AMI Defines Three Rs of Water: Recovery, ROI, and Rate Structure

Aug. 4, 2016

Editor’s note: This article first appeared in the January/February 2014 edition of Water Efficiency.

Are these concerns realistic? Well, let’s look at some of the latest product releases, how manufacturers are making new and creative financing methods available. But, if the real issue is selling the technology to a city council on a tight budget (is there such a thing as a city without a tight budget?), then the savings realized by these “three Rs” should easily earn the approval of any tight-fisted finance committee.

Then, too, one could easily point to the worldwide acceptance of Advanced Metering Infrastructure, or AMI, as noted by the reliable source Bloomberg New Energy Finance. According to a report from Bloomberg‘sLondon office released in May 2013, US water utilities will spend $2 billion on smart meter and infrastructure upgrades this year through 2020, almost matching all previous investment in leak-finding devices. That’s quite a boost, since spending peaked at $395 million in 2010, when companies took advantage of stimulus funding allocated for clean energy and water projects. For administrators worried about keeping EPA happy, it should be noted that about $1.7 billion of the $7.2 billion given to EPA as part of the 2009 American Recovery and Reinvestment Act (ARRA) was targeted for infrastructure upgrades and smart meters for water.

Smart meters can be a wise investment against the staggering cost of destructive weather, as in the case of New York City (NYC). So, let’s start with this example of how AMI can facilitate one of the Three Rs: recovery from disasters.

In terms of large-scale disasters, Hurricane Sandy is a legend. According to Aon Benfield, a London-based global reinsurance firm, Sandy was the largest global disaster of 2012, with a cost of $65 billion, followed by another disaster with a huge impact on the water industry, the year-long Midwest/Plains drought, with a financial tally over $35 billion. Much of Sandy’s cost was shouldered by the City of New York and the City’s water utility sector (serving more than 800,000 customers and nine million residents), but the burden could have been much worse had it not been for an AMI system.

The NYC Department of Environmental Protection (DEP) is the largest public water utility in North America and relies on an AMI solution from Aclara (Hazelwood, MO). The system combines Aclara’s STAR Network meter transmission units (MTUs) and data collector units (DCUs) to read meters and transmit data back to the utility.

CANARY Event Detection Software developed by Sandia

The system’s design is ideal for recovering from disasters, because the STAR Network MTUs are small, permanently sealed modules that are connected to the DEP’s water meters and read the meter and data on an FCC-licensed wireless channel at customer-specified intervals. The DEP had its DCUs placed in strategic locations throughout the five boroughs to provide a complete and redundant network for reliable operation.

After Sandy departed New York, only 12 of the 350 DCUs in the New York City system were damaged, primarily due to the loss of power to the DCU. But, even with the loss of the DCU, redundancies in the network system meant that if a DCU was out of service, the MTU signal could be picked up by another functioning unit.

The system performed well during a crucial time, according to Warren C. Liebold, Director, Metering/Conservation at the NYC DEP.

“Almost all of our DCUs are physically connected into the Citywide Wireless System [NYCWin] that was built by the city Department of Information Technology and Telecommunications in 2007 to 2008,” says Liebold. “It’s composed of about 450 mostly rooftop send/receive stations developed to service first responders and other city agencies. More than 90% of the DCUs are colocated with NYCWiN RANs using an Ethernet connection from the DCU into the NYCWiN station and using the NYCWiN system for data backhaul. Co-locating with the NYCWiN system saved DEP from having to prospect and locate its own rooftop locations and rent space from landlords. We have another 20 or so DCUs independently located on city light poles.”

The system was designed with battery backup on the DCUs, and the distribution and number of DCUs allows each MTU to communicate with at least two DCUs, and sometimes three or four. This conservative design helps to offset any natural and artificial geographic challenges (hills, tall buildings), as well as local radio interference. It also provides resiliency in case a DCU is lost.

“During Sandy, we lost connections to about a dozen DCUs out of 350,” recalls Liebold. “Meter reads from about 2% of our customers were lost. No DCUs were physically lost to the storm, but connections were lost. There were also a few hundred properties that were physically damaged to such an extent that water service was turned off and the MTU was lost. As a benefit, the AMR [automatic meter reading] system was able to identify properties with major leaks that required major short-term repairs. Apartment buildings without water service (no power, no pumps) could also be identified and referred to Health and Emergency Management departments.”

Reliable and resilient wireless communications technologies that can withstand disasters are continuing to evolve. For example, Sensus, in Raleigh, NC, recently announced upgrades to its FlexNet technology, in support of the company’s AMI solutions and the need to move more data faster between distinct devices communicating on a point-to-multipoint, enterprise-class network. The next generation of the FlexNet system supports true end-to-end IPv6 communication across all platforms–electric, gas, water, and lighting control. IPv6 compatibility transforms the system from a single-application AMI network to a truly interoperable smart grid infrastructure, enabling industry standard addressing to be used between all endpoints and applications.

Sensus recently published a white paper titled “Water 20/20: Bringing Smart Water Networks Into Focus”, that provides insight from more than 180 utilities worldwide. The report found a powerful, and profitable, synergy when system performance improvements in the field were combined with data management tools in the office. In the field, water delivery is improved by addressing leakage and pressure management, network operations, and water quality monitoring. At the office, the utility now has a smart water network–an integrated set of products, solutions, and systems to remotely and continuously monitor and diagnose problems, prioritize and manage maintenance issues, and use data to optimize all aspects of water distribution network performance.

The report’s researchers noted that utilities worldwide lost an estimated $9.6 billion each year through water leakage alone. One-third of utilities around the globe reported a loss of more than 40% of clean water due to leaks. Reducing leaks by 5%, coupled with up to a 10% reduction in pipe bursts, could save utilities up to $4.6 billion annually. By reducing leaks, smart water networks can reduce money wasted on producing and/or purchasing water, energy required to pump water, and the need to treat water for distribution. The use of different types of smart sensors to gather data and apply advanced analytics, such as pattern detection, could provide real-time information on the location of a leak in the network.

Additional savings from smart network data includes:

  • 15% savings on capital expenditures by strategically directing investment,
  • up to 20% savings in labor and vehicle efficiency and productivity,
  • 70% of quality monitoring costs,
  • and far more in avoided catastrophe.

Such savings make for a powerful argument, yet 65% of survey respondents frequently cited unfavorable economics or the lack of a solid business case as key barriers to adoption of smart water networks.

Administrators at The City of Houston Public Works and Engineering Department have a record of standing apart from the 65% that cited unfavorable economics. Since 1986, the utility has partnered with Itron in Liberty Lake, WA, first with handheld readers, then with drive-by AMR, and most recently with fixed network AMI. Prior to Itron’s AMI solution, Houston read and billed usage on a monthly basis, a process that left significant gaps when analyzing usage data for nearly three million residents over a four-county, 600-square-mile service area.


Itron’s Fixed Network system includes Network Administration Application (NAA) software, Cell Control Units (CCUs), repeaters, and 60-W encoder receiver transmitters (ERTs), all dispersed around the greater Houston area. With fixed network technology, the utility acquired the ability to collect hourly consumption data from the 60-W ERTs and send the data over the network to the utility for bill creation and analytic applications.

Reports from Houston show that AMI deployment has resulted in immediate operational cost savings. The system’s virtual connect and disconnect features eliminate the need for expensive truck rolls, so, in effect, there are 1,000 work orders each day that don’t have to go out to the field, because meter reads take place over the airwaves.

Future goals for the utility include a Web portal that would allow consumers to see their consumption data over specified periods. Another project plans to bridge the gap between office and field by equipping field personnel with mobile data terminals so they see consumption data for endpoints in real time. Finally, the utility has plans to use the fixed network to integrate acoustic leak detection and/or pressure monitoring of water mains.

Leak detection technology integrated with Itron’s AMR infrastructure is already saving money for Providence Water, the largest water utility in the State of Rhode Island. Providence Water supplies 60% of the state’s drinking water for 72,000 retail customer connections across 17 cities and towns. The utility reports a water loss of 11.6% throughout 950 miles of distribution piping. Some of the blame falls on a lack of equipment that limited complete system leak surveys to 10-year intervals.

The leakage totals about 2.57 billion gallons of non-revenue water, resulting in an annualized net cost of $954,315. But that figure doesn’t include expenditures on road and property damage repairs. For instance, recently a mainline rupture beneath a state road cost $45,350, excluding final road restoration costs. A leak on the same road that had been detected and repaired as part of regular operations cost $12,967. Similarly, an emergency repair on a residential service line totaled $5,480, compared with $3,417 for a scheduled repair.

According to a Providence spokesperson, as of June 1, 2012, the utility is tracking 167 probable leaks located on copper, lead, and cast iron lines, and losing an average of 3 gallons per minute (gpm). Just these initial repairs will recover more than 31 million gallons each year. Leak alerts have led to discoveries of leaks on gate valves and hydrants. Also, the utility expects to stem losses from incidences of vandalism and copper pipe theft at vacant homes.

Providence had some financial help from ARRA funding, but there’s good news for those that didn’t tap into the ARRA, because many AMI suppliers will search for and find creative solutions to the problem. For example, Johnson Controls, Milwaukee, WI, found funding for a system at the city of Cumberland, MD, by creating an energy performance (EPC) contract that combined citywide HVAC system retrofits and infrastructure upgrades with an AMI system. (It also helped the financials for a citywide WiFi network.) Now there’s a good deal, and it also included building management systems, LED traffic lights, and weatherized buildings.

Total yield for the 15-year contract comes in at an impressive $8 million in energy and operational savings, thanks to reductions in labor, monthly water billing rather than quarterly, plus improved leak detection and repair programs. Not bad for a small city (population 24,000) with an economy suffering from reduced manufacturing jobs and a shrinking tax base.

A $9.3 million EPC from the Building Technologies Division of Siemens Industry, Inc., Buffalo Grove, IL, performed a similar turnaround for the ailing infrastructure of Bay City, TX. Improvements focused on the city’s wastewater and potable water supply systems, water meters, municipal lighting and supporting information technology. The results reduce electricity consumption by nearly 30%, and water consumption by more than 70%. Moreover, the safety, reliability, and efficiency of these essential services goes up. And talk about fast paybacks, the 15-year term of the project is expected to generate a positive cash flow for the city starting in year one.

The fixed-base AMR system contributes to the positive cash flow. It’s coupled with new billing software that provides better customer service to citizens with reference to daily consumption data, online bill pay, quicker response to inquiries about water use, and leak detection. Upon project completion, the energy savings guaranteed by the performance contract will yield some $700,000 in equivalent energy expense reductions every year for the duration of the contract.

The impact of billing software and data analytics is a driving force in product development for meter manufacturers. For example, the newest releases of ReadCenter Analytics software from Badger Meter, Milwaukee, WI, provide water and gas utilities with easy access to timely metrics and information for visibility to key utility management concerns. When coupled with AMI hardware, ReadCenter AnalyticsPro software offers a Web-based solution to optimize operations, increase productivity, improve customer service, conserve resources, and generate more revenue. But maybe the best feature is that it’s easier to use.

“Our next generation AMA [Advanced Metering Analytics] software automates data analysis, so it’s no longer necessary for utilities to run reports to understand what is happening in their systems,” says Morrice Blackwell, Marketing Manager for software solutions at Badger Meter. “ReadCenter AnalyticsPro software makes real use of hourly interval data provided by the AMI system to help the utility understand what is really going on in their water operations. By delivering proactive meaningful information, our AMA solution helps utilities efficiently monitor and manage their valuable resources.”

ReadCenter AnalyticsPro features an enhanced dashboard that provides utilities with an immediate system overview. At a glance, water utility personnel can see potential issues such as leaks, tampering, no usage, reverse flow, and endpoints that are reaching the final days of useful life. From the dashboard, users can click on the item in question to see the details behind the condition. The dashboard also includes a seven-day weather forecast for the local area to help utilities with outdoor work scheduling. Fixed Network Monitoring provides a summary of how fixed network data collectors and endpoints are operating.

The city of Garretson, SD, will be the first city in the country to deploy a combined water and natural gas AMA solution from Badger. A long-time Badger customer, the city decided to replace its existing walk-by/drive-by AMR system with a more advanced ORION SE (Smart Endpoint) solution that enables meters to automatically transmit readings to a central location throughout the day. Customers will be billed on a monthly basis. Coupled with sophisticated ReadCenter Analytics software, the new system will provide more timely and efficient readings and information that will help the city proactively manage its utility operations, such as presenting data with overlays from the National Weather Service.

Weather data will allow Garretson to show customers what may have affected their use of water or gas on an hourly basis. At a system level, the city can monitor the amount of water it purchases from the rural water system, versus the amount it sells to customers. This will help the city to detect lost water and potential system leaks or issues that need repair. Other system features include tampering alarms, no usage alarms, and register errors.

Customer service was a critical factor in the decision to implement an AMI system for the City of Kennedale, TX, but there’s more at stake, according to Kennedale City Manager Bob Hart. In December 2012, Kennedale chose the FATHOM platform from Phoenix, AZ-based Global Water, to provide a fully integrated, end-to-end Customer Information System (CIS), including utility billing, customer care, and AMI.

“The underlying reason, from our perspective, is using this as a cornerstone of our water conservation program,” explains Hart. “We want to set up a rate design with a time-of- use and day-of-use rate structure. We’re part of the Dallas Fort Worth region, and we have watering restrictions that allow residents to water two days a week. We would like to set up the rate structure based on a cost of water on the days allowed for watering, versus watering on the other five days of the week when the cost would be more. So, this would be a price signal to encourage conservation.

“I was intrigued with Global,” he continues, “because they have the ability to send e-mails and text messages if your water consumption exceeds typical amounts. We’ll be able to read meters every 15 minutes and know when somebody is watering their yard, and that’s the component we want to capture for sending a price signal. So, we can double or triple the cost of water for irrigation during the restricted days. Instead of trying to enforce this thing with citations, you can water anytime you want to, and we’re going to work to send you a price signal, to alert you of the cost and to motivate conservation.”

Hart notes that about 65% of the city’s water meters need to be replaced, and he expects the boost in accuracy to recover a significant amount of unbilled water.

According to Graham S. Symmonds, chief technology officer of FATHOM, Kennedale can look forward to finding revenue from a number of areas in its operations.

“We’re finding that there is a lot of revenue hidden in the data,” says Symmonds. “Utilities have a bias towards their data and believe that everything in their computer system is true and correct, and oftentimes it’s not. That has a direct impact on the revenue. Often, meters are missing or, somehow, not linked with the physical infrastructure, and that happens naturally over time. Until now there’s been no way to check the systems and maintain them in a proper state.”

As part of the AMI platform installation, Global does a revenue audit, and it’s not unusual to find some surprises. For example, a utility in California with 44,000 meters provides water, wastewater, and trash services to about 130,000 sites, and the paper and field audit found that about 5–6% of those services were incorrect.

“That’s a significant percentage, and we calculated it at about $230,000 a month in lost revenue,” says Symmonds. “The accumulation of errors over time can get expensive, and, in this case, it’s over $2 million a year.”

The FATHOM audits typically show lost revenue from 5–8%, from both residential and commercial meters.

“We did a study on large meters, and, in one case, over half of them did meet AWWA specifications,” says Symmonds. “They see so much more volume but sometimes are forgotten in the system because industrial customers aren’t always as demanding as residential customers.”

Ultimately, Hart expects to hit all of the Three Rs with FATHOM’s AMI system, with new meters and unbilled water leak detection accounting for a large portion of the savings.

“We’ll also be able to cut our billing department down from three people to one, and then the savings we get from the inaccurate meter readings will be important. Some of the early work we’ve done on this has seen some readers that are running very slow, or not even working at all, so the ROI should cover all of our costs.”

Fast paybacks are typical, and budgetable financing solutions have made AMI systems much more accessible to utilities, adds Symmonds.

“From the utility’s perspective, this is a one-stop shop, and we can finance systems and provide the infrastructure and software services billed on a monthly fee. We have seen times where the lost revenue recovery has funded the deployment of the platform.”

Other manufacturers have similar financing options, and ultimately, the industry is delivering on services that allow water utilities to recover from disasters, achieve fast returns on their investment (or better yet, immediate positive cash flow), and implement rate structures such as time of use billing, to improve conservation programs. 

Advice for Choosing an AMI System
According to Warren C. Liebold, Director, Metering/Conservation, NYC Environmental Protection Bureau of Customers Services)
Our advice to water utilities considering AMI is primarily to understand that while AMI projects “seem” like meter projects, they are just as much IT projects, and you should make sure that you have an IT shop deep enough to manage the system, unless you intend to outsource that to the AMI vendor.Absolutely, undertake a pilot project where you install transmitters on a small percentage of your meters in a small area of your territory, have them communicating back to the central computer, and have the reads flow into your billing system—even if it’s a test portion of the billing system.

Some steps to follow:
1. Try out your field staff’s use of the handheld computers and software used to program the AMI transmitters. You will probably want to customize the software a bit, and the relationship between field and office staff is essential. We automated the transmitter installation system and could not have completed such a large project, with such a low error rate, without automation.

2. Set up the “midware” that will transfer the reads from the AMI system into your billing system. This is specific to each utility’s billing system.

3. Your IT staff needs to understand the tasks involved with monitoring and operating the system. If you’re considering a system with hourly reads, then it can’t be run off a Windows XP desktop. These are server-based SQL database systems.

As far as storms are concerned, an AMI system provides these benefits:
1. It informs you of large customer leaks resulting from storm damage.

2. If your AMI system includes distribution system leak detection, you can receive quick notification of distribution system leaks.

3. Loss of power in large buildings will be indicated by zero water use.

4. Evacuation rates can be estimated by the number of residential properties with zero water use. Identifying stranded people can also be accomplished the same way.

About the Author

Ed Ritchie

Ed Ritchie specializes in energy, transportation, and communication technologies.

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