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8.4 Water Meter Replacement Performance ContractCITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 03/07/2011 4:00 P.M. APPROVED FOR AGENDA SECTION ORIGINATING DEPARTMENT: NO: 8 AGENDA: UTILITIES DEPARTMENT ITEM NO. 4 BY: BY: Martha Tasker Page 1 ITEM: Award of Performance Contracting Agreement for the Water Meter Replacement, Project No. 11-2868 with Siemens Industry, Inc. BACKGROUND: Salina’s water system consists of approximately 20,500 water meters. Water meters typically slow down or under-register as they age. The accepted i ndustry standard is to consider replacement of water meters after 10-15 years of se rvice. A total of 70% of Sali na’s water meter stock is over 10 years old. Staff currently replaces 500 meters per year, which equates to 40 years to complete replacement. In January of 2005, a policy was adopted to relocate meters from inside structures to City right-of-way. There are approximately 7,900 meters located inside, and staff currently relocates 100 meters per year, which equates to 79 years to complete the relocations. Continuing at the current pace is unacceptable. Performance contracting was selected, which allows for a turn-key project to be paid with revenues from enhanced meter accuracy, future capital cost avoidance and future operational savings. Requests for Qualifications were received from four firms. One firm di d not meet the minimum qualifications. Two companies were interviewed, and Siemens Industry, Inc. was selected for the project development. Approximately 270 meters we re tested by a third party in accordance with American Water Works Association (AWWA) Standards. Tested accuracy rates ranged from 42.3% to 98.2%. The AWWA Standard for new water meters is 98.5% to 101.5%. Staff evaluated several solutions with multiple vendors to address the problem. A turn-key Sensus FlexNet Advanced Metering Infrastructure (AMI) with Neptune meters was selected. The FlexNet System operates with minimal infrastructure requiring two tower base stations with a 98% redundancy. Additional FlexNet benefits include: operates on a dedicated fr equency licensed by the FCC; real- time, on-demand view of water usage; hourly or dai ly reporting options; reduction of service order calls; leak detection; backflow detections; cust omer access capabilities through the web; water conservation monitoring and overall ability to boost customer satisfaction. Neptune meters provide low flow sensitivity of 1/8 gallon per minute and meet all applicable lead free requirements. The City has a long standing relationship with Neptune. In addition, the project includes relocating approximately 7,900 meters from inside structures to City right-of-way and testing and verifying of meters yearly for the 15 year life of the project. The total project is $14,634,851. The construction period for the project is 18 months (April 2011 through September 2012). The attached Performance Contracting Agreement includes: Performance Contracting Agreement Exhibit A – Scope of Work and Services Exhibit B – Payment Schedules Exhibit C – Performance Assurance CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 03/07/2011 4:00 P.M. APPROVED FOR AGENDA SECTION ORIGINATING DEPARTMENT: NO: 8 AGENDA: UTILITIES DEPARTMENT ITEM NO. 4 BY: BY: Martha Tasker Page 2 Exhibit C – Performance Assurance references 345 pages, which includes the following attachments: Attachment 1: Meter Account List Attachment 2: Meter Testing Data Attachment 3: Baseline Consumption Data by Meter Size Attachment 4: Current Rate Structures for Water and Sewer Services Attachment 5: Revenue and Operational Savings Analysis These attachments are considered supporting docum entation and are not included; they will be attached to the executed agreements. The current water charges include an Excess Use Charge. An Excess Use Charge applies to (1) all irrigation meters (2) any use in excess of the Excess Use Baseline. A cust omer with meter water consumption greater than three million cubic feet per year is not charged an Excess Use Charge. The Excess Use Baseline equals the great er of 120% of the Winter Quar ter Average or 120% of the Minimum Winter Quarter of 800 cubic feet. T he Winter Quarter Average is the average metered consumption for the monthly bil lings of January, February and Marc h. Each customer’s Winter Quarter Average is calculated in April each year and is utilized for the following months of May through April. As new water meters are installed, staff will re view accounts to ensure customers are not charged additional Excess Use Charge, as a result of the increased water meter accuracy. In July of 2010, 18% of our customers incurred an Excess Use Charge. In the year of 2010, an average of 11% of our customers incurred an Excess Use Charge. In addition, wastewater charges are based on the Winter Quarter Average and will not be increased until a Winter Quarter Average can be calculated based on the water consumption measured by the new water meter. FISCAL NOTE: The Water Meter Replacement Project is included in the Capital Improvements Program. The project will be financed with 15 year revenue bonds and will be funded wit h revenues from the improved meter accuracy, future capital cost avoidance and fu ture operational savings. The project is cash positive at year one (see attached sheet). CONFORMANCE WITH THE STRATEGIC PLAN: Related Strategic Plan goals may include: GOAL #3: The City will provide the highest quality of services, consistent with governing body direction, available resources and staff commitment to quality. Action Item: The City Commission will maintain it s commitment to the muni cipal organization by providing direction and resources that will allow them to meet established expectation. COMMISSION ACTION: It is recommended that the City Commission award the Performance Contracting Agreement for the Water Meter Replacement, Project No. 11-2868 to Siemens Industry, Inc. of Buffalo Grove, Illinois in the amount of $14,634,851.