HomeMy WebLinkAboutINS-2022-161 - Advanced Metering Infrastructure (AMI)
Infrastructure Services Department www.kitchener.ca
REPORT TO: Community and Infrastructure Services Committee
DATE OF MEETING: May 16, 2022
SUBMITTED BY: Greg St. Louis, Director, Gas & Water Utilities, 519-741-2600 ext. 4538
PREPARED BY: Angela Mick, Manager, Quality Management & Water Programs,
519-741-2200 ext. 4408
WARD(S) INVOLVED: All Wards
DATE OF REPORT: April 19, 2022
REPORT NO.: INS-2022-161
SUBJECT: Advanced Metering Infrastructure (AMI)
RECOMMENDATION:
That due to the financial costs of Advanced Metering Infrastructure (AMI), staff be
directed to evaluate the implementation of AMI for the water utility only as part of the rate
options for the 2024-2028 Water Infrastructure Program (WIP) Review based on the
analysis as outlined in staff report INS-2022-161.
REPORT HIGHLIGHTS:
This report outlines the key findings from a feasibility study performed by Util-Assist to
investigate Advanced Metering Infrastructure (AMI) for water and gas meters
All evaluated AMI options resulted in significant negative net present value over a 20-year
operating period
Based on an analysis of options, should Council wish to advance implementation of AMI, the
recommended option is the Itron Silver Spring streetlight network AMI solution for water
meters
At this time, it is not recommended that AMI be implemented on the gas meters, since it is
not common practice in the gas industry or with our competitor
The water only costs of $38.4M result in preliminary projected customer impacts of $18/year
(4.1%) to the wet utilities. This is above any rate impacts associated with WIP and it is
recommended that implementation of AMI be considered in conjunction with all
investment needs of the water utility defined through the next WIP review.
This report supports the delivery of core services.
EXECUTIVE SUMMARY:
The City of Kitchener engaged a consultant, Util-assist to complete a feasibility study to
determine the estimated financial impact and benefits associated with advanced metering
infrastructure. Util-assist specializes in technology solutions for utility companies and has
conducted over 100 AMI studies since 2005.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
AMI is a technology that collects meter reading data automatically from utility customers and
allows the customer to have access to their data to review consumption in near real-time. This
is the technology that hydro companies utilize. Currently, the City has a meter reading vendor
whose staff walk the City and physically read the gas and water meters and use a handheld
device to download the water meter monthly consumption for billing.
Based on the technical feasibility assessment, should the City pursue AMI, the recommended
solution is the Itron Silver Spring streetlight network shared AMI solution for water meters. At
this time it is not recommended to advance AMI implementation for gas meters. There few gas
utilities implementing AMI for their customers in Canada as there are few inherent benefits as
gas meters are under the purview of Measurement Canada and the Ontario Energy Board.
Measurement Canada approved the Itron gas meters (500G) within the last 6 months, however
additional certification is required for the streetlight network solution. Enbridge Gas Inc (EGI) is
monitoring the financial requirements of AMI due to the significant investment requirement. In
addition, the additional costs of AMI would make KU less competitive than EGI.
The Itron AMI solution for the water utility is estimated to costs $38.4.M (capital + 20-year
operating costs) with quantifiable benefits of $16.8M, which provides a negative present value
of $21.6M. The costs outweigh the savings over a 20-year period by $27.9M. Costs are in 2020
dollars.
While implementation of AMI provides an improved level of customer service and availability of
meter reading data, the business case suggests that the financial impacts should be carefully
considered and staff recommend evaluating potential implementation in conjunction with other
program and infrastructure investment needs that are defined through the Water Infrastructure
Program Review in 2023.
BACKGROUND:
connected
smart city. The streetlights could be used for a host of applications including AMI that could
monitor natural gas and water usage and use the network to send the information wirelessly,
saving on meter reading costs and alerting homeowners quickly to unusual spikes in usage.
Council expressed interest in investigating the feasibility of implementing AMI to leverage the
existing streetlight network as many other municipalities, including Waterloo and Cambridge
have begun to implement water AMI to various degrees.
The City embarked on a feasibility study to determine the technological, financial and resource
requirements that would be required to implement AMI and to understand the benefits including
the enhanced customer service and development of a business case on whether to invest in
this technology for both gas and water.
The decision to implement next generation metering through AMI has significant implications for
abler for modernizing
reliability (identify leaks) and deliver expanded data to customers. The enhanced customer
service and improved productivity and operational efficiency for meter reading are key benefits.
When selecting and implementing a new metering system, it is critical that the City get the
information and support it needs to make the best decisions for its operation and customers. The
business case report delineates key considerations, outlines the justification to proceed with
next-generation metering and provides details on both financial and non-financial drivers and
benefits. In addition, it outlines potential deployment option strategies and next steps for the
REPORT:
There are approximately 68,000 water meters and 74,000 gas meters within the City. Although
AMI has become a more common technology utilized for water utilities, it is not common for gas
utilities in Ontario.
AMI is the infrastructure that collects the meter reads. It consists of three layers; the advanced
metering communication device (meter and endpoint); advanced metering regional collector
and the advanced metering control computer. Consumption data can be gathered on an hourly
basis but requires additional analytical systems to analyze the data for alarms and billing. AMI
frequently includes a customer portal where customers can review their hourly consumption
data. AMI provides the following functionality benefits:
Empowers customers and delivers significant customer benefits
Customers have access to current consumption data
Aligns with strategies and can be leveraged for other initiatives like Green Button
Controls in place to ensure security and privacy
Real-time data and alerts support leak identification and water loss reduction
Reduced environmental footprint due to reduced vehicles/trips
Data for self-service and to support customer inquires
Real-time data supports timely and accurate water billing with significantly reduced bill
estimation
Recognizing these benefits, many water utilities have implemented or are in the process of
implementing AMI. For example, both Waterloo and Cambridge have recently implemented
AMI or are in the process of implementing AMI in their respective water utilities.
Kitchener is unique from other municipalities that have chosen to move forward with AMI for
several reasons:
Kitchener owns and operates a gas utility, and the meter reading costs are shared
between the utili
Gas meters are replaced to meet Measurement Canada requirements so some of the
AMI is not yet common practice in the gas industry.
and 10%, respectively. Other municipalities may have higher water loss and may use
AMI as a method to decrease the amount.
Meter exchange and AMI may reduce losses due to more accurate real-time readings;
however, Kitchener has been proactively replacing aging water meters for several
years. The benefit from replacing newer meters is less than replacing aging meters.
program targets replacing residential water meters
every 15 years, which is within industry norms and natural gas meters are regulated
by Measurement Canada.
Kitchener has a substantial number of gas and water meters; more that surrounding
municipalities. The cost of the meter replacement/retrofit portion is a significant
percentage of the overall costs.
Options Considered
Six options were evaluated, three from both financial and technical perspectives, and three from
only a technical perspective in order to arrive at the recommended approach for the City. The
Options evaluated were as follows:
1.
and technical evaluation). Option 1A considered a water only solution.
2. Migratable drive-by Automatic Meter Reading (financial and technical evaluation)
3. Shared AMI solution with Kitchener Wilmot Hydro (financial and technical evaluation)
4. City-owned, standalone AMI network (technical evaluation only). This was not
evaluated financially because the City has other available streetlight options that
provide the same level of functionality and are available at lower project capital and
would require additional O&M expenses not associated with either of the other two
AMI shared solution options.
5. LoRaWAN network offered by eleven-x (technical evaluation only). This was not
evaluated financially as it posed too great a risk for the City to pursue given the lack
of an approved Measurement Canada gas solution (or any gas solution at all) and the
-year battery life (versus 20 from the primary AMI providers)
6. Status quo with existing metering technology (technical evaluation only)
The Attachment A summarizes the financial evaluation of Options 1, 1A (Water only), 2 & 3 and
outlines advantages, disadvantages, and risks over a 20-year period.
Detailed Analysis of Preferred Technical Option: Water Only Shared AMI Solution with
Itron Silver Springs
The Water Only Shared AMI Solution with Itron Silver Springs (Option #1A) is the preferred
technical solution, if the City decides to move forward with AMI. A detailed cost/benefit analysis
of this option, with both quantitative and quality benefits is outlined below.
The breakdown of net present value costs and benefits for the Water Only Shared AMI Solution
with Itron Silver Springs are provided in Tables 1 to 3. After 15 years, the City would begin to
build a reserve to fund the next water meter replacement cycle starting at year 20.
Water Only AMI Implementation
The estimated cost for water implementation of AMI for water meters is $38.4.M (capital + 20-
year operating costs) with quantifiable benefits of $16.8M, which provides a negative present
value of $21.6M.
Table 1 Net Present Value Capital Costs Breakdown for Water Only AMI Solution with Itron
Silver Springs
Component Description Subcomponent Costs Total Costs
AMI System Metering endpoints, installation, network
infrastructure, head end infrastructure, $18.8M
professional Services
Water meters
$12.4M
Water Meter Installation
$4.8M
Additional network access
points/photocells, Head End System
$1.0M
Software/Professional Services/Meter
reading equipment
Contingency
$0.6M
Meter and Data Capital costs associated with
Management implementing MDM. The MDM receives
$2.2M
(MDM) and the meter data and performs storage and
Labour processing of the data
Integration and Associated with integration of the meter-
SOPs to-cash process and associated standard $1.9M
operating procedures
Security and Associated with regular security audits
$0.4M
corporate and expenses
Total Capital Cost
$23.3M
Table 2 outlines the 20-year Operating costs for the Water Only Shared Solutions with Itron
Silver Springs, which includes additional staffing required to maintain the system.
Table 2 Net Present Value 20-year Operating Costs Breakdown for Water Only AMI Solution
with Itron Silver Springs (does not include debt financing)
Component Description Total Costs
AMI System Associated with metering endpoints, installation, network
infrastructure, head end infrastructure and professional $9.7M
services
MDM and Associated with the Meter & Data Management (MDM)
Labour and project operations labour to implement and maintain $5.1M
all new systems
Security and Associated with regular security audits and corporate
$0.3M
corporate expenses
Total Operating Costs (20 year)
$15.1M
The quantifiable benefits are outlined in Table 3 and includes avoid meter replacement costs,
minimized meter reading costs and resources spent on billing/exception complaints.
Table 3 Net Present Value of Quantifiable Benefits for Water Only AMI Over 20-Years
Quantifiable BenefitDescriptionTotal Benefit
Avoided Meter Replacement Avoided costs of existing meter replacement and
Costs repair costs from failures associated with those $13.5M
meter replacements.
Meter Reading and Field Reduced outsourced meter reading costs through
Services the automation of the AMI network (gas meter $2.9M
reading will still be required)
Billing Department Reading Avoided costs from staff performing meter reading
$0.2M
Verifications exceptions that will be performed by the MDM.
Billing Exception and Reduced customer calls from estimated or
Complaints (CSR) incorrect meter reads and incorrect billing by
$0.2M
automated meter data validation processes and
enhanced customer tools.
Total Benefits
$16.8M
There are a number of non-financial benefits to customers and the City. The Strategic Plan has
conservation and minimizing vehicle usage. AMI on the water meters would leverage the
streetlights and further transform Kitchener into a Smart City. Although these benefits are
improved efficiency, reliability, and safety. Utility non-quantifiable benefits include:
Provide enhanced customer engagement
o Provides the platform for enhanced customer billing options.
o Provides granular meter data to for use in a customer facing web portal.
o Customers could be advised of potential leaks using hourly, not monthly data.
Improve safety and reliability
o Eliminates the need for monthly meter reading services. This includes scheduling
o Improve safety record for meter reading field personnel by drastically reducing the
potential of slips, trips, and falls as well as preventable vehicle accidents.
o Provides enhanced data analytics by combining time-stamped data from previously
disparate sources.
o Proactively identifies potential meter safety concerns (backflow).
Improve business efficiencies
o Eliminates the logistical workload to read meters.
o Provides visual representation of system performance at the meter level.
Reduces impact on the environment and reduces carbon footprint with fewer field visits
Even without the AMI project, the utilities must maintain its metering assets in the field. These
assets traditionally have 15-20 year life span and require replacement based on failures and
recommended replacement processes. Once the existing water meters have been
replaced/retrofit, a 20 year life span would be used for meter replacement. The business case
budgeting and work performed
by the City.
Natural gas meters are regulated by Measurement Canada, an agency responsible for ensuring
accuracy in the selling of measured goods, developing, and enforcing the laws related to
measurement accuracy, approving, and inspecting measuring devices and investigating
complaints of suspected inaccurate measurement. Measurement Canada identifies natural gas
meter replacement and testing cycles to ensure proper function and accuracy of the installed
meter inventory. As a result, the benefit for the gas utility is less as the natural gas meters will
still need to be replaced to comply with Measurement Canada.
Other Considerations
Staffing Resource Requirements
With AMI, should the City elect to move forward with it now or in the future, resources will be
required to support the technology and data management. Four positions (AMI Manager, AMI
Operator, Meter Data Management Operator, and Technical Analyst) have been included in the
financial analysis based on required resources identified by Util-Assist. It will be important to
determine where these positions are best aligned within the existing organizational structure and
that the new positions are filled prior to procurement so that they are fully up to speed with the
system(s) that are deployed.
Timeline
An important consideration for any city or utility looking to deploy advanced metering technology
is the critical nature of the development of a realistic timeline for the project. For advanced
metering to be properly implemented, there are phases of the project that take a certain amount
of time and are difficult to rush without introducing risk to the project. There are others that can
be compressed or phased (i.e., meter installation). Util-Assist recommends a timeline that sets
aside the first two years for planning (review of business processes/communication plan,
development of various comprehensive terms of reference and procurement processes), year
three for back-office work and testing and year four and beyond for mass deployment. Every
water meter in the City will need to either be replaced (53,000) or retrofit (15,000), the majority
of which requires customer access into the building.
The meters that the City of Kitchener currently installs/replaces are compatible with AMI. For
future retrofits, the remote on the outside would need to be replaced (access to the inside would
not be required).
Other Components
Beyond the base and expected metering-related hardware and software installation that would
be associated with any meter project, with AMI, there are a number of other components that
must also be considered:
Meter Data Management (MDM) system to store and be the system of record for billing.
This also performs the analytics to enable warning like high water use/potential leak flags.
Customer Engagement Solution - upgrade of the current e-billing solution to a Green
Button Certified platform, such as Smart Energy Water (SEW) will provide a new customer
facing portal that will provide customer water consumption and billing data on a monthly
basis via an app or website. These costs are detailed in another report, INS-2022-202
and not included in the AMI estimate.
System Integration between various City systems to ensure proper connection.
Various requests for proposal would be required for each element as well as meter supply
and installation.
Summary
If the City chooses to move forward with AMI implementation, the AMI Solution with Itron Silver
Springs for the water utility only is recommended. Staff are recommending a prudent approach
to evaluate AMI as part of the rate options for the 2024-2028 Water Infrastructure Program
(WIP).
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
The total project cost is $38.4M (based on 2020 estimates), which includes 20-year operational
costs.
The Water Infrastructure Program is a program that reviews the capital and operating investment
requirements for water infrastructure in the City for a five-year period. It is recommended that
detailed costs be presented as part of the 2024-2028 WIP rates to determine the impact on user
rates for the various utilities.
The preliminary projected impact of the project to rates is $18/year (4.1%) to the wet utilities.
These rate increases would be on top of any WIP increases.
Debt financing would be required to fund the capital component and wages (over 15 years) of
$25.4M, which will add approximately, $8.9M in interest payments (estimated at 4%).
COMMUNITY ENGAGEMENT:
INFORM dvance of the
council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
There are no previous reports/authorities related to this matter.
APPROVED BY: Denise McGoldrick, General Manager, Infrastructure Services
ATTACHMENTS: Attachment A Financial Evaluation of Options 1, 1A, 2 & 3
AMI costs
Risks
AMI for gas is not common practice in the gas industry or with our competitor and the additional may increase the difference in rates, making KU less competitive
Cost (negative Net Present Value over system lifecycle).
Disadvantages
A
ely
Evaluation (Gas and Water)
owned
-
ttachment
A
Advantages
Demonstrates that the City is leveraging deployed assets to support the metering initiative.Enables customer benefits and efficiencies.Enables operational benefits and efficiencies.Opportunities
exist to develop new use cases over time that will positivcontribute to the project gainCitynetwork ensures that City controls its own destiny.
Options
Gain
Total
Present 27.9M
-
Summary of
Cost
Total
47.5M
Total
Benefit
19.6M
)
1
Shared
Solution
Water and Gas AMI Solution with Itron Silver Springs(Daily Reads Option #
Risks
Still require meter reading services for gas metersCustomers may request the same level of consumption data for gas meters that they have for water meters Cost may not materialize into
a future AMI solution.
Cost (negative Net Present Value over system lifecycle). Inability to support customer
Disadvantages
A
is
for
metering
Evaluation (Gas and Water)
.bute to the
owned
-
ttachment
A
Advantages
Demonstrates that the Cityleveraging deployed assets to support the water initiative.Enables customer benefits and efficiencies.Enables operational benefits and efficiencieswaterOpportunities
exist to develop new use cases over time that will positively contriproject gainCitynetwork ensures that City controls its own destiny.Reduced capital expenditures.Reduced O&M.
Options
Gain
Total
Present 21.6M12.6M
--
Summary of
Cost
Total
38.4M31M
Total
Benefit
16.8M18.4M
AMI
1A)
Drive by
Solution
Water Only SharedSolution with Itron Silver Springs(Daily Reads Option #Water and Gas AMR
y.
Risks
may require system upgrades potentially resulting in additional costs to the CitMonthly fees.
e
side
-
experience initiatives lack of data available to CSRs and end customers, no web/customer portals, limited customerleak support.Inability to deal with field issues as they arrive (no
granularity of data).Cost (negativNet Present Value over system lifecycle).Cost (negative Net Present Value over system lifecycle).
Disadvantages
A
Evaluation (Gas and Water)
ttachment
A
Advantages
Ability to migrate to AMI in the future.Demonstrates partnership in that the City is leveraging deployed assets of KWH, of which it is the primary shareholder, to support the
Options
Gain
Total
Present 31.4M
-
Summary of
Cost
Total
51M
Total
Benefit
19.6M
Shared
Solution
(monthly reads)(Option #2)Water and Gas AMI Solution with Kitchener Wilmot Hydro(Daily Reads Option #3)
year life
-
ether an AMI
Risks
period; these budgetary
billing solution, are not included in the
-
Disadvantages
A
year period (specifically meter replacements required as
-
billing solution is required regardless of wh
ties
-
Evaluation (Gas and Water)
ttachment
pportuni
A
Advantages
metering initiative.Enables customer benefits and efficiencies.Enables operational benefits and efficiencies.Oexist to develop new use cases over time that will positively contribute
to the project gain.4
Options
202
Gain
Total
Present
Summary of
.
s
Cost
Total
alue
v
2020
off was assumed to be Q1
-
Total
Benefit
Costs are inTotal project gain is the difference between the present value of cash inflows and outflows over the 20of meters (net present value)Project kickThe financial analysis does
not extend beyond the 20end of life is reached). Batteries have a 20 year life.Estimates do not include the regular statutory replacement of gas meters during this restraints would
remain.The cost for the upgrade of the billing system to S/4HANA, or a new estudy as the upgrade or implementation of a new esolution is pursued.
Solution
Financial Evaluation Notes