwartz and Myron Graham and the artist. Their opinion was that it was doubtful
anyone in the community felt much ownership with regard to the bricks and the site, but
expressed a desire for the preservation of the main portion of the Court of Flags (flag panels and
plaques). Relocation did not seem to be a concern.
Staff then contacted the Elks Lodge #322 of San Luis Obispo, the club responsible for
spearheading piece. The Club directors discussed the issue of relocation and expressed concern
about both the poor condition of the Court of Flags and the overuse of the site by the transient
population. They not only approved the relocation of the Court of Flags to 919 Palm Street, but
also offered to provide funding, if needed (see Attachment 1).
C:\DOCUME—I\slouserWCALS—I\Temp\CAR-RE—I.DOC
C3 ��
i
Court of Flags Page 3
Identification of a Proper Relocation Site
In searching for a possible relocation site and a means of paying for the fabrication and
installation of the ceramic panels and plaques, staff held a discussion with Mr. Mark Rawson of
Palm Street Parking Structure, LLC regarding their requirement for public art on the 919 Palm
Street garage. He expressed an interest in the Court of Flags and identified a location on the
exterior side of the building facing the City/County library (see Attachment 2). The site lends
itself well to the piece because 1) the wall adjacent to the library is large and offers an
appropriate canvas for the Court of Flags, particularly as people exit the library or walk the plaza,
and 2) from an educational display perspective, it complements the library and its mission.
Instead of a three-dimensional piece of art, as the Court of Flags currently is, Mr. Rawson
proposes to install the panels and plaques on the side of the building. He subsequently contacted
the artist regarding fabrication and installation costs and on March 8, 2006 submitted a letter of
interest to the City, indicating a desire to apply the Court of Flags to the public art requirement
for the development project (see Attachment 3).
Next Steps
If Council approves the demolition of the current Court of Flags and accepts the offer from Palm
Street Parking Structure, LLC to relocate the re-fabricated piece to an exterior wall of 919 Palm
Street, staff will shepherd the project through the ARC review and approval process, per the
Public Art Policy.
CONCURRENCES
The Parks Division has cordoned off the Court of Flags for the past six months due to safety
concerns associated with tripping hazards. Both Public Works and the Parks and Recreation
Departments are in agreement that the Court of Flags area needs to be demolished when the flags
and plaques are relocated. The concept of moving the Court of Flags to another location was
addressed by the ARC in the Mission Plaza Expansion Plan in 2003, but if the 919 Palm location
is supported by Council, the site would be subject to review and approval by the ARC, as
indicated above.
FISCAL IMPACT
All costs associated with the fabrication and installation of the Court of Flags will be born by
Palm Street Parking Structure, LLC. There will be some cost to the City to demolish the piece
and refurbish the area, although these costs are not expected to exceed $5,000. Sufficient
funding exists in various maintenance accounts to complete the refurbishment. The flag pole
itself is intended to be reused at the Damon Garcia Sports Fields.
ALTERNATIVES
Council could deny approval to relocate the Court of Flags to 919 Palm Street. The City would
be responsible for the costs associated with the fabrication and installation of the piece. The
need to identify another location would remain however, since it would be counterproductive to
reinstall the piece in its current location given the plans to expand the Art Center.
C:\DOCUME—I\slouser\LOCALS—I\Temp\CAR-RE—I.DOC
Court of Flags Page 4
ATTACHMENTS
1. Correspondence from Elks Lodge#322
2. Proposed relocation site
3. Letter from Mr. Rawson
C:\DOCUME—I\slouser\LOCALS-1\Temp\CAR-RE—I.DOC C3
ATTACHMENT 1
A FRATYRNAL ORGANIZATION -
d
�P.. O6iapo eL.Jr & 322
BENEVOLENT AND PROTECTIVE ORDER OF ELM
222 Elko Lane
Pnom 808.849.0922
San Luis ODIwo,Calltomla 99401-5494
April 10,2006
TO Betsy Raiser
City of San Luis Obispo
As per our discussion today relative to the moving of the Court of Flags to 919 Palm Street.The
San Luis Obispo Elks Lodge 322 who were mainly responsible for the installation of the Court of Flags
are in agreement with your planned move.
jrt 0.-'4 ot 4,1'r�
Frank H.Rowan,Lodge Secretary
C3 - S
L00/L00 1 L889EV9908 XVj LZ EL 900Z/OL/VO
ATTACHMENT 2
PROPOSED RELOCATION SITE
Side of 919
Palm Street
facing the
side
entrance to
the
City/County ,
Library
Area
designated
for the
Court of
Flags
ATTACHMENT 3_-
Palm Street Parking Structure, LLC
P.O. Box 1085
San Luis Obispo, California 93406
(805) 593-0200
FAX# (805) 593-0109
March 8, 2006
Betsy Kiser
Principal Administrative Analyst
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Re: Palm Morro Office/ Parking Structure Project —Public Art
Dear Betsy,
This letter is to confirm our direction regarding the public art piece for the Palm Morro Parking
.and Office Structure. As we discussed previously the city has expressed an interest in seeing the
old Court of Flags art piece, which was previously located next to the Mission, re-fabricated and
reinstalled in some suitable location downtown. We were contacted and had expressed our
willingness to work with the original artist to see this carried out.
At this time we have been in contact with the original artist, Bob Nichols, and he has confirmed
his desire to work toward this same goal. We have discussed the proposed location adjacent to
the library arld Bob has indicated that this would be a suitable place with good size for placement
of the art piece. He is currently developing plans which would illustrate the placement of the new
piece as well as developing a proposed schedule. As soon as we have his plans and sketches we
will take these through the normal ARC review process for placement of public art.
The costs for fabrication and installation of the art piece will be paid by us and applied toward
our public art contribution for the Palm Morro Project.
Please feel free to contact me if you have any questions regarding this item.
Si nc . ly,
Mark Rawson
Copelands' Properties
C3 - �1
'Ken Hampian -flag mondoc -._,- Page 1 i
RECEIVED
APR 18 2006
SLO CITY CLERK
To the editor April 16, 2006
Bob Nichols is a friend of mine, and I know what a fine artist he is. But, lets face it,the
flag memorial he did just out of architecture school is an esthetic and technical disaster,
and does not represent his best work. I'm sure these standardized flags provided by the
Elks for schools and civic buildings can be ordered ready-made from a catalogue.
Removing the monument and replacing it with something more appropriate for the Art
Center makes sense, but remaking the flags as new public art makes none at all. I suspect
the Copelands want to do this as an expedient way to satisfy the public art requirement of
their new parking structure: If so,this is an affront to all working artists in the San Luis
Obispo area.
Let's give Nichols another chance to do the flags,by making a call for public art
proposals for the parking structure through the San Luis Obispo Public Arts Program to
which he can submit a new design. This is the accepted procedure, and there is no reason
to circumvent it for the benefit of the builders.
Barry Frantz
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Dear Gentlepeople: � g(A2R
I have often felt that the flag of our country meant more to some people than the citizens it
represents. I tend to pull back when I see big flag displays because they remind me of the polarizing
mantra of conservatives in the 60's: "America: Love it or Leave it". That doesn't mean I am not
patriotic, however, it just means my loyalties lie with the people, not the symbol. But the feeling I get
around the "Court of Historic Flags" in Mission Plaza is a little different.
The "Court of Historic Flags" is more than a flagpole and more than a series of faded ceramic
panels. It is a reminder of our heritage, the courage of the nation's founders, and those regular folks
who pitched in to defend their precious new freedoms. And, for me, it is because this"reminder" is in a
classic form, that it does not offend. Similar tributes are in most small towns in Europe, and they are
touching instead of grandiose.
OK—so I'm saying that the presentation is as important as the art. Any replacement on the
side of the parking structure must reflect the bi-centennial theme so that the context is not lost.
And one more thing: If the "Court of Historic Flags" is removed I want my brick back. I think
we paid a dollar to "buy a brick" and lay it around that flag pole when it was erected that day. Many of
my downtown neighbors were there, on our hands & knees in the sand, writing our names on the
bottom of the brick, and excitedly creating a memory. I'm sure Linnaea was there, too, but this wasn't
a Chamber of Commerce "event"; it was a bunch of regular folks pitching in. None of the national bi-
centennial celebrations came close to creating the feeling of community, history, and pride I felt that
day. That feeling is what reappears for me when I visit the site—and that feeling can't be reapplied to
a parking garage wall.
Sincerely and with appreciation,
BetseytNash v people
success
P.O.BOX 3057 o SAN LUIS OBISPO,CA 93403-3057 0 PHONE/FAX:805.474.0969 - EMAIL:NASH-HR@CHARTER.NET o WEB:WWW.NASHHRSERVICES.COM
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CITY OF SAN LUIS O B I S 06
FROM: John Mandeville, Community Development Director
Prepared By: Philip Dunsmore, Associate Planner
SUBJECT: ADOPTION OF AN ORDINANCE REZONING PROPERTY AT 3210
THROUGH 3240 BROAD STREET FROM NEIGHBORHOOD-
COMMERCIAL SPECIAL CONSIDERATIONS (C-N-S) TO
COMMUNITY-COMMERCIAL SPECIAL CONSIDERATIONS (C-C-S)
(GP/R/ER 78-05)
CAO RECOMMENDATION
Adopt Ordinance No. 1493.
DISCUSSION
Situation
On April 4, 2006, the City Council voted 3 to 2 to introduce Ordinance No. 1493 to print,.
amending the City's Zoning Map for property at 3210 through 3240 Broad Street from
Neighborhood Commercial Special Considerations (C-N-S) to Community Commercial
Special Considerations (C-C-S). Ordinance No. 1493 is now ready for adoption. The new
zoning designation will become effective 30 days after its adoption.
Significant Impacts
The City Council adopted a Negative Declaration for the project that concluded that no
significant environmental impacts are anticipated with the re-zoning of the property.
Consequences of Not Taking the Recommended Action
If the Council does not adopt the ordinance, the zoning designation of the property would
remain as is, until alternative zoning designations are approved.
Attached: Ordinance No. 1493
GAPdunsmore\Rezoning&PDs\78-05(Lemburg)\CC 2nd read 78-05.doc
Cy� .
ORDINANCE NO. 1493 (2006 Series)
AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO
AMENDING THE ZONING MAP TO CHANGE THE ZONING FOR PROPERTY AT
32109 32129 3220,3230,3240 BROAD STREET
FROM C-N-S TO C-C-S
(GP/R/ER 78-05)
WHEREAS, the Planning Commission of the City of San Luis Obispo'conducted a
public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo,
California, on December 14, 2005 and voted to recommend approval of map amendments
pursuant to application GP/R/ER 78-05, Dan Lemburg, applicant;.and
WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing
in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, on February
21 and April 4, 2006, for the purpose of considering Application GP/R/ER 78-05; and
WHEREAS, notices of said public hearings were made at the time and in the manner
required by law; and
WHEREAS, the Council has reviewed and considered the Mitigated Negative
Declaration of environmental impact for the project; and
WHEREAS, the Council has duly considered all evidence, including the.
recommendation of the Planning Commission, testimony of interested parties, and the evaluation
and recommendations by staff, presented at said hearing.
WHEREAS, the City Council finds that the proposed rezoning is consistent with the
General Plan, the purposes of the Zoning Regulations, and other applicable City ordinances; and
BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:
SECTION 1. Environmental Determination. The City Council finds and determines that
the project's Mitigated Negative Declaration adequately addresses the potential environmental
impacts of the proposed map amendment to the Zoning Regulations, and reflects the independent
judgment of the City Council. The Council hereby adopts said Mitigated Negative Declaration.
SECTION 2. Findings. The City Council makes the following findings:
1. The City Council finds and determines that the project's Negative Declaration adequately
addresses the potential environmental impacts of the proposed project, and reflects the
independent judgment of the Commission.
2. The proposed rezoning is consistent with General Plan Land Use Element policies
regarding Community Commercial zoning, which designate such districts for locations
that are appropriate to serve the community in its entirety rather than just the adjacent
Ordinance No. 1493 (2006 Series)
GP/R 78-05
Page 2
neighborhood.
3. The existing property is not suited to remain restricted to neighborhood serving uses (C-N
zoning) since the location of the site at the corner of high volume arterial roadways acts
as a community-wide center accessible to users from a wide region of the City.
4. This project site is subject to criteria which clearly necessitate an S overlay zone in order
to ensure adequate review and create a specifically refined list of allowed land uses. The
commercial center's proximity to a creek, the size and configuration of the property and
adjacent high density residential uses warrant the refined land use list.
SECTION 3. Action. The Zoning Regulations Map Amendment (GP/R 78-05) is
hereby approved (Exhibit A).
SECTION 4. A summary of this ordinance, together with the names of Council
members voting for and against, shall be published at least five (5) days prior to its final passage,
in the Telegram-Tribune, a newspaper published and circulated in this City. This ordinance shall
go into effect at the expiration of thirty(30) days after its final passage.
INTRODUCED on the 4`h day of April, 2006, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the _ day of 2006, on the following roll
call vote:
AYES:
NOES:
ABSENT:
Mayor David F. Romero
ATTEST:
City Clerk Audrey Hooper
APPROVED AS TO FORM:
VAttomey Jonathan Lowell
GAPdunsmore\Rezoning&PDs\78-05(Lemburg)\GPR 78-05 cc ord.doc
• � �� Exhibit A
General Plan and Zoning Map Change from Neighborhood Commercial
to Community Commercial with Special Considerations for 3210, 3212,
3220, 3230, 3240 Broad Street (GP/R/ER 78-05)
C-S
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Current rezone request
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3210 broad - Previously changed .y
to C-C-S •`
Previously changed
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council
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C I T Y OF SAN LUIS OBISPO
FROM: John Moss,Utilities Director
Prepared By: David Hix,Wastewater Division Manager
SUBJECT: COMPLETION OF REGULATORY STUDIES FOR SAN LUIS OBISPO
CREEK
CAO RECOMMENDATION
Approve amendment number one to agreement with Larry Walker Associates for Completion of
MUN Use Attainability Analysis for the Lower Portion of San Luis Obispo Creek.
DISCUSSION
In May of 2005, the City hired Larry Walker Associates to perform a feasibility analysis of
regulatory options for the Water Reclamation Facility (WRF). The City requested this study
because it had become apparent that the City needed to explore and exhaust all likely regulatory
options for the WRF's National Pollutant Discharge Elimination System (NPDES) permit. The
WRF's discharge requirements will become significantly more stringent in the next 5 years because
of the State's requirements that the WRF meet the Municipal and Domestic Supply (MUN)
beneficial use for San Luis Obispo Creek. This beneficial use will require significant and costly
upgrades to meet the State's requirements that the WRF's discharge meets or exceeds drinking
water standards. The preliminary study determined that a Use Attainability Analysis (UAA) to
study the reasonable beneficial uses of San Luis Obispo Creek was the most likely and favorable
regulatory option the City should pursue. If approved by the State and EPA,this study may remove
or change the MUN beneficial use for San Luis Obispo Creek.
This request is an amendment to the feasibility analysis of regulatory options agreement of$80,000
and will complete the UAA for San Luis Obispo Creek. Larry Walker Associates (LWA) have
assisted the City in a variety of water quality issues including negotiating the City's NPDES permit,
performing ground water studies, trihalomethane (THM) fate in the creek and characterizing
pollutant concentrations in the WRF's effluent. LWA specialize in water quality regulations and
studies and have extensive knowledge with the State water quality regulations and policies and have
prepared several similar studies for other agencies. LWA is very familiar with the City's NPDES
permit,the Central Coast RWQCB and its staff from assisting the City in its last permit negotiation.
Council Agenda Report—Completion of studies for San Luis Obispo Creek
Page 2
FISCAL IMPACT
Completion of the UAA will cost $79,700. Funding for this study in the amount of$80,000 was
approved as part of the 2005-06 Mid-Year Budget Review pages C-7 and C-8, under Contract
Services in the Wastewater Administration and Engineering program.
Attachments
1. Amendment to Agreement No.1
2. LWA Proposal
Electronic File Path: Corpyard/Sys/Users'(H:)Dhix/WRFStudies/LWAregoptionsamendl.CAR
Attachment I
AMENDMENT TO AGREEMENT NO 1.
THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on
by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after
referred to as City,and Larry Walker Associates,hereinafter referred to as Contractor.
WITNESSETH:
WHEREAS, on May 6, 2005 the City entered into an Agreement with Contractor for Feasibility Analysis
of Regulatory Options;and
WHEREAS, the City desires to amend the scope of services to include Completion of MUN Use
Attainability Analysis for the Lower Portion of San Luis Obispo Creek and Contractor has submitted a proposal for
this purpose that is acceptable to the City.
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter
contained,the parties hereto agree as follows:
1. The scope of services and related compensation is hereby amended as set forth in Exhibit A
attached hereto.
2. All other terms and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year
first written above.
ATTEST: CITY OF SAN LUIS OBISPO
By:
Audrey Hooper David F.Romero,Mayor
City Clerk
APPROVED AS TO FORM: CONTRACTOR
1 '
By.
Ci kadmey Jou (.ci iKG(
l.J
Attachment 2
707 4th Street, Suite 200 530.753.6400 www.lwa.com � /�
Davis.CA 95616 530.753.7030 fax A—
L A R R Y
W A L K E R
December 14, 2005
Mr. Dave Hix ASSOCIATES
City of San Luis Obispo
955 Morro Street
San Luis Obispo, CA 93401
Proposal for Completion of a MUN Use Attainability Analysis for the lower portion
of San Luis Obispo Creek
Dear Mr. Hix:
The following proposal was developed as part of Task 5 of the Scope of Services presented
in the Proposal for Feasibility Analysis of Regulatory Options dated March 15, 2005. Larry
Walker Associates ("LWA") is submitting this proposal to complete a MUN Use
Attainability Analysis (UAA) for the lower portion. of San Luis Obispo Creek. The
completion of a UAA could result in the dedesignadon of the MUN use which potentially
could allow the City of San Luis Obispo Wastewater Reclamation Facility (WRF) to comply
with trihalomethanes (THMs) and nitrate limits without extensive facility improvements.
LWA's scope of services, schedule, and cost estimate are presented below.
SCOPE OF SERVICES
LWA tasks anticipated under this proposal are as follows:
Task 1: Develop and implement stakeholder process.
Task 1.1: Develop an interested party list (IPL), establish contact, and provide background
information. List would include owners/residents of land parcels adjacent to
SLO Creek as wellas staff from California Department of Health Services,
Central Coast Regional Board, USEPA,DFG, USFW, City of San Luis Obispo,
and County Public Health Department. Present to Regional Board Staff for
comments and revise if necessary.
Task 1.2: Conduct first stakeholder meeting to outline process, review work completed to
date, and solicit feedback on process,work completed, and other potentially
interested parties.
Task 1.3: Conduct second stakeholder meeting to present Draft MUN UAA and solicit
feedback.
Cs'-y
Attachment 2
O
Task 2. Complete.Use Attainability Analysis
Task 2.1: Develop historic and current use questionnaire for distribution to potentially
knowledgeable parties. Present proposed questionnaire to Regional Board Staff
for comments and revise if necessary.
Task 2.2: Distribute questionnaire and compile results. Initially questionnaires will be sent
by mail,however, if surveys are not returned phone calls or site visits may be
necessary.
Task 2.3: Gather additional information on diversions from the creek by completing a
second creek walk during spring/summer, continue investigation of SMMWC's
statement of water diversion, and compiling information from studies completed
by other agencies (e.g. City of SLO or NOAA), if available.
Task 2,4: Complete analysis of the feasibility of SLO Creek attaining the MUN use given
the conditions outlined in 40 CFR 131.10 (g) and applicability of State Board
Resolution No. 88-63 exceptions.
Task 2.5: Evaluate the cost and effectiveness of remedies for addressing human sources of
pollution. Estimate removal efficiencies and develop planning level costs
estimates for control options for removal of nitrate from WRF effluent,bacteria
from urban discharges,and nitrate and bacteria from agricultural discharges.
Task 2.6: Analyze potential impacts of MUN dedesignation to other beneficial uses.
Task 2.7: Compile information from tasks 2.1 through 2.6 and submit a Draft MUN UAA.
Task 2.8: Meet with the City, Regional Board, and Stakeholders to review Draft MUN
UAA. (Combine with Task 1.3)
Task 2.9: Revise Draft MUN UAA and submit to Regional Board for Peer Review.
Task 2.10: Prepare response to Peer Review comments,revise Draft MUN UAA if
necessary, and submit to Regional Board for 45-day posting.
Task 2.11. Prepare response to 45-day posting comments,revise Draft MUN UAA if
necessary, and submit to Regional Board for adoption hearing.
Task 3: Develop and Support Basin Plan Amendment
Task 3.1: Prepare Draft Basin Plan Amendment (BPA) for Regional Board consideration
and comment.
Task 3.2: Revise Draft BPA and submit to Regional Board with peer reviewed Draft MUN
UAA for 45-day posting.
Task 3.3: Prepare response to 45-daypostingcomments,revise Draft BPA if necessary,
and submit to Regional Board for adoption hearing.
Task 3.4: Attend Regional Board adoption hearing.
Task 3.5: Prepare administrative record for State Board hearing.
Task 4. Contract administration
LWA SCHEDULE
The following table outlines the number of months needed to complete the corresponding
task or tasks as well as the expected timing of initiation and completion of those tasks.
Question marks are used to indicate the uncertainty in the timing of completion of the
���
Anachment 2
Regional Board sponsored peer review and the placement of the UAA on the Regional
Board agenda. The number of months necessary to complete tasks may vary to meet
additional City or Regional Board requirements.
Months to Month Initiated and Completed After
Task Complete Recei t of Notice to Proceed
Task 17213 4 5 6 7 8 9 10 11 12
Task U to L2 1
Task 1.3 1
Task 2.1 to 2.9 5
Task 3.1 1
Regional Board Sponsored Peer Review ? ? ? > ?
Task 2.10 and 3.2 1 ? ? ?
45-day Public Comment Period 1.5 ? ? ?
Task 241 and 3.3 1 ? ? ?
Task 3.4 1 ? ? ? ?
Task 3.5 1 ? ? ? ?
LWA COST ESTIMATE
The estimated cost for the work described above is $79,700 as detailed on the attached
spreadsheet dated December 14,2005. The actual cost may vary from the estimate if
necessary to meet additional City or Regional Board requirements.
Please call if you have any questions or if you need additional information.
Sincerely,
vu�
Larry�alker
Chief Executive Officer
Larry Walker.Associates, Inc.
(530) 753-6400
Enclosure: LWA cost estimate dated December 14, 2005
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CITY OF SAN LUIS O B I S P O
FROM: Jonathan P. Lowell, City Attorney
SUBJECT: APPROVE AN AMENDMENT TO PAYMENT AGREEMENT WITH
PALM STREET PARKING STRUCTURE, LLC (COPELANDS)
CAO RECOMMENDATION
Approve the Amendment to Payment Agreement and authorize the Mayor to execute the
document on behalf of the City.
DISCUSSION
In February 2003 the City entered into a Payment Agreement with Palm Street Parking Structure,
LLC (the Copelands) (Developer) relating to the construction of the new Palm Monro Parking
Structure (919 Palm Street) and payment for that new building. The construction is nearly
complete and the parties now recognize there is a need to memorialize through an Amendment to
Payment Agreement certain understandings that will aid in finalizing the completion, financing,
occupancy of the structure, and payment for the work performed.
The attached Amendment to Payment Agreement provides that the City shall pay the Developer
the amount agreed upon ($12,169,947), and that a dispute over any additional amount requested,
up to 2.5% above the agreed upon figure ($304;249), shall be resolved by mediation. Larger
disputes shall continue to be resolved through civil litigation. The Amendment also provides that
upon issuance of a Certificate of Occupancy, the City may occupy and utilize the structure prior
to final payment being made to the Developer. Finally, the Amendment sets forth actions for the
Developer to take to facilitate the City's bond financing of the new structure.
CONCURRENCES
The Community Development Director, the Director of Finance and Information Technology,
and the Public Works Director concur with this recommendation.
FISCAL IMPACT
There are financial benefits to both parties by agreeing to resolve smaller payment disputes
through mediation, but it is difficult to quantify those savings in the abstract. Earlier occupancy
of the structure will allow the City to open the structure for the benefit of the public and collect
parking revenues sooner. Ensuring that the Developer takes steps necessary to facilitate the
City's financing will help to avoid delay which would result in minor increased costs.
Council Agenda Report—Amendment to Payment Agreement
Page 2
ALTERNATIVES
The City could decide not to enter into the Amendment. This is not recommended because the
proposed Amendment is set up to address both the Developer's concern regarding timely
payment for work performed that is not in dispute and the City's preference for earlier occupancy
and making certain the bond issuance proceeds smoothly.
ATTACHMENTS
1. Amendment to Payment Agreement.
G:\Agenda-Ordinances-ResolWgenda Report.Palm St Parking Structure 418-06.DOC
ATTACHMENT
Amendment to
Payment Agreement
This Amendment to Payment Agreement, dated as of April , 2006, is made by and
between the City of San Luis Obispo, a chartered city organized and existing under the
Constitution of the State of California (the "City"), and Palm Street Parking Structure, LLC, a
California limited liability company (the "Developer"), with respect to that certain Payment
Agreement (the "Agreement'), dated as of November 5, 2003, between the City and the
Developer. Capitalized words not otherwise defined herein shall have the same meaning as in
the Agreement.
1. If the City disputes any amount claimed by the Developer in the Payment
Request, and the total of any such amount(s) in dispute does not exceed 2.5% of the total Fixed
Amount of $12,169,947 specified in the Agreement ($304,249), the City shall pay the Developer
the undisputed amount of the Payment Amount as provided in the Agreement. The parties agree
that the disputed portion of the Payment Amount, if any, due to the Developer shall be settled by
mediation under the Construction Industry Mediation Rules of the. American Arbitration
Association. If within 30 days after the mediation session (as such may be continued by the
agreement of the parties), the mediation does not result in settlement of the dispute, then any
unresolved controversy or claim arising from or relating to the Payment Amount shall be settled
by arbitration in front of one (1) arbitrator administered by the American Arbitration Association in
accordance with its Construction IndustryArbitration Rules and judgment on the award rendered
by the arbitrator(s) may be entered in any court having jurisdiction thereof. The place of any
mediation or arbitration shall be San Luis Obispo, California unless the parties agree otherwise.
In the event of a dispute over a total amount that exceeds 2.5% of the total Fixed Amount of
$12,169,947 specified in the Agreement ($304;249), the City shall pay the Developer the
undisputed amount of the Payment Amount as provided in the Agreement and the parties agree
either one of them may pursue any and all applicable equitable and legal remedies to adjudicate
the disputed amount beyond the Payment Amount.
2. Notwithstanding the provisions of Section 4.9 of the Agreement, Developer
consents to City occupying either the parkjng or office portions of the Parking Structure, or both
portions, upon issuance of a Certificate of Occupancy for such portion or portions, and prior to
Substantial Completion as contemplated under the Agreement. The provisions of Sections 4.9.1
through 4.9.6 shall remain in effect. In the event of occupancy of the parking portion of the
Parking Structure, City shall have the unfettered right to commence parking operations therein,
including permitting the public to enter and park in the facility and collecting revenues. Payment
to Developer for the Parking Structure shall be made in accordance with Part 5 of the Agreement,
except..
3. In order to facilitate City's financing of the Parking Structure, Developer agrees
to do the following prior to 5 p.m., Friday, April 21,2006, as directed by City:
a. Sign a reconveyance in a form satisfactory to City of the deed of trust
encumbering the property and deposit the reconveyance into an escrow set up by City with
Cuesta Title.
b. Sign instructions to Cuesta Title in a form satisfactory to City directing
Cuesta Title to record the deed of trust reconveyance upon the deposit of funds, in the amount of
the Fixed Amount ($12,169,947), by the City into the escrow account.
C. Ensure that all mechanics' liens encumbering the subject property or any
other similar liens are satisfied,through bonding or other means.
C� -3
ATTACHMENT
4. All other terms of the Agreement not inconsistent herewith shall remain in full
force and effect and are hereby ratified and reaffirmed.
This Amendment is executed as of the date first written above.
PALM STREET PARKING STRUCTURE, LLC,
a California limited liability company
By:
Tom Copeland
Its Managing Member
CITY OF SAN LUIS OBISPO,
a municipal corporation and Charter City
By:
David F. Romero, Mayor
Attest:
By:
Audrey Hooper, City Clerk
Approved as to Form:
/ a
By:
ZJoRatfian Lowell, City Attorney
G:\Agreements\Amendment Payment Agreement 919 Palm.doc
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LERK
MEMORANDUM
From the Office of the City Attorney
April 18, 2006
To: Mayor and City Council
Via: Ken Hampian, City Administrative Officer
From: Jonathan P. Lowell, City Attorney A-
Subject: Item C-6, Amendment to Payment Agreement with Palm Street Parking Structure,
LLC (Copelands)
Staff is removing this item from the agenda, as it has determined the Amendment is no longer
necessary. The parties are satisfied that the provisions of the existing agreement should suffice
regarding potential disputes that may arise. As construction and financing are both nearing
completion simultaneously, the matter of early occupancy is not an issue. The developer is
taking steps to ensure that liens and encumbrances that may cloud title are resolved in order to
facilitate the City's bond financing of the structure.
COUNCIL I�CDD ]EF
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